Can Austrian Economics Break Bricks?

“Government Created Economies of Scale and Capital Specificity”

by Benjamin Darrington, Yale University

Abstract:
The microeconomic effects of government policy are examined for their role in shaping the composition and distribution of capital goods in a way that hampers the market mechanism for adapting to changing economic conditions and entrepreneurial error. The role of government policy in creating artificially large economies of scale by subsidizing large scale and centralized production, and insulating large firms from market conditions is analyzed for its effects of promoting specificity and geographic concentration in capital goods above the levels which would prevail in an unhampered market. During times of economic crisis and adjustment, e.g. the depression phase of business cycles, these characteristics in the structure of production increase the depreciation of existing capital goods and retard the liquidation and reassignment of productive resources involved in unprofitable lines of production thereby unnecessarily deepening the recession and slowing economic recovery.

A feature publication of the Market Anarchy Zine series.

Title is a reference to “Can Dialectics Break Bricks?” a famous Situationist film with radical leftist, anti-bureaucratic dialogue dubbed by students over an older kung-fu flick. Suggested by Soviet_Onion.

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~ by rechelon on June 5, 2008.

One Response to “Can Austrian Economics Break Bricks?”

  1. […] of note, Government Created Economies of Scale and Capital Specificity, published in pamphlet form here, has been the single most important work on political economy I have ever read. I first read it in […]

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