"A controversy among economists has raged in the pages of professional journals for the last decade. The debate concerns capital theory and distribution theory, as well as interpretation of models of long-run economic growth. This book is an attempt to integrate recent developments in capital theory and show their implications for models of long-run economic growth in mature capitalistic countries. This book first presents the von Neumann model and outlines its classical approach to the rate of profits and distribution. Sraffa's resolution of the value-price transformation problem is then presented and compared with Samuelson's ""Surrogate Production Function"". With the results of this comparison and the delineation of the special case in which the ""Surrogate"" is valid, several existing models of growth are set out in two representative groups. Neoclassical models form the first group. These are defined by their reliance on marginal theory to determine factor prices, the rate of profit and therefore distribution via the perfectly differentiable production function. Models of Meade, Tobin, Solow, and Samuelson- Modigliani are outlined and analyzed for their treatment and distribution and profits theory. The second group is comprised of models within the strict Keynesian tradition. The basic groundwork of these models as found in the work of Keynes and Kalecki is first cited. The Keynesian models are characterized by their assumption that the investment decision is totally independent of savings decisions in the economy. The models of Harrod, Kaldor, Pasinetti and Joan Robinson are presented and their method of approach to the rate of profits and distribution is analyzed. The concluding chapter focuses on some criticisms brought against the Keynesian models and offers some generalized formulations to deal with these neoclassical objections. General conclusions follow the treatment of each representative group and author."--Provided by publisher.

There is a controversy among economists that has raged in the pages of professional journals. The debate concerns capital theory and distribution theory, as well as interpretation of models of long-run economic growth. This book is an attempt to integrate developments in capital theory and show their implications for models of long-run economic growth in mature capitalistic countries.

Contemporary capitalism is characterized by periods of vigorous economic growth and periods of slow or even negative growth. This book draws on the classical political economy approach to consider both economic cycles and economic growth and draw conclusions about the inherent instability of the modern economy. The book shows that the work of the old classical economists (Smith and Ricardo) and Marx is theoretically sound and capable of providing answers to both growth and cycles. It also demonstrates the potential and natural integration of growth and cycles in a single model. The microeconomic foundation of this model is the labor theory of value, which continues with the General Law of Capital Accumulation, the Law of the Falling Rate of Profit, and the movement of the Industrial Reserve Army of Labour. Finally, a dynamic model of growth-cum-cycles is constructed consisting of the evolution and interaction of five key variables, namely, the rate of profit, the propensity to invest in fixed capital, technological change, the reserve army of labour, and the rate of capital devaluation. The analysis demonstrates that economic growth and cycles are not disconnected from each other, as they have been treated in the literature, but rather interdependent aspects of the same evolutionary process of a capitalist economy. This book will interest readers in the history of economic thought, economic growth and development, macroeconomics, and political economy.

From the mid-1980s, investors in the US increasingly directed capital towards the financial sector at the expense of non-financial sectors, lured by the perception of higher profits. This flow of capital inflated asset prices, creating the stock market and housing bubbles which burst when the imbalance between stagnant incomes and rising debts triggered the banking meltdown. Profitability and the Great Recession analyses these trends in profitability and capital accumulation, which the authors identify as the root cause of the financial crisis, in the context of the US and other major OECD countries. Drawing on insights from Adam Smith, David Ricardo, John Stuart Mill and Karl Marx, the authors interpret the relationship between capital accumulation and profitability trends through the conceptual lens of classical political economy. The book provides extensive empirical evidence of declining rates of US non-financial corporate accumulations from the mid-1960s and profitability trends in that sector falling from post-war highs. In contrast to this, it is shown that there was a vigorous rise of profitability in the financial sector from a 1982 trough to the early part of the twenty-first century, which led to the bloating of that sector. The authors conclude that the long-term falling accumulation trend in the non-financial corporate sector, highlighted by the bankruptcy of major automobile corporations, stands out as the underlying force that transformed the financial crisis into a fully-fledged Great Recession. This book will be of interest to students and researchers in the areas of economics, political economy, business and finance.

This volume seeks to go beyond the microeconomic view of wages as a cost having negative consequences on a given firm, to consider the positive macroeconomic dynamics associated with wages as a major component of aggregate demand.