Academic journal article Journal of Australian Political Economy

Sebastian Berger (Ed.): The Foundations of Non-Equilibrium Economics: The Principle of Circular and Cumulative Causation

Academic journal article Journal of Australian Political Economy

Sebastian Berger (Ed.): The Foundations of Non-Equilibrium Economics: The Principle of Circular and Cumulative Causation

Article excerpt

Sebastian Berger (ed.)

The Foundations of Non-Equilibrium Economics: the Principle of Circular and Cumulative Causation

Routledge, London and New York, 199 pp., $75.

Do economic processes tend to produce convergent equilibrium outcomes? The bulk of orthodox economics either assumes that they do or purports to demonstrate how and why they do. Yet 'out there' in the real world is abundant evidence of economic processes that have divergent characteristics. An early start gives cumulative advantages. Those with power perpetuate their privileged positions. The rich get rich while the poor get (relatively) poorer. Vicious circles recur. These are commonplace examples of processes of circular and cumulative causation (CCC).

So when theory and reality diverge what is to be done? The orthodox theorists may choose to ignore the reality. Proponents of CCC argue for a change in the theory. Beginning with the pioneering contributions of Thorstein Veblen, economists such as Allyn Young, Gunnar Myrdal, Nicholas Kaldor and William Kapp have sought to embed the CCC principle at the core of an alternative political economy. …

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