Harrodian Instability: A Marxian Perspective

The analysis of a sustained long-run equilibrium path of economic growth goes back to Marx’s discussion of the schemes of reproduction and capital accumulation. In this paper, we indicate that the Harrodian ‘knife edge’ instability is a feature of the inner nature of the capitalist mode of production that is explained by the evolution of the rate of surplus-value. A fundamental category in Marx’s analysis, which is not restricted to income distribution, but also has further repercussions, which we grapple with in our analysis. In particular, we argue that the unbalanced economic growth path is the macroeconomic manifestation of the consequent antithesis between productive forces and productive relations formed during the process of capital accumulation and confined by the evolution of the rate of surplus-value.