Economic models and social economy.

chang chang at
Sat Jul 11 20:49:54 PDT 1998

Dear Rakesh Bhandari, My English is not good. Many words in your message can not be found in my English dictionary. I can't catch what is the meaning of the economic model in your message. Could you give me a brief explanation of your economic model? Thank you very much.

Sincerely, Ju-chang He

> chang wrote:
> Dear Rakesh Bhandari,
> These words can not be found in my English dictionary. Could you tell me
> what is the meaning of these words?
> "Fave correpsond infinte acause structual underconsumptionists
> fincreasing stree proces maintainence seak indefinetely
> oversaturated "

Rakesh Bhandari wrote:
> Yes, sorry for the typographical errors. The book from which I quoted has
> been proofread well, so perhaps you should get it:
> Good luck on your economic model
> Rakesh Bhandari

Rakesh Bhandari wrote:
> Charles, am I wrong to sense that this model is roughly based on the ideas
> of Luigi Pasinetti which I quote here because it speaks to this economic
> model, the concern with leisure time, and my fave topic the theory of
> economic crisis.
> " an economic system in which productivity is increasing, consumers'
> preferences evolve, and the problem of making the increments to
> production correpsond to the evolution of consumers' preferences is by no
> means a trivial one. As already discussed at length, the consumption
> decisions concerning increments to expenditure are necessarily different
> from the previous ones as they concern preferences that they have to be
> learnt, i.e., found out for the first time. But the amount that can be
> learn within each period of time is not infinte; which means that although
> the process of learning itself can go on ad infinitum, the rate at which
> it can go on is limited. And when it happens--as is periodically bound to
> happen--that a sudden jump is required in the rate of consumers' learning,
> in order to keep up with technological discoveries, there is no reason to
> expect an immediate response. In these cases, investment decisions will
> tend to be postponed, which means that the total amount of actual
> investment will drop and acause total effective demand to fall short of
> the technical possibilities of production. The economical system will
> indeed remain unable to take advantage of all its technologically possible
> production, until it succeeds in finding an appropriate structual
> re-distribution of demand, employment and productive capacity...What the
> underconsumptionists did not realize is that the difficulty o fincreasing
> total effective demand is one of finding out, and achieving at sufficient
> speed, its appropriate structural composition and not one of reaching any
> absolute level. It seems important to stree that this proposition does not
> depend on the belief that human possibilities and imagination for new
> types of consumption can increase indefinitely. Even if the absolute
> amount of consumption had a limit, the alternative would always be open of
> devoting the continually increasing productivity to reducing labour time
> (and increasing leisure time), instead of production. The point is that
> the proces is not one to be expected automatically. The learning process
> it entails can by no means be taken for granted, although there is no
> inherent impossibility in human nature of carrying it on. DIfficulties do
> arise because periodic accelerations of this process of learning are
> required. More specifically, the maintainence of full employment requires
> a speeding up periodically in the rate at which technical improvements
> are, so to seak, to be digested. But of course there is no impossibility
> in the process itself. In other words, with an appropriate structural
> dynamics, an economic system can indeed grow indefinitely, though through
> periodical difficulties. In the ed, it can indeed take advantage of
> whatever increase in potential production technical improvements may
> bring along, with per capital consumption indefinetely increasing in
> quantity and quality, or with leisure time increasing." Structural Change
> and Economic Growth, p. 242
> Do crises tend to break out in the consumption goods sectors due to
> oversaturated demand? I thought the consumer goods industries tend to show
> the least cyclical variation. If there is overproduction of these
> consumer goods is that because there is really no need or no demand for
> them?
> best, rakesh

-- Ju-chang He SHENZHEN, P.R. CHINA E-mail address: <chang at> Welcome to visit My Home Page at <>

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