Transcript (A): Per Worker - Kevin James Bowman, Ph.D.

Integral Neoclassical Economic Growth
Journal of Integral Theory and Practice Winter 2008 Issue
Kevin James Bowman
Assistant Professor
Augsburg College
[email protected]
The Four Quadrants
Ken Wilber’s Many Levels in Four Quadrants
Consciousness
Ex. Cognition
(Piaget)
Culture
Ex. Values
(Graves)
Behavior
Society
Ex. Techno-economic
(Lenski)
Capital Types
Accumulating CAPITAL PER WORKER over time requires
INVESTMENTS.
INDIVIDUAL
Human Capital
(contributing to worker skill or dexterity)
Consciousness Capital
Per Worker (d )
Behavioral Capital
Per Worker (e)
includes stages of
cognitive ability,
body/brain, behaviors
self-sense, etc.
INTERIOR
EXTERIOR
Cultural Capital
Per Worker (A):
Interior intersections of
workers within firms
or economy that together
allow for organized
workers and machines
Social Capital
Per Worker (k):
Not traditionally defined.
Rather, exterior,
collective capital…
The Supply Side
Per Worker Aggregate Production Function
y = a1/4d1/4e1/4k1/4
y = average product and average income,
Inputs:
human capital per worker (h = d + e)
d = consciousness
capital per worker
e = behavioral capital
per worker
a = cultural capital per
worker
k = social capital
per worker
Assumptions
1. Each input equally important
2. diminishing returns to each input setting in a
equivalent rates
3. equal cost to invest in 1 unit of any capital type.
4. constant returns to scale (exponents sum to 1),
at least as a benchmark.
5. Perfect competition (pc).
OPTIMAL HIRING CONDITION
=> Firms hire capital until the benefit = its cost
This is only true where:
d=e=a=k
Investment in : d where d>e=a=k
=> ↓ MPd and
↑MPe, MPa, and MPk
Payments to Labor = (d+e+a) = (3/4) of y
d = consciousness
capital per worker
e = health capital per
worker
a = cultural capital
per worker
Payments to Physical Capital = k = (1/4 y
k = social capital
per worker
The Demand Side Assume closed economy:
y=c+i
consumption (c) and investment (i)
includes private and public c and i.
The level of savings (sy):
sy = i = iA + iD + iK + iL
Optimal hiring condition
=> investment is divided among the four types of
investment.
Assume accumulation of y is sustainable when it deepens
needs satisfaction:
The Equilibrium Long Run Equilibrium Growth Path
• Each circle represents
total income
per time period.
• Each input earns 1/4.
• Inputs accumulate
proportionally
over time.
• Labor gets (3/4)y.
The Relation Between Needs Development and
Same-Level Broad Capital (Maslow)
the satisfaction of given needs in the present
brings about the desire to satisfy higher needs.
Investment in higher-order broad capital allows for greater
per worker income which can satisfies
higher-order needs in the future
Informs us of:
• broad capital deepening integrally & its relation to
• same level “needs-deepening”
• satisfies Knights critique
Stylized Facts of Economic Growth:
[Valdes, 1999, Mankiw, Romer, and Weil, 1992,
Bernanke and Gurkaynak, 2002]
1. The interest rate is constant.
2. The following grow at roughly equal and constant rates in
countries that develop:
i) Physical capital per worker (machine per worker),
ii) income per worker, and
iii) average wages
3. Physical Capital and Labor income shares are constant.
[(1)-(3) cited in].
i) The physical capital share of total income rages from
1/4 to 1/3, and
ii) the labor share of total income ranges from
2/3 to 3/4.
4. Human capital per worker also grows at equal rates
with those listed in (2) above.
Flatland Interpretation of the Economy versus
Broad and Deep Capitalism
This model provides:
1. economists with
a) a much broader/deeper understanding of
human, social, and cultural capital, and
b) and understanding of needs-deepening
c) the relationship between deep capital
and needs-deepening.
2. integral theorists & developmental psychologists
a. economic growth concepts
b. first dynamic, mathematical model
of post-disciplinary development.
Assignment
Use Wilber’s integral model and/or the integral
neoclassical economic growth model to answer
the following:
1. Explain why the following are problems.
a. Economists generally assume that we only
care about out own consumption of goods
and services.
b. For years, only investment into physical
capital was considered investment for the
future.
2. Describe the transition from a stage 4
traditional economy to a stage 4 industrial
economy. Describe the type of consciousness
capital (such as cognition), cultural capital
(like moral development) ,and social capital
(like our types of machinery).