Technical Change, Effective Demand and Employment

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.

Neo-Kaleckian and Sraffian Controversies on the Theory of Accumulation

“…21 (iii) FSP supporters as well as some supermultiplier economists (e.g., Dejuan, 2005) would, like Garegnani (1962), include in 'final demand' the 'autonomous investment' associated with technical change. Taking the opposite view, Cesaratto et al (2003) maintain that all gross investment is induced in the sense that, ceteris paribus, in the long run autonomous investment displaces a corresponding amount of induced investment (Serrano 1995, 81n); hence they do not assign to autonomous investment the Schumpeterian role of the principal driver of growth. 22 However, Cesaratto et al (2003, 44 -48) suggest a modification of the capital coefficient used in the supermultiplier, which allows the model to take account of the fact that in each period autonomous investment might be supplemental to induced investment and support effective demand.…”

Um modelo alternativo ao Novo Consenso para economia aberta: evidências para a economia brasileira no período 1999 – 2014

“…Supõe-se que a taxa de crescimento da capacidade produtiva se ajusta à taxa de crescimento do produto (Serrano, (1995), Cesaratto, et. al.…”

The Macroeconomic Implications of Consumption: State-of-Art and Prospects for the Heterodox Future Research

“…The supermultipler model can be used to divide two strands of Sraffians: those who, like Serrano, support the supermultiplier analysis with its normal capacity utilization rates (see BORTIS, 1997;CESARATTO;STIRATI, 2003;DEJUAN, 2014) and those who deny that the capacity utilization rates stay at their normal levels in the long run, either continuously or in average (See CICCONE, 2011;PARK, 2000;PALUMBO, 2013;TREZZINI, 2011).…”