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on Post Keynesian Economics |
| By: | Sekimonyo, Jo M.; Casimir, Tara |
| Abstract: | This paper reexamines the foundations of business cycle theory by proposing that macroeconomic instability arises endogenously from the structural organization of production, distribution, and finance rather than from exogenous shocks or nominal frictions. It introduces the Distribution–Leverage Cycle (DLC), a framework in which cyclical dynamics emerge from the interaction between surplus distribution and leverage accumulation. The analysis identifies the distribution gap, defined as the divergence between productive capacity and effective demand, as a central mechanism driving instability. This gap emerges when surplus is concentrated among claimants with relatively low propensities to consume, including financial, entrepreneurial, and knowledge-based capital, particularly in the context of artificial intelligence. Credit expansion acts as a compensatory mechanism that sustains demand in the short run while increasing leverage and financial fragility over time. To provide a micro-foundation for surplus allocation, the paper builds on the concept of Socially Necessary Participation (SNP), defined as the institutional recognition of participation in value creation as the basis for claims on surplus. In this framework, macroeconomic instability reflects both demand imbalances and a structural decoupling between participation and entitlement to income. When participation is displaced, especially through technological change, credit substitutes for income and reinforces cyclical dynamics. Financial crises can be interpreted as the endogenous outcome of economies that rely on leverage to offset persistent distributional asymmetries. Building on Ethosism, a normative institutional framework, the paper extends this approach to examine how alignment between participation and surplus allocation can be restored through mechanisms such as profit-sharing, broadened ownership, and incentive-compatible distributive structures. By integrating distribution, leverage, and participation, the DLC framework moves beyond equilibrium-centered macroeconomic models and characterizes business cycles as structural and endogenous features of modern economies. |
| Keywords: | Business cycles; Distribution–Leverage Cycle (DLC); Socially Necessary Participation (SNP); Surplus distribution; Leverage dynamics; Artificial intelligence and capital; Endogenous instability; Financial fragility; Macroeconomic structuralism; Political economy |
| JEL: | B5 B52 D31 E12 E21 E32 E44 G01 O33 Q41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129008 |
| By: | Hendrik Theine (Institute for Comprehensive Analysis of the Economy, Johannes Kepler University Linz, Austria; Socio-Ecological Transformation Lab, Johannes Kepler University Linz, Austria; Darmstadt University of Applied Sciences, Germany); Steffen S. Bettin (Department of Socioeconomics, Vienna University of Economics and Business, Vienna, Austria) |
| Abstract: | Generative AI presents a puzzle for political economy. Leading firms accumulate structural advantages, lock in users, and shape technical standards at unprecedented speed, while unit economics remain negative and no clear path to profitability has emerged. This puzzle, we argue, can only be made sense of through an explicit analysis of corporate power, for which mainstream frameworks centred on market concentration alone are ill-equipped. Drawing on heterodox economics and cultural political economy (Boyer, 2022; Galbraith, 1984; Rothschild, 2002; Sum and Jessop, 2013), we develop a multi-dimensional heuristic distinguishing market power, as strategic control within markets, from the power to shape the wider cultural political economy. The rules of the game and the relationship to the state. We map market concentration across three layers of the genAI stack (GPU infrastructure, hyperscalers, foundation models), examine its distinctive cost structure, and analyse the emerging state–capital configuration. High costs and negative unit economics generate strong concentration, pointing toward an AI oligopoly. Politically and culturally, firms deploy the familiar Big Tech playbook (lobbying, academic capture, hegemony production), recruited around two narratives: AI nationalism and the AGI imaginary. Yet we identify a structural break from the platform era. Where platform firms sought to bypass the state, frontier AI firms actively court state procurement and patronage. What is emerging, we argue, is a state project in the making: a configuration in which states adopt the survival and dominance of specific AI firms as their own objectives. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:set:wpaper:6 |
| By: | Karambakhsh, Pooya |
| Abstract: | This article examines Australia’s rate of profit and its interplay with other macroeconomic indicators from the early 1960s to the mid-2020s. Compared with previous Marxian studies, it applies a broader range of approaches to calculating the rate of profit, assesses more indicators, and explicitly employs the concept of productive labour in analysis. The calculated profit rates demonstrate an overall upward trend and indicate a cyclic pattern. The main driver of the long-term trend has been the rise of the rate of surplus value. The divergence from previous studies highlights the importance of temporal, social, and geographical specificities when it comes to profitability analysis. Over the past six decades, total national weekly worked hours have increased only because of the growth of the labour force, as the average weekly worked hours per worker has consistently declined. Over the second half of the twentieth century, the share of productive labour in total employment fell sharply but has remained almost constant over the past two decades. Despite a partial recovery in the 2000s, the share of productive capital in the national capital stock has also declined. The cost of using capital, represented by the share of depreciation in GDP, has increased consistently over the studied period. |
| Keywords: | Rate of Profit, Productive Labour, Rate of Surplus Value, Technological Change, Marxian Political Economy |
| JEL: | B51 E11 P1 |
| Date: | 2026–03–26 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128475 |
| By: | Jiyuan Lyu |
| Abstract: | The reduction of complex labour to simple labour is an unresolved difficulty in Marx's labour theory of value, and a key obstacle that has prevented the transformation problem from being settled definitively. This paper proposes a two-step solution framework. First, we prove that as long as the macroeconomy generates a physical surplus, the reduction coefficients that respect the floor of labour-power reproduction form a bounded ``value feasible region''; within this region the two macro aggregate equalities can hold simultaneously for a reasonable range of the profit rate. Second, we propose a linear mapping method that exploits the observable structure of nominal wages and the reproduction floor constraint to systematically construct the implicit reduction coefficients from the value feasible region. We show that this mapping is a homeomorphism between the price feasible region and the value feasible region, and that it preserves the boundary structure. An empirical calibration based on China's 2017 inter-provincial input--output table with 1272 sectors shows that the reduction coefficients obtained by the mapping method substantially outperform the homogeneous labour method and the wage-proxy method in matching the macro profit share. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.30890 |