Insights on profit sharing and job creation in bi-dimensional Goodwinian models

This chapter reveals how the deterministic nonlinear Lordon - Goodwin model (M-1) endogenously generates cycles of absolute and relative over-accumulation of capital parallel in important aspects to the Marx industrial cycle. This model hyperbolizes the acuteness of accumulation crises. By correcting functional relations for wage terms, first, and for capital accumulation rate, second, the present chapter transforms it into M-2 and M-3, respectively. Scenario 1 of sluggish stabilization at low employment is based on M-3. Scenario 2 is a futile attempt to achieve hastily a higher employment than in scenario 1 by policy optimization via mechanistic profit sharing. Original equations for profit sharing and bargained wage terms are revised in M-4 where a growth rate of profit depends positively on a gap between the indicated and current employment ratios. The latter policy rule does not cause over-shooting of profit and under-shooting of wage in satisfying scenario 3 unlike the ill-defined policy rule in scenario 2. An analysis of local stability of stationary states for these nonlinear models is extended by exposing transients to distant attractors. The system dynamics method has helped in designing organic profit sharing. These results will serve a socially efficient recovery from the current global crisis.