The Natural Instability of Markets: Expectations, Increasing Returns, and the Collapse of Capitalism

As socialist states struggle to transform themselves into market economies and the United States privatizes everything from schooling to policing, the current crises in Russia and East Asia suggest that something might be amiss. In the rush to open societies to the benefits of competition, economists have overlooked the fundamental instability of competitive markets. What had seemed to be an invincible capitalist juggernaut may be reaching its apotheosis. A close look at market economies is more timely and crucial than ever. Michael Perelman argues that capitalism's victory is temporary, based as it is on an unrealistic understanding of the systems inherent risks. He analyzes the nature and causes of crisis within a market society, and along the way, he re-examines one of capitalisms most primary and unquestioned tenets, that the more competition there is, the better off society will be.

"His message is an important and well-reasoned one...a book that deserves a wide audience." --Review of Political Economy

"His message is an important and well-reasoned one...a book that deserves a wide audience." --Review of Political Economy

As socialist states struggle to transform themselves into market economies and the United States privatizes everything from schooling to policing, the current crises in Russia and East Asia suggest that something might be amiss. In the rush to open societies to the benefits of competition, economists have overlooked the fundamental instability of competitive markets. What had seemed to be an invincible capitalist juggernaut may be reaching its apotheosis. A close look at market economies is more timely and crucial than ever. Michael Perelman argues that capitalism's victory is temporary, based as it is on an unrealistic understanding of the systems inherent risks. He analyzes the nature and causes of crisis within a market society, and along the way, he re-examines one of capitalisms most primary and unquestioned tenets, that the more competition there is, the better off society will be.

Includes bibliographical references (p. [167]-182) and index.

Michael Perelman is Professor of Economics at California State University, Chico.

Introduction: The Fragile Foundations of the Triumphant Market * Competition: The Hidden Costs of the Invisible Hand * How Economists Work * Instability: Keynes, Schumpeter, and Polanyi * Inertia * The Evolution of Competition in the U.S. Economy * A Summing Up