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A network model for the complex behavior of the rate of profit: Exploring a simulation model with overlapping technological revolutions

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  • Costa Ribeiro, Leonardo
  • de Deus, Leonardo Gomes
  • Loureiro, Pedro Mendes
  • da Motta e Albuquerque, Eduardo

Abstract

This article proposes a network model to replicate the behaviour of the profit rate in the long run. Specifically, it accounts for the results of an empirical investigation of the profit rate in the US, which show that it has fractal properties and its complexity changes over time. The starting point of the model is Marx’s insights on the interplay between the tendency of the rate to fall and its countertendencies. It combines these insights with the persistent generation of new commodities – inventions – and a specific set of new branches of production that triggers technological revolutions. A simulation running this network model successfully replicates historical features of the system.

Suggested Citation

  • Costa Ribeiro, Leonardo & de Deus, Leonardo Gomes & Loureiro, Pedro Mendes & da Motta e Albuquerque, Eduardo, 2017. "A network model for the complex behavior of the rate of profit: Exploring a simulation model with overlapping technological revolutions," Structural Change and Economic Dynamics, Elsevier, vol. 43(C), pages 51-61, December.
    • Handle: RePEc:eee:streco:v:43:y:2017:i:c:p:51-61
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    More about this item

    Keywords

    Complex systems Metamorphoses of capitalism Rate of profit Simulation models;

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian

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