Chapter 11 A Baseline Model of the Goodwin Marx-Keynes-Schumpeter System
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We extend in chapter 11 the distributive cycle of Goodwin by effective demand forces and endogenous process innovations, driven by the evolution of the employment rate of the workers in the sphere of production through control by a monitoring workforce above them. We discuss the consequences of this MKS extension for the income distribution between capital and labor. We show that these extended dynamics can create persistent fluctuations in employment, income distribution and productivity growth if their balanced growth path is surrounded by an unstable multiplier-accelerator process. Our integration of global stability through a Marxian reserve army mechanism, with locally destabilizing Keynesian effective demand processes and Schumpeterian process innovations, provides a basic model of what Goodwin 1983 described as the MKS system approach to the understanding of the evolution of capitalism, one hundred years after Marx’s death.

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