Conflict and Effective Demand in Economic Growth

Description

All capitalist economies experience fluctuations in employment and economic activity around a long-term growth rate. How is this cyclical pattern of growth to be explained? Are the causes of fluctuations in output and employment to be found outside the system or are they intrinsic to the system? Will the long-term growth rate correspond to the growth of the labour force? It is the search for answers to these questions which motivates Peter Skott's analysis. The book develops a theory of dynamic interaction between three types of agent: firms, households and banks. Firms are profit-maximisers operating under conditions of imperfect competition and their production and investment decisions are influenced by monetary and financial factors as well as by the state of the labour market. Households hold financial assets, supply labour and have a direct influence on nominal wage rates. Banks set interest rates on bank loans and deposits. No assumptions are made about nominal price rigidities and the capital-output ratio is determined endogenously. Using a framework of analysis which is rigorous and which does not exclude traditional neoclassical mechanisms, this book demonstrates the validity of important Marxian and Keynesian insights into the growth process.

"Peter Skott's book is an important, innovative, and extremely satisfying contribution to this literature and to the theory of economic growth and business cycles in general...While the author consciously places his contributions in the heterodox literature, the book is an equally valuable contribution to mainstream macroeconomic theory...In sum, this is a book which can be strongly recommended to all economists--neoclassical and non-neoclassical alike--interested in growth and fluctuations in capitalist economies. Moreover, graduate students with formal training in macroeconomics and political economy courses will find this book of enormous value. Not only is there much in this book to learn from; as a bonus, its crisp, clear style also makes it exceptionally pleasurable reading." The Economic Journal "One exciting development during the last decade has been the attempt to synthesize Marxian and Keynesian macroeconomics...In this short, dense, valuable book, Peter Skott contributes thoughtful discussions of many aspects of this literature, as well as a fully specified model...While the task of applying these new hybrid models to historical events remains in its infancy, Peter Skott has measurably advanced our understanding of their theoretical properties." Thomas R. Michl, Eastern Economic Journal