Economics Dictionary of ArgumentsHome
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| Equilibrium: In physics, equilibrium is a state in which the forces acting on an object or system are balanced. This means that the net force is zero, and the object or system is not accelerating. The concept helps to understand how objects and systems behave. It is also used in engineering, chemistry, and economics._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Equilibrium - Dictionary of Arguments
Rothbard III 789 Equilibrium/Rothbard: The expectation of falling factor prices speeds up the movement toward equilibrium and hence toward the pure interest relation as determined by time preference.(1) >Factors of production, >Factor market, >Price/Rothbard. If, for example, unions keep wage rates artificially high, "hoarding" will increase as unions keep wage rates ever higher than the equilibrium rate at which "full employment" can be maintained. >Hoarding/Rothbard, >Unions/Rothbard. This induced hoarding Iowers the money demand for factors and increases unemployment still further, but only because of wage-rate rigidity.(2) >Unemployment/Rothbard, >Demand for money/Rothbard. Rothbard III 813 Equilibrium/demand for money/money market/Rothbard: (…) an increase in the stock of money leads to a fall in the PPM and a decrease in the stock of money leads to a rise in the PPM. However, there is no simple and uneventful rise and fall in the PPM. For a change in the stock of money is not automatically simultaneous. If (…) relative prices and valuations remain the same for all throughout, the new equilibrium will be identical with the old except for an all-round price change. In that case, the gains and losses will be temporary, disappearing upon the advent of the new equilibrium. Demand/time: Actually, however, this will almost never occur. For even if people's values remain frozen, the shift in relative money income during the transition itself changes the structure of demand. Preferences: The gainers of wealth during the transition period will have a structure of preferences and demand different from that of the losers. As a result, demand itself will shift in structure, and the new equilibrium will have a different set of relative prices. Time preference: Similarly, the change will probably not be neutral to time preferences. The permanent gainers will undoubtedly have a different structure of time preferences from that of the permanent losers, and, as a result, there may be a permanent shift in general time preferences. >Time preference/Rothbard. Economics/observation: What the shift will be or in which direction, it is of course impossible for economics to say. >Money market/Rothbard. 1. Hutt concludes that equilibrium „is secured when all services and products are so priced that they are (i) brought within the reach o fpeople's pockets (i.e., so that they are purchasable by existing money incomes) or (ii) brought into such a relation to predicted prices that no postponement of expenditure on them is induced. For instance, the products and services used in the manufacture of investment goods must be so priced that anticipated future money incomes will be able to buy the services and depreciation of new equipment or replacement.“ (Hutt, "Significance of Price Flexibility," p. 394) 2. "Postponements (in purchases) arise because it is judged that a cut in costs (or other prices) is less than will eventually have to take Place, or because the rate of fall of costs is insuffciently rapid." Ibid., p. 395._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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