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Is the Most Unproductive Firm Really the Foundation of the Most Efficient Economy?
William Lazonick (University of Massachusetts)
PhD economists almost invariably teach students that the most unproductive firm is the foundation of the most efficient economy. It’s called “perfect competition”, but it’s perfect nonsense. As Joseph Schumpeter put it in Capitalism, Socialism and Democracy (1942): “Perfect competition is not only impossible but inferior, and has no title to being set up as a model of ideal efficiency.” Professor Lazonick explains why economists teach this absurd theory of the firm and its debilitating implications for understanding how the economy functions and performs. He then argues that everyone (and not just economists) needs a theory of innovative enterprise.
Speaker biography:
William Lazonick is President of the Academic-Industry Research Network and University of Massachusetts Professor of Economics Emeritus. Previously, Lazonick was Assistant and Associate Professor of Economics at Harvard University, Professor of Economics at Barnard College of Columbia University, and Distinguished Research Professor at INSEAD in France. He has professorial affiliations with SOAS University of London and Institut Mines-Télécom in Paris. He earned a B.Com. (Commerce and Finance) at the University of Toronto, M.Sc. (Economics) at London School of Economics, and Ph.D. (Economics) at Harvard University. Uppsala University and University of Ljubljana have awarded him honorary doctorates. Lazonick’s research focuses on the social conditions of innovation, socioeconomic mobility, employment opportunity, income distribution, and economic development in advanced and emerging economies. His forthcoming book, with Jang-Sup Shin, is Predatory Value Extraction: How the Looting of the US Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored (Oxford University Press).
Organised by the Industrial Development and Policy Research Cluster.
Chaired by Antonio Andreoni.
Speakers: William Lazonick (University of Massachusetts), Antonio Andreoni (SOAS)
Released by: SOAS Economics Podcasts
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By SOAS Economics Podcast
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William Lazonick (University of Massachusetts)
PhD economists almost invariably teach students that the most unproductive firm is the foundation of the most efficient economy. It’s called “perfect competition”, but it’s perfect nonsense. As Joseph Schumpeter put it in Capitalism, Socialism and Democracy (1942): “Perfect competition is not only impossible but inferior, and has no title to being set up as a model of ideal efficiency.” Professor Lazonick explains why economists teach this absurd theory of the firm and its debilitating implications for understanding how the economy functions and performs. He then argues that everyone (and not just economists) needs a theory of innovative enterprise.
Speaker biography:
William Lazonick is President of the Academic-Industry Research Network and University of Massachusetts Professor of Economics Emeritus. Previously, Lazonick was Assistant and Associate Professor of Economics at Harvard University, Professor of Economics at Barnard College of Columbia University, and Distinguished Research Professor at INSEAD in France. He has professorial affiliations with SOAS University of London and Institut Mines-Télécom in Paris. He earned a B.Com. (Commerce and Finance) at the University of Toronto, M.Sc. (Economics) at London School of Economics, and Ph.D. (Economics) at Harvard University. Uppsala University and University of Ljubljana have awarded him honorary doctorates. Lazonick’s research focuses on the social conditions of innovation, socioeconomic mobility, employment opportunity, income distribution, and economic development in advanced and emerging economies. His forthcoming book, with Jang-Sup Shin, is Predatory Value Extraction: How the Looting of the US Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored (Oxford University Press).
Organised by the Industrial Development and Policy Research Cluster.
Chaired by Antonio Andreoni.
Speakers: William Lazonick (University of Massachusetts), Antonio Andreoni (SOAS)
Released by: SOAS Economics Podcasts