Evenly Rotating Economy: Difference between revisions
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The '''Evenly Rotating Economy''' is a fictitious system in which there is no price changes whatever--i.e., there is perfect price stability. The concept | The '''Evenly Rotating Economy''' is a fictitious system in which there is no price changes whatever--i.e., there is perfect price stability. The concept is used to illustrate the function of entrepreneurship and the demonstrate meaning of profit and loss by providing a system where they are absent.<ref name="Mises_evenly_rotating_economy">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap14sec5.asp XV. The Scope and Method of Catallactics], 5. The State of Rest and the Evenly Rotating Economy, [[Human Action]], online version, referenced 2011-02-05.</ref> | ||
On the ''evenly rotating economy'', [[Ludwig von Mises]] writes: | On the ''evenly rotating economy'', [[Ludwig von Mises]] writes: | ||
Revision as of 09:36, 5 February 2011
The Evenly Rotating Economy is a fictitious system in which there is no price changes whatever--i.e., there is perfect price stability. The concept is used to illustrate the function of entrepreneurship and the demonstrate meaning of profit and loss by providing a system where they are absent.[1]
On the evenly rotating economy, Ludwig von Mises writes:
"The same market transactions are repeated again and again. The goods of the higher orders pass in the same quantities through the same stages of processing until ultimately the produced consumers' goods come into the hands of the consumers and are consumed. No changes in the market data occur. Today does not differ from yesterday and tomorrow will not differ from today...Therefore prices--commonly called static or equilibrium prices--remain constant too."[1]
References
- ↑ 1.0 1.1 Ludwig von Mises. XV. The Scope and Method of Catallactics, 5. The State of Rest and the Evenly Rotating Economy, Human Action, online version, referenced 2011-02-05.