Provocation # 80
I would love some suggestions about equilibrium. Assume we have people who want stuff and people willing to make it and some capital and incomes. I can see where equilibrium among these “forces” might be a reasonable assumption. Fairness might even be the result. Lets add some very realistic facts. Lower interest rate for the rich, better information for them on when the next up cycle is likely and when the downside is near, or a mix of corruption and family funding. Then we have new and powerful forces leading to a different equilibrium that moves towards monopoly.
Since this description of real markets seems reasonable, why do we like the idea of equilibrium so much when, in the absence of regulation, equilibrium dynamics guarantee monopoly?
If this is true, is it obvious? Is it discussed?
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