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Technical Change, Effective Demand and Employment

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  • Sergio Cesaratto
  • Franklin Serrano
  • Antonella Stirati

Abstract

Ricardo and Marx saw technological change as a possible cause of long-period unemployment. Neoclassical and Schumpeterian economists regard technological unem ployment as a transitory phenomenon. This paper argues that the capital critique (i) demolishes the neoclassical claim that market mechanisms will restore full employment whenever workers are displaced by technical change, and (ii) rehabilitates the old Ricardian argument that automatic compensation factors are generally absent. The neo-Schumpeterian notion of autonomous investment is also rejected, in favour of the view that, in the long period, all investment is induced. By extending Keynes's theory of effective demand to the long period through a model based on the supermultiplier, this paper suggests that the ultimate engines of growth are located in the autonomous components of effective demand--exports, government spending and autonomous con sumption. Technical change plays a role in the accumulation process through its effects on consumption patterns and the material input requirements. However, the impact of technical change is now seen to depend upon circumstances such as income distribution, the availability of bank liquidity and exchange rate policy.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Review of Political Economy.

Volume (Year): 15 (2003)
Issue (Month): 1 ()
Pages: 33-52

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Handle: RePEc:taf:revpoe:v:15:y:2003:i:1:p:33-52

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  1. Garegnani, P, 1970. "Heterogeneous Capital, the Production Function and the Theory of Distribution," Review of Economic Studies, Wiley Blackwell, vol. 37(3), pages 407-36, July.
  2. Anyadike-Danes, Michael & Godley, Wynne, 1989. "Real Wages and Employment: A Sceptical View of Some Recent Empirical Work," The Manchester School of Economic & Social Studies, University of Manchester, vol. 57(2), pages 172-87, June.
  3. Kaldor, Nicholas, 1971. "Conflicts in National Economic Objectives," Economic Journal, Royal Economic Society, vol. 81(321), pages 1-16, March.
  4. Cesaratto, Sergio, 1999. "Savings and Economic Growth in Neoclassical Theory," Cambridge Journal of Economics, Oxford University Press, vol. 23(6), pages 771-93, November.
  5. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-39, May.
  6. Pierangelo Garegnani & Antonella Palumbo, 1997. "Accomulation of capital," Departmental Working Papers of Economics - University 'Roma Tre' 0002, Department of Economics - University Roma Tre.
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Cited by:
  1. Tommaso Ciarli & André Lorentz & Maria Savona & Marco Valente, 2008. "The Effect of Consumption and Production Structure on Growth and Distribution. A Micro to Macro Model," Papers on Economics and Evolution 2008-13, Philipps University Marburg, Department of Geography.
  2. White, Graham, 2005. "Growth, Autonomous Demand and a Joint-Product Treatment of Fixed Capit al," Working Papers 8, University of Sydney, School of Economics.
  3. Tommaso Ciarli & Andre' Lorentz & Maria Savona & Marco Valente, 2012. "The role of technology, organisation, and demand in growth and income distribution," LEM Papers Series 2012/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  4. Sergio Cesaratto, 2009. "Endogenous growth theory twenty years on: a critical assessment," Department of Economics University of Siena 559, Department of Economics, University of Siena.
  5. Tony Aspromourgos, 2004. "Sraffian research programmes and unorthodox economics," Review of Political Economy, Taylor & Francis Journals, vol. 16(2), pages 179-206.
  6. White, Graham, 2008. "Demand-led growth with debt constraints," Working Papers 2008-01, University of Sydney, School of Economics.
  7. Sergio Cesaratto, 2012. "Neo-Kaleckian and Sraffian controversies on accumulation theory," Department of Economics University of Siena 650, Department of Economics, University of Siena.

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