Abstract for: Socially Efficient Stabilization of Industrial Cycles via Organic Profit-sharing and its Crucial Tension

Two related “neoclassical” models of economic growth with economies of scale are reconsidered. The main variables are relative wage and employment ratio, whereas rate of capital accumulation (a ratio of investment to profit) is constant. A third extended and partially refined Goodwinian model Z-1 reflects destabilizing cooperation and stabilizing competition of investors. In a system of three ODEs, rate of capital accumulation becomes the new main variable. Oscillations imitating industrial cycles are endogenous. Crisis is a manifestation of relative and absolute over-accumulation of capital. Limit cycle with a period of about 6 years results from supercritical Andronov – Hopf bifurcation. The reshaped non-linear three-dimensional model is named S-1. It implements proportional and derivative control over surplus value maintaining organic profit-sharing. The growth rate of surplus value depends on a gap between the indicated and current employment ratios and on growth rate of employment ratio. Parametric policy optimization shortens a transient to a deliberately high target employment ratio without lowering stationary relative wage against Z-1. The proposed stabilization policy enhances stability and efficiency of capital accumulation; it also provides stronger gains for workers’ well-being. Still deep-rooted tendency to producing relative surplus value is revealed that challenges workers’ adherence to organic profit-sharing.