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Starvid:
oracles of economics, have you got any ideas?
Standard economics states that advertising plays an informative role in the market and otherwise completely ignores the uncomfortable questions of why firms invest so much in advertising or how much return they get from their advertisement investment.

This view of advertising is demolished by JK Galbraith in The New Industrial State, which I thought you were reading?

Basically Galbraith claims (if I am not mistaken this is a key part of what he calls the "revised sequence") that firms manage consumer demand through a variety of means and that advertising is a key way to both create needs and maintain a level of demand for them.

Obviousle since standard microeconomics takes consumer sovereignty as axiomatic, an analysis of how firms control consumer demand is anywhere between nonsense or anathema, depending on how well a neoclassical economist understands the extent to which Galbraith's view of advertising threatens the foundations of standard microeconomics.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.

by Migeru (migeru at eurotrib dot com) on Thu Aug 6th, 2009 at 04:16:15 AM EST
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