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Comparative Growth Dynamics in a Discrete-time Marxian Circuit of Capital Model

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  • Deepankar Basu

    (University of Massachusetts Amherst)

Abstract

This paper develops a discrete-time formalization of the circuit of capital model presented by Marx in Volume II of Capital Marx (1993) as a tool for aggregate economic analysis of capitalist economies. The discrete-time formalization closely follows and extends the continuous-time formalization in Foley (1982, 1986a). The discrete-time model is used to address two important issues of interest to the heterodox economic tradition: profit-led versus wage-led growth, and the growth-reducing impact of non- production credit. First, it is demonstrated that both profit-led and wage-led growth regimes can be accommodated within the Marxian circuit of capital model. Second, it is demonstrated that the steady-state growth rate of a capitalist economy is negatively related to the share of consumption credit in total net credit, when the total credit is large to begin with. JEL Categories: B51, O1.

Suggested Citation

  • Deepankar Basu, 2011. "Comparative Growth Dynamics in a Discrete-time Marxian Circuit of Capital Model," UMASS Amherst Economics Working Papers 2011-12, University of Massachusetts Amherst, Department of Economics.
    • Handle: RePEc:ums:papers:2011-12
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    File URL: http://www.umass.edu/economics/publications/2011-12.pdf
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    References listed on IDEAS

    as
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    4. Neri Salvadori (ed.), 2006. "Economic Growth and Distribution," Books, Edward Elgar Publishing, number 3798.
    5. Neri Salvadori, 2004. "Economic growth and distribution: on the nature and causes of the wealth of nations," Economics Bulletin, AccessEcon, vol. 28(18), pages 1.
    6. J. v. Neumann, 1945. "A Model of General Economic Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 13(1), pages 1-9.
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    More about this item

    Keywords

    circuit of capital; economic growth; consumption credit; Marxian political economy.;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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