Abstract
ABSTRACT This paper aims to present the recent debate about Sraffian Supermultiplier Model (SSM), that gained notoriety in the academic environment after the controversy between Peter Skott (2016) and Marc Lavoie (2016, 2017) on the specification of the investment function of the Neo-Kaleckian models of income growth and distribution. Lavoie used the SSM model as an attempt to rescue the Neo-Kaleckians models of the devastating criticism made by Peter Skott (2010) regarding the specification of the investment function. In this context, we will not only argue that this rescue operation was not successful, but we will also question the capacity of SSM models to serve as an “alternative closure” for heterodox models of income growth and distribution, due to three fundamental shortcomings of the SSM approach, which are: (i) the hypothesis that the normal degree of utilization of the productive capacity is an exogenous variable, (ii) that investment in capacity expansion is totally endogenous; and (iii) the applicability of this approach out of a closed economy framework. We will also argue that the Kaldorian models of growth, which are one of the theoretical foundations of the so-called Developmentalist Macroeconomics, and stock-flow consistent models (SFC) seem to be much more promising alternatives for the development of heterodox theories of growth and income distribution.
Highlights
This paper aims to present the recent debate about the Sraffian Supermultiplier Model (SSM) Model, arguing that the acceptance of SSM approach as a closure for heterodox growth models puts in danger the own future of heterodox demand-led growth models due to three significant problems of the SSM approach, namely: (i)the assumption that normal degree of utilization of the productive capacity is an exogenous variable; (ii) that investment is a completely endogenous variable; and (iii) the issue of the applicability of these models for a small open economy with government activities
This paper aims to analyze the controversy of Peter Skott and Marc Lavoie, as well as the relation of the controversy with the Sraffian Supermultiplier (SSM)
This adjustment mechanism allows to consider the functional income distribution as an exogenous variable to the process of economic growth, as well as it is compatible with the long run equilibrium of the system, by ensuring the convergence of the effective degree of capacity utilization to the long run normal level
Summary
RESUMO: Este artigo tem como objetivo apresentar o recente debate sobre o Modelo Supermultiplicador Sraffian (SSM), que ganhou notoriedade no ambiente acadêmico após a polêmica entre Peter Skott (2016) e Marc Lavoie (2016, 2017) sobre a especificação da função de investimento dos novos modelos kaleckianos de crescimento e distribuição de renda. Lavoie usou o modelo SSM como uma tentativa de resgatar os modelos neokaleckianos das críticas devastadoras feitas por Peter Skott (2010) sobre a especificação da função de investimento. Também argumentaremos que os modelos kaldorianos de crescimento, que são um dos fundamentos teóricos da chamada Macroeconomia Desenvolvimentista, e modelos consistentes de fluxo de ações (SFC) parecem ser alternativas muito mais promissoras para o desenvolvimento de teorias heterodoxas de crescimento e distribuição de renda. PALAVRAS-CHAVE: Supermultiplicador sraffiano; modelos de crescimento heterodoxos; modelos consistentes de fluxo de estoque; macroeconomia desenvolvimentista.
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