Equilibrium Growth (I) Cassel–Von Neumann Ray

Michio Morishima

in Theory of Economic Growth

Published in print December 1969 | ISBN: 9780198281641
Published online November 2003 | e-ISBN: 9780191596667 | DOI:
 Equilibrium Growth (I) Cassel–Von Neumann Ray

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In the previous chapter, the state of balanced growth of all outputs with continued full employment of labour was described in terms of six sets of inequalities. Such a state of affairs has been called a Silvery Equilibrium, which is reduced to the familiar Golden Equilibrium in the particular case where no worker saves and no capitalist consumes at all. In this chapter, the existence is established of a balanced growth at the natural rate in one step but not two. The impossibility of perverse cases is demonstrated if various assumptions put forward in Ch. 6 are made. The new argument uses game theory as before. The different sections of the chapter look at the game‐theoretic approach, the preliminary production‐pricing game, the existence and uniqueness of the ‘fair’ wage rate, equivalence between the ‘game‐theoretic’ and ‘balanced growth’ solutions, groping for the equilibrium game, the equilibrium game and the Silvery Equilibrium, and characterization of the fair wage rate as the warranted and the greatest technically possible real wage rate.

Keywords: balanced growth; G. Cassel; consumption; economic growth; employment; equilibrium growth; fair wage rate; game theory; Golden Equilibrium; labour; J. von Neumann; output; prices; production; real wage rate; savings; Silvery Equilibrium; wage rate

Chapter.  9460 words. 

Subjects: Economic Development and Growth

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