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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
    1. Peter Hans Matthews, 2000. "An Econometric Model of the Circuit of Capital," Metroeconomica, Wiley Blackwell, vol. 51(1), pages 1-39, February.
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    4. 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.
    5. Amit Bhaduri, 2008. "On the dynamics of profit-led and wage-led growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(1), pages 147-160, January.
    6. Özlem Onaran & Engelbert Stockhammer & Lucas Grafl, 2011. "Financialisation, income distribution and aggregate demand in the USA," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(4), pages 637-661.
    Full references (including those not matched with items on IDEAS)

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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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