1 A System Dynamics Design of the US Economy Exit from the Stern Crisis

This paper re-defines two hypothetical laws of capital accumulation by including endogenous profit investment share and establishing an explicit inverse relation between this share and capital-output ra-tio. Other main state variables are labour productivity, employment ratio and unit value of labour force. A comprehensive Phillips equation, governing real labour compensation, is an element of a hypotheti-cal law (HL-IR). A control law (CL-IR) determines a growth rate of surplus value by a gap between target and current employment ratios. A capital strive to higher profitability alters HL-IR and CL-IR. After the recent neo-conservative defeat there is, likely, no place for stabilising policy with the same or similar aggressiveness as in 2002–2007. Based on the US macroeconomic data mainly for 1969–2007, computer simulation runs for a later period (through 2060) exhibit how a postponed non-aggressive application of altered CL-IR in 2012 and afterwards could smooth out long waves of capital accumulation and shorten a period of fluctuations from 24–30 to 14–16 years in the restructured US economy compared to evolution based on HL-IR altered in 2008. The present stern crisis of the capital accumulation, probably worst after the World War II, will last until 2018–2022 when the pre-crisis maximum of net output is restored and 2023–2026 when the pre-crisis maximum of employment is reached again