Subjectivism and Economic Analysis: Essays in memory of Ludwig ...

MAURIZIO CASERTAWhat is left out in this regime, then, is the behaviour ofindividuals as labour suppliers. Such individuals are not supposed toreact to the endogenous rate of growth of employment or to theendogenous wage rate. No policy and hence no theory exist on thisaccount. A learning process can be assumed to be in place, however,to form such a theory. Only when the theory becomes available cana policy be developed. Again, this kind of equilibrium is necessarilyprovisional in nature.When, unlike the previous case, distribution is not allowed to beresidually determined, but is supposed to play a crucial role in thesystem, a different regime of growth is established. We then have asituation where the state of class conflict, reflected in a particularincome distribution, acts as a binding constraint on the capability ofthe system to grow over time. To see why this is the case supposethat the equation:W=W 0where W 0 represents the exogenously given real wage rate, is addedto the previous system. Since we already have five independentrelations that determine five unknowns, this additional relationwould clearly overdetermine the system. As a consequence, oneindependent relation has to be given up to make room for therelation reflecting the state of class conflict over the distribution ofincome. If the sacrificed relation is the investment function, wewould get what in the literature is known as the neo-Marxian case.Unlike the previous case, here distribution determinesaccumulation. Thus, accumulation is no longer determined by thedesire of firms to grow, but serves the interests of the class conflict.Again, as in the full-employment neoclassical case, animal spiritshave been suppressed; entrepreneurial investment propensities havenot been modelled. No policies are pursued, no theories are checkedin the light of the messages received from the economy and nature.In the cases considered so far the degree of capacity utilisationhas not figured among the variables that are determined residually.The assumption K/X=a 1has always ensured that the degree ofcapacity utilisation remains fixed at its normal level. A theory of thedegree of capacity utilisation is somehow included in the model.When that assumption is relaxed, a new regime of growth can beobtained where the degree of capacity utilisation turns into avariable to be determined endogenously. If this assumption isreplaced by another one fixing income distribution, we have a120