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A Theory of Accumulation and Secular Stagnation: A Malthusian Approach to Understanding a Contemporary MalaiseSay’s Principle and the Possibility of Deficient Demand

A Theory of Accumulation and Secular Stagnation: A Malthusian Approach to Understanding a... [Malthus and Ricardo disagree over whether capitalists chronically consume less than they earn, which leads them to radically different conclusions about the nature of short term economic cycles and the possibility of secular stagnation. In this chapter the competing positions are placed into a general equilibrium framework, where it is shown that their respective conclusions hold up. If, as Ricardo contends, people are never satiated and ultimately spend all their income on final goods, it is plausible the economy hones in on full employment. If, as Malthus contends, capitalists spend only a small portion of their profits on final goods, the economy will not reach full employment, and output will fluctuate around a low growth trend that is determined by aggregate demand.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Theory of Accumulation and Secular Stagnation: A Malthusian Approach to Understanding a Contemporary MalaiseSay’s Principle and the Possibility of Deficient Demand

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Publisher
Palgrave Macmillan US
Copyright
© The Editor(s) (if applicable) and The Author(s) 2016
ISBN
978-1-349-71984-6
Pages
44 –65
DOI
10.1057/9781137562210_3
Publisher site
See Chapter on Publisher Site

Abstract

[Malthus and Ricardo disagree over whether capitalists chronically consume less than they earn, which leads them to radically different conclusions about the nature of short term economic cycles and the possibility of secular stagnation. In this chapter the competing positions are placed into a general equilibrium framework, where it is shown that their respective conclusions hold up. If, as Ricardo contends, people are never satiated and ultimately spend all their income on final goods, it is plausible the economy hones in on full employment. If, as Malthus contends, capitalists spend only a small portion of their profits on final goods, the economy will not reach full employment, and output will fluctuate around a low growth trend that is determined by aggregate demand.]

Published: Aug 5, 2016

Keywords: effective demand; general glut; Keynes and the classics; liquidity preference; Say’s Principle

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