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This book treats the mechanisms of growth and cycles in capitalist
economies in a unified manner, incorporating a highly original
macro-dynamic theory based on Marxian micro-foundations and
historical perspectives. That theory was developed about 50 years
ago by Nobuo Okishio (1927-2003) and included the ideas of Keynes
and Harrod. In mainstream economics, it used to be standard to
analyse long-term economic growth and business cycles in different
frameworks. That approach has been changing recently, but it still
tends to be common to discuss them separately. At the outbreak of
the global financial crisis of 2007-2008 and the prolonged
stagnation that followed, there was strong criticism among
policymakers and businesspeople that mainstream macroeconomics
failed to provide convincing explanations and effective policy
recommendations. This book offers an alternative perspective that
responds to those criticisms. All these macroeconomic difficulties
call for new wisdom beyond the limited neoclassical framework. The
sharp, wise thoughts of Okishio will add new tools for young
researchers worldwide to meet the challenges of the current
resource misallocation, the Great Recession and the Lost Decades
problems. Okishio proposes a historical perspective for the
capitalist system, first. He argues that production relations are
conditioned by productive force. The former should evolve as the
latter improves, and the latter should evolve in order for human
society to survive. While reproduction is indispensable for the
economy to continue in any production relations, it takes a
specific form in capitalist economy. He next shows that the
existence of profit requires the exploitation of the labourer. This
is called the Fundamental Marxian Theorem. He also shows a
trade-off relationship between the real wage rate and the profit
rate. In his theory, the real wage rate is determined to clear
commodity markets in the short run as in the Keynesian theory,
while Marx believed that the real wage rate is given at subsistence
level or is influenced by the labour market. Okishio attributes the
origin of the business cycle to labourers' under-consumption and
private capitalists' dispersive decision of accumulation. The
former is caused by exploitation, and the latter is based on the
capitalist class's private ownership of the means of production.
Both are derived from the nature of the capitalist economy. He
argues lastly that, in the long term, the development of productive
force through the business cycle will transform the production
relation into a new economic system.
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