Capitalism as Creative, Chaotic Evolution by Structural Change
Capitalism as Creative, Chaotic Evolution by Structural Change
As in meteorology, prediction in economics is hampered by highly irregular, chaotic dynamics. A two‐sector model is employed to examine the complementary growth theories of Schumpeter and Keynes showing that innovation can lead to a decline in output. A brief history of the chaos theory follows noting that linear systems subject to shocks can appear chaotic. Finally, a further model demonstrates that innovation may stimulate a boom and subsequent collapse in output.
Keywords: Cantor set, chaos theory, chaotic attractor, chaotic dynamics, growth theory, innovation, Keynes, output, prediction, Schumpeter
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