Comparative Growth Dynamics in a Discrete-time Marxian Circuit of Capital Model

In this paper, a discrete-time version of the Marxian circuit of capital model in Foley (1982, 1986a) is used to address two important theoretical issues of general interest to the heterodox economics tradition: profit-led versus wage-led growth, and the growth-reducing impact of non-production credit. First, it is demonstrated that both profit-led and wage-led growth regimes can be accommodated within the Marxian circuit of capital model. Second, it is demonstrated that, if the total flow of credit is large, the steady-state growth rate of a capitalist economy is negatively related to the share of consumption credit in total net credit.