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Two-Sector Growth with Endogenous Technical Change: A Marxian Simulation Model

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  • David Laibman

Abstract

Conventional growth literature fails to incorporate technical change and investment as endogenous variables; Marxian growth literature is bedeviled by indeterminacies surrounding technical change and the rate of profit. Both sets of problems are addressed using a two-sector (capital good, consumer good) model, in which capitalists accumulate coexisting vintages of techniques. The parameters of the latest technique are determined by maximizing the innovator's profit, constrained by diminishing returns to mechanization. The model describes the differential impact of goods-, capital-, and labor-market equilibrium on the sectors, as the economy converges to a proportional-growth path. Conditions are identified under which prices approach labor values over time; and under which Marx's "rising composition" and "falling profit rate" tendencies are realized.

Suggested Citation

  • David Laibman, 1981. "Two-Sector Growth with Endogenous Technical Change: A Marxian Simulation Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(1), pages 47-75.
    • Handle: RePEc:oup:qjecon:v:96:y:1981:i:1:p:47-75.
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    File URL: http://hdl.handle.net/10.2307/2936140
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    Cited by:

    1. Jonathan F. Cogliano & Roberto Veneziani & Naoki Yoshihara, 2022. "Computational methods and classical‐Marxian economics," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 310-349, April.
    2. Frank Beckenbach, 2020. "A value-theoretic approach to economic dynamics and evolution—synthesizing different Marxian modules in a simulation model," Review of Evolutionary Political Economy, Springer, vol. 1(1), pages 103-135, May.

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