Mordecai Kurz

Mordecai Kurz (born November 29, 1934) is an economist whose research work has covered a variety of problems in economic theory and policy. He has written extensively on growth theory, game theory, the formation of beliefs, and the effect of market power on inequality and growth, and he has worked on various policy projects. He contributed to the design of minimum income guarantee experiments in Seattle and Denver from 1971 to 1975, and in Manitoba in 1974. He also served as a special economic advisor to President Carter’s Commission on Pension Policy in 1979.

Education[]

Kurz is the Joan M. Kenney Professor of Economics, Emeritus at Stanford University and served as the economics director of Stanford’s Institute for Mathematical Studies in the Social Sciences from 1971 to 1989.^[2] He was a Guggenheim Fellow (1977),^[3] a fellow of the Institute for Advanced Studies of the Hebrew University in Jerusalem (1979) and has been a fellow of the Econometric Society since 1971.^[4] Kurz was a Stanford research associate (1961), assistant professor at Stanford (1962), lecturer at the Hebrew University of Jerusalem (1963-1966), associate professor of economics at Stanford University (1966-1968) and full professor (1969-).

His work on the theory of rational beliefs was influential in moving financial and macroeconomists away from the assumption of perfectly rational expectations.^[5] The theory of rational beliefs offered an explanation for the heterogeneity in investment behavior and, consequently, in returns.^[6][7] In 2004, a Festschrift was published in his honor on the topic, entitled Assets, Beliefs, and Equilibria in Economic Dynamics: Essays in Honor of Mordecai Kurz.^[8] It was edited by Charalambos Aliprantis, Kenneth Arrow, Peter Hammond, Felix Kubler, Ho-Mou Wu and Nicholas C. Yannelis.

Research[]

Kurz argues^[9] that technological innovations in a market economy perpetually plant new seeds of market power since private ownership of technology awards the owner monopoly power with a major advantage over competitors. He claims that firms use diverse strategies to expand their market power and make it a durable feature of an unregulated, laissez-faire, capitalist economy. Absent strong public policy to constrain it, firms’ market power expands, causing inequality to expand to extremely high levels. Kurz then makes two claims:

(i) Profits and inequality. Kurz has maintained that in an unregulated market economy, the above process generates rising monopoly profits that are concentrated in few hands.^[10] The rest of society, particularly low-skilled workers, pay the cost^[11] of technological progress in the form of income that either declines over time or grows slower than the income of the recipients of profits: the rich minority gets richer at the expense of the majority, who are mostly workers who are uncompensated for their losses.^[11]

(ii) The stock market. In 2016, Kurz defined “Monopoly Wealth” to be the wealth created by market power.^[9] It is the present value of claims to future monopoly profits due to market power. In 2015, Kurz found that monopoly wealth was so high that 82% of the value of all stocks was monopoly wealth.^[12][13][14] Kurz asserts that capital is mostly financed by debt, and stock trading is mostly the trading of monopoly wealth.

Publications[]

Books[]

Public Investment, the Rate of Return, and Optimal Fiscal Policy (with K. J. Arrow), the Johns Hopkins Press, Baltimore (1970). Endogenous Economic Fluctuations: Studies in the Theory of Rational Beliefs, Mordecai Kurz (ed.), Springer Series in Economic Theory, No. 6, Springer Verlag, August 1997.

Selected journal articles[]

• "The General Instability of a Class of Growth Processes," Review of Economic Studies (April 1967); 155-74.
• "The Seattle Experiment: The Combined Effect of Income Maintenance and Manpower Investments" (with R. G. Spiegelman), American Economic Review (May 1971); 22-9.
• "Power and Taxes" (with R. Aumann), Econometrica (July 1977); 1137-61.
• "Endogenous Formation of Coalitions" (with S. Hart), Econometrica (July 1983); 1047-64.
• "On the Structure and Diversity of Rational Beliefs," Economic Theory 4 (1994), 877-900.

References[]

External links[]

• Mordecai Kurz's homepage