Preliminary communication

Instability of capitalism inflation, unemployment, and business cycles

Adil H. Mouhammed

Abstract

This paper investigates the instability of capitalism defined as a condition under which capitalism creates inflation, unemployment, and business cycles. Great economists such as Marx, Veblen, and Schumpeter have examined this problem, concluding that capitalist instability will transform capitalism. A model is developed in this paper to investigate instability, and the finding is that the basic cause
behind instability is the conflict on income share: wages and profits. The fluctuations in the share of profits create inflation, unemployment, and business cycles. This generalization has been verified by using data from the American economy for the 1970s, 1980s, and the 1990s. Over this period, the paper concludes, when
the profit share is high, moderate inflation and employment were generated, and when profit share is low, inflation, unemployment, and business cycles have appeared.

Keywords

Business cycle; instability of capitalism; conflict on income share; profit inflation; unemployment; planning and competitive sectors; power; innovation; surplus value

Hrčak ID:

6891

URI

https://hrcak.srce.hr/6891

Publication date:

22.12.2006.

Article data in other languages: croatian

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