"The total movement of this disorder is its order": Investment and utilization dynamics in long‐run disequilibrium. (12th January 2022)

• Record Type: Journal Article
• Authors: Thompson, Stephen
• Is Part Of: Metroeconomica. Volume 73:Number 2(2022)
• Page Start: 638
• Page End: 682
• Publication Date: 2022-01-12
• Subjects: autonomous demand -- chaos -- Harrodian instability -- long‐run average -- non‐capacity‐creating -- Rosa Luxemburg -- supermultiplier; Economics -- Periodicals; 330
• DOI: 10.1111/meca.12377
• Languages: English
• ISSNs: 0026-1386

Abstract

Abstract: Recently economists have developed Kaleckian‐Harrodian models, in which non‐capacity‐creating autonomous demand acts as a stabilizing force that drives long‐run growth. But critics have questioned the plausibility of the stability conditions for these models. Motivated by this controversy, in this paper I formulate an alternative framework, in which stable equilibria need not exist, and solution trajectories can perpetually fluctuate in violent and aperiodic ways, but the long‐run dynamics can be understood in terms of time averages. On this basis I argue that key findings in the Kaleckian‐Harrodian literature can be sustained even if the stability conditions are rejected.