Full text: Stagnation theory in the light of recent history. (Fassung 2)

5 
also an alternative adjustment: Given that profit rates 
are "too high" (or "too low") in relation to the rate 
of growth, and the utilization is therefore abnormally 
low (high), there will be increased "cut throat" 
competition (reduced competition) with the effect of 
driving out excess capacity (retaining old capacity) 
and at the same time - in the process of doing so - 
reducing (increasing) the rate of profit. 
To put the matter more succinctly, excessive profits 
will induce expansion, but in this way also a competitive 
struggle which will reduce both profits and excess 
capacity while long-run deficiency of profits will lead 
to scarcity of capacity and to a relaxation of competition, 
thus increasing profits and the stimulus to expansion. 
My main point in Maturity & Stagnation was that this 
mechanism (in one direction) is obstructed by oligopoly 
which tends to lead to mark-ups which are too high in 
relation to the given rate of growth, and therefore to 
under utilization and further to retardation of growth. 
The symmetrically opposite case which I did not treat 
in Maturity & Stagnation will result if mark-ups are 
too low and utilization therefore excessively high - 
which in the extreme case will lead to inflation.
	        

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