Edited by Mark Setterfield
Chapter 16: Dissent-Driven Capitalism, Flexicurity Growth and Environmental Rehabilitation
* Peter Flaschel and Alfred Greiner 1 Sustainable social evolution through recurrent mass unemployment? This chapter starts from the hypothesis that Goodwin’s (1967) Classical Growth Cycle, modeling the Marxian Reserve Army Mechanism, does not represent a process of social reproduction that can be considered adequate and sustainable in a social and democratic society in the long run. The chapter derives from this background a basic macrodynamic framework in which cyclical growth and the reproduction of capitalism à la Goodwin is replaced by an employer of “first” resort, added to an economic reproduction process that is highly competitive and flexible and thus not of the type characteristic of former Eastern socialist economies. Instead, there is a high degree of capital and labor mobility (particularly with respect to “hiring” and “firing”), and thus flexibility, but fluctuations of employment in this first labor market (the private sector) are made socially acceptable through the security aspect of the flexicurity concept by a second labor market where all remaining workers (and even pensioners) find meaningful occupation. The resulting model of flexicurity capitalism with its detailed transfer payment schemes is in its essence comparable to the flexicurity models developed for the Nordic welfare states and Denmark in particular. We show that this economy exhibits a balanced growth path that is globally attracting. We add here that credit financed investment, and thus more flexible investment behavior, can be easily added without disturbing the prevailing situation of full capacity growth (see Flaschel et al., 2008 for details). In this chapter,...
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