Marx-Goodwin growth cycles in a two-sector economy

Abstract

Goodwin (1967) has proposed a growth cycle model which consists of two simultaneous nonlinear differential equations. The model may be interpreted as Volterra's prey-predator model stated in a Marxian form. "Marxian" means that the model mirrors the antagonistic relationship between capital and labour class struggle. And it seems to be helpful in understanding the dynamic contradictions of capitalism or "The General Law of Capitalist Accumulation"1. However, it was made clear that Goodwin's model suffers from some drawbacks. For example, it does not possess structural stability and the amplitude of the cycle entirely depends on the initial conditions2. Desai (1973), Medio (1980), Pohjola (1981) and Wolf stetter (1977) have explored what particular modifications of the Goodwin's assumptions result in a qualitatively different movement. The model has been examined under alternative assumptions (e. g. production technique, wage bargaining) in a one-sector economy. The purpose of this paper is to add new aspects. That is, the Marx-Goodwin model is to generalize to a two-sector economy3