"In a work obviously targeted, like Shaikh’s, at graduate students in economics, the authors approach their objective via a critique of orthodox growth theory and two types of growth models. One, the post-Keynesian Harrod-Domar model, is described as a knife-edge model, as any deviation from a balanced growth path sets off an inexorable process of either inflationary expansion (if investment is above the ‘warranted rate’) or deflationary contraction (if below) – unless states intervene to stabilize the system. The ‘neoclassical’ Solow model, constructed in response to the unrealistic instability of the post-Keynesian model, depended on the ludicrously unrealistic assumptions of perfect competition. It was later combined with the problematic concept of ‘total factor productivity’, and suffered from the notorious ‘aggregation problem’ of measuring the total stock of capital.

After concisely explaining the deficiencies of both models, the authors turn to classical political economy, including Marx, for an alternative. In summary, they counterpose Shaikh’s concept of ‘real competition’ to both neoclassical perfect competition theory and theories of monopoly capital. They explain how aggregation problems can be overcome using a labour theory of value, with estimates of socially-necessary labor-time for the elements of constant capital."

https://marxandphilosophy.org.uk/reviews/22045_economic-growth-and-long-cycles-a-classical-political-economy-approach-by-nikolaos-chatzarakis-persefoni-tsaliki-and-lefteris-tsoulfides-reviewed-by-peter-green/

#Economics #PoliticalEconomy #EconomicGrowth #Neoclassicism #PostKeynesianism #Marx #Marxism #LongCycles