Partial Cooperation with Capital vs. Solidarity in a Model of Classical Growth

Abstract

Goodwin’s (1967) model of a growth cycle has since long been regarded as a model of class struggle and the conflict over income distribution which mirrors basic aspects of Marx’s “General Law of Capitalist Accumulation” in Volume I of “Das Kapital”. When rereading this chapter (Marx 1954, Chap. 25) with Goodwin’s model and its various extensions in mind, one indeed finds many observations of Marx – in particular in its Sect. 19.1 – which are strikingly similar to the assumptions and conclusions which this growth cycle model exhibits. However, Marx also very often stresses aspects of the behavior of “capital” which are not covered by this approach to cyclical growth (where profits are more or less mechanically invested by “capitalists”). These aspects typically concern the strategic possibilities of capitalists when faced with the profit squeeze mechanism due to a low number of unemployed workers in the reserve army. Such strategic considerations have, by and large, not found inclusion in the formal discussion of the Goodwin growth cycle. There exist attempts of Balducci et al. (1984), Ricci (1985) and in particular Mehrling (1986) where the theory of differential games is applied to this type of growth cycle model, but this seems to represent all efforts made to incorporate game-theoretic aspects into this conflict over income distribution. In this respect K. Lancaster’s (1973) related model on the dynamic inefficiency of capitalism has received much more attention in recent years, cf. Haurie and Pohjola (1987) for a typical article on this subject.