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The Mythical versus the Real-World Golden Age of Capitalism: A Robinsonian Perspective

Author

Listed:
  • Beatriz Estulano Vieira

    (University of Brasilia and New School For Social Research)

  • Jorge Thompson Araujo

    (University of Brasilia and World Bank)

Abstract

This paper compares and contrasts Joan Robinson’s theoretical – and “mythical”, in her words – Golden Age with the real-world Golden Age of Capitalism documented in Marglin and Schor (1990). The former provided the analytical backdrop for Robinson’s (1956, 1962) economic growth model based on a two-sided relationship between profits and investment, while the latter was a post-war empirical phenomenon in developed countries characterized by high and stable growth as well as low unemployment. In the mythical Golden Age, full-employment steady-state growth results from a highly stringent set of conditions that are satisfied only accidentally: Namely, the equality over time between the natural, the warranted, and the actual rate of growth of national income. In turn, the real-world Golden Age of Capitalism was born in the context of the welfare state, a robust trade union movement, the commitment to demand management, and international leadership by the USA, within which the macroeconomic structure, the international order, the system of production, and the rules of coordination operated. The paper then argues that Joan Robinson’s economic growth model, with suitable adjustments that preserve the two-way investment-profits relationship, also offers a sound basis for the understanding of the real-world Golden Age. These adjustments are provided by Bhaduri and Marglin (1990) and Marglin and Bhaduri (1990), who allow for idle capacity in the long period and a more realistic investment function. The Bhaduri-Marglin approach provides a coherent and innovative account of real-world Golden Age, while preserving the theoretical core of the Robinsonian growth model. Therefore, this comparison exercise highlights the explanatory power of Joan Robinson’s growth model: While originally designed to show the theoretical limits of economic growth and capital accumulation in a stylized capitalist economy, it also supplied the conceptual basis for an understanding of post-war capitalism in developed countries.

Suggested Citation

  • Beatriz Estulano Vieira & Jorge Thompson Araujo, 2024. "The Mythical versus the Real-World Golden Age of Capitalism: A Robinsonian Perspective," Working Papers 2415, New School for Social Research, Department of Economics.
    • Handle: RePEc:new:wpaper:2415
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    References listed on IDEAS

    as
    1. Brian Burkitt, 1979. "Wage Restraint and the Inflation Barrier," Review of Radical Political Economics, Union for Radical Political Economics, vol. 11(1), pages 49-51, April.
    2. Joan Robinson, 1962. "Essays in the Theory of Economic Growth," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-00626-7.
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    5. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    6. Mark Setterfield, 2024. "The Kalecki-Robinson Tradition in Post-Keynesian Growth Theory," Working Papers 2402, New School for Social Research, Department of Economics.
    7. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(3), pages 587-612.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Golden Age of capitalism; economic growth; capital accumulation; profit squeeze; conflict inflation;
    All these keywords.

    JEL classification:

    • B15 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Historical; Institutional; Evolutionary
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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