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Long-term and Short-term dynamics of the Economic System according to Method of System Potential

Author

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  • Grigorii Pushnoi

    (International Bogdanov Institute)

Abstract

The new method of system dynamics, Method of System Potential (MSP), is applied for examination of long-term and short-term dynamics of Economic System. According to MSP two ways of long-term development of a system exist: (1) cyclical and (2) noncyclical dynamics of efficiency index of a system is possible. The cyclical type of development is based on periodical renewal of a system while the noncyclical way means that the system stagnate. Innovative processes are intensively stimulated in first-type systems (with cyclical dynamics) while the second-type systems needs the special pressing instance for promotion of innovations. The systems with cyclical dynamics tend to fix and sustain the separate existence of its constituents since the collapse into united wholeness leads to fall of 'potential' of a system (part ownership system). The constituents of systems with noncyclical dynamics tend to amalgamate into united wholeness since it leads to the increment of 'potential' of system. Hypothesis that these two qualitatively different ways of development correspond to West and East ways of evolution is discussed. MSP-cyclical dynamics of economic system gives some quantitative version of N.Kaldor' (1940) model. Interrelation between MSP business cycle model and N.Kaldor' model is discussed.

Suggested Citation

  • Grigorii Pushnoi, 2005. "Long-term and Short-term dynamics of the Economic System according to Method of System Potential," Development and Comp Systems 0505002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0505002
    Note: Type of Document - pdf; pages: 13. russian text; prepared for Third Conference on Evolutionary Economics, Bogdanov' Institute, Russia
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    More about this item

    Keywords

    Kaldor' model; cusp catastrophe; East and West; long-term dynamics; deep structure; economic system; business cycle; stagnation; investment and saving functions.;
    All these keywords.

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth

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