Abstract for:Stabilization of Industrial Cycles by Profit Sharing Policies Localized near Stationary States

This paper illustrates how dangerous linear thinking and linear control could be if overstretched. It takes a three-dimensional Goodwinian model of industrial cycles as experimental tool and demonstrates that effective stabilization of industrial cycles by standard profit sharing policies is feasible mostly near stationary states. Yet stabilization fails in bringing model economy to a higher target employment ratio distant from an initial stationary one. It has been found out that if an initial displacement from a stationary state with high target employment ratio is not minuscule accumulation rate and other variables behave erratically and leave a region of economic viability. The paper calls for organic profit sharing through proportional and derivative control over growth rate of surplus value connected with target employment ratio and with growth rate of this ratio by appropriate feedback loops. Workers’ competition for jobs will be much weaker at the same stationary state (with target employment ratio X = 0.95) under organic profit sharing than under mechanistic one. Only truly dialectic system dynamics approach is capable to find out badly needed robust non-linear control through designing interwoven feedback loops with appropriate gains.