Lesson 7. Joan Robinson. Leader in the Theory of "Imperfect Competition"

(1903-1983)

Joan Robinson taught economics at England's Cambridge Univer­sity for more than 40 years. Her book, The Economics of Imper­fect Competition (1933), led her to be recognized as one of the world's foremost economists.

Taking their cue from Alfred Marshall (see Chapter 3), economists of the 1930's based their theories on the concepts of perfect competition and monopoly. But perfect competition, with its many buyers and sellers, all of whom had perfect knowledge of market conditions, rarely occurred. Neither, for that matter, did perfect monopoly, wherein buyers, unable to find substitutes, paid a price selected by the monopolist. What usually happened was something in between the extremes of perfect competition and monopoly. Professor Robinson referred to this kind of trade as imperfect competition.

Robinson's imperfect competition described markets in which sellers had more freedom to determine prices than they have under perfect competition, but less than they have under pure monopoly. They had this freedom either because their products were sold under conditions of monopolistic competition, or oligopoly.

Joan Robinson regarded imperfect competition as a major weakness of capitalism. By commanding a higher price than they might have under perfect competition, she said, businesses cam higher returns, while consumers have to find ways to do with less. Meanwhile, the economy operates at levels under its capacity to employ workers and produce goods and services. Conditions of underproduc­tion and unemployment, she concluded, inevitably lead to periodic recessions and political unrest.

Exercises

1. Questions for Understanding:

1. What led Joan Robinson to be recognized as one of the world’s foremost economists?

2. What concepts did economists of the 1930 base their theories on?

3. What kind of trade did she refer to?

4. What markets did her theory describe?

5. How did she regard imperfect competition?

6. What did conditions of underproduction and unemployment lead inevitably to?

7. Does imperfect competition include both monopolistic competition and oligopoly?

2. Match each item in Column A with its definition in Column B:

	Column A		Column B
	foremost		that can not be avoided
	concept		most notable
	competition		not complete
	imperfect		activity in which persons compete(are tested)
	to determine		ability to hold
	pure		general notion
	to refer (to)		to consider
	to regard		to decide
	capacity		to apply to
	inevitable		clean

III. Complete the phrases with prepositions (where it is necessary) and say in what situations they are used in the text. Use them in sentences of your own.

1. to teach…economics

2. perfect knowledge…

3. to refer…a new kind of trade

4. to determine…prices

5. to sell…conditions…monopolistic competition

6. to command… a higher price

7. … levels

8. to lead…

IV. Give Russian equivalents for the following words or word combinations from the text:

1. to teach economics

2. “The Economics of Imperfect Competition”

3. one of the world’s foremost economists

4. concepts of perfect competition

5. to have a perfect knowledge of market conditions

6. to refer to

7. to have more freedom to determine prices

8. inevitably lead to

9. periodic recessions

10. political unrest

5. Say if you agree or disagree with the following and give your reasons:

1. Imperfect competition is a major weakness of capitalism.

2. Conditions of underproduction and unemployment inevitably lead to periodic recessions and political unrest.

VI. Complete the table. Work out your point of view on Robinson’s theory.

Appraisal Ideas and Beliefs	Still Relevant	Needs Modification	Should Be Rejected
1.See the model on p. 2….

Give your reasons.