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A computational approach to the Marxian circuit of capital model

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  • Hee-Young Shin

    (Wright State University)

Abstract

The paper reconstructs the Marxian circuit of capital model to identify distinctive dynamics of the growth and reproduction of the total capital stock. The growth of the financial, productive, and commercial capital stock and the reproduction of the capital-labor relation in this model is primarily induced by the change in both the three capital flows that link the three capital stocks and time-lags tied to the accumulation of each capital stock. The paper develops a representative Marxian circuit of capital model in a single sector and conducts a series of comparative dynamic analyses through simulations. The simulation result shows that there exist nonlinear interactions among the three capital stocks that generate divergent growth patterns of the total capital stock, and these dynamic interactions are induced by the change in both three capital flows and time-lags required for the reproduction of the system. The simulation approach to the model also sheds light into the nature and effect of financialization and the realization crisis on the growth pattern of the three capital stocks, in which delays in either mobilizing financial capital outlay or in sales of final products alters the composition of the total capital stock, thereby pointing to the potential presence of distinct and divergent “growth regimes” of capital accumulation.

Suggested Citation

  • Hee-Young Shin, 2025. "A computational approach to the Marxian circuit of capital model," Review of Evolutionary Political Economy, Springer, vol. 6(1), pages 43-70, April.
    • Handle: RePEc:spr:revepe:v:6:y:2025:i:1:d:10.1007_s43253-024-00142-0
    DOI: 10.1007/s43253-024-00142-0
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    References listed on IDEAS

    as
    1. Leila Davis & Shane McCormack, 2021. "Industrial stagnation and the financialization of nonfinancial corporations," Review of Evolutionary Political Economy, Springer, vol. 2(3), pages 459-491, December.
    2. Foley, Duncan K., 1982. "Realization and accumulation in a Marxian model of the circuit of capital," Journal of Economic Theory, Elsevier, vol. 28(2), pages 300-319, December.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Shaikh, Anwar, 1974. "Laws of Production and Laws of Algebra: The Humbug Production Function," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 115-120, February.
    5. Özlem Onaran & Engelbert Stockhammer & Lucas Grafl, 2011. "Financialisation, income distribution and aggregate demand in the USA," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(4), pages 637-661.
    6. Jesus Felipe & John McCombie, 2006. "The Tyranny of the Identity: Growth Accounting Revisited," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 283-299.
    7. Deepankar Basu, 2011. "Comparative Growth Dynamics in a Discrete-time Marxian Circuit of Capital Model," UMASS Amherst Economics Working Papers 2011-12, University of Massachusetts Amherst, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Circuit of capital; Time-lags; Financialization; Realization crisis; Differential equation systems; Simulation;
    All these keywords.

    JEL classification:

    • B16 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Quantitative and Mathematical
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General

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