Endogenous constraints on full productive capacity in a free-market economy

Nicolas D. Cole ()
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Nicolas D. Cole: Formerly King’s College London University (BA)

Evolutionary and Institutional Economics Review, 2023, vol. 20, issue 1, No 5, 121 pages

Abstract: Abstract The full employment interest rate implicit in classical economic theory is 4½%, deduced by including the rate of normal profit in a simple macroeconomic model. By not fixing the interest rate at this optimum, Central Banks endogenously maintain excess productive capacity, cause unemployment, and encourage the exploitation of Labour by Capital.

Keywords: Rate of normal profit; Classical theory; Full employment interest rate; Productive capacity; Central Banks (search for similar items in EconPapers)
JEL-codes: B0 E0 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40844-023-00254-y

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