A critique of Solow growth models from the perspective of the Marxian circuit of capital

The aggregate production function used in Solow growth models assumes the constancy in relative income distribution between owners of capital and labor input. The paper revisits this fundamental assumption implied by constant returns to scale property of the aggregate production function from the perspective of the Marxian circuit of capital model and attempts to identify the necessary condition for this equi-proportional growth in relative income shares. The analysis in this paper shows that the constancy and proportionality in the growth of relative income shares are not consistent with real-world patterns of capital accumulation process, in which the decision for capitalization of realized surplus value is independently made from the decision for technical composition of the productive capital stock. Though it is possible to formalize the necessary condition for the stable and equi-proportional growth rate in the two social-class incomes within the framework of the Marxian circuit of capital model, it is hardly realistic to assume that the capitalist economic system automatically attains this harmonious distributive outcome in the absence of the external balancing mechanism