Allyn Young (1876–1929)

This chapter discusses Allyn Young’s disequilibrium approach to economics, his theory of growth and increasing returns, his ideas on imperfect competition and monopoly, his contribution in the field of money, banking and business cycles, and his ideas on the future of capitalism and how it could be reformed through institutional intervention to better reflect the public interest. Young stated that the dominant tendency in the industrial system was that of differentiation rather than that of integration, and therefore there was no inevitability attached to monopoly capitalism. Evolution was not based on any single principle. While some firms producing standardized products may become big and reap economies of scale, most other specialized firms would stay small and medium. Young believed that the role of the state depended on the stage of society, so the state had to assume more responsibilities to reflect the changing times. Legal-institutional intervention was required to control monopoly in a few specific areas in which it occurred, and an independent central bank was required to control credit which was unstable. Thus, capitalism could be reformed through independent institutions which, working in the public interest, would save capitalism from its excesses. Young also emphasized democracy and equality of competitive opportunity to make the system work for all rather than a few.