“The total movement of this disorder is its order”: Investment and utilization dynamics in long-run disequilibrium

Abstract

Recently economists have developed Kaleckian-Harrodian models, in which non-capacity-creating autonomous demand acts as a stabilizing force that drives longrun growth. But critics have questioned the plausibility of the stability conditions for these models. Motivated by this controversy, in this paper I formulate an alternative framework, in which stable equilibria need not exist, and solution trajectories can perpetually fluctuate in violent and aperiodic ways, but the long-run dynamics can be understood in terms of time averages. On this basis I argue that key findings in the Kaleckian-Harrodian literature can be sustained even if the stability conditions are rejected.