Disproportionality Crisis and Cyclical Growth-A Theoretical Note

A Theoretical Note Prabhat Patnaik A slowly growing agriculture imposes strict limits to the growth of industry; these limits in a capitalist economy make their presence felt through a process of discontinuous growth, ie, booms and slumps or cyclical movement A boom comes to an end when real wages have been pressed hard enough through a rise in food prices to reduce capacity utilisation; this comes about in the industrial necessaries sector by a fall in workers' consumption and in the other industrial sectors by a fall in investment especially of the government which is sensitive to the political implications of continuing' inflation in food prices; the sensitivity of private investment to capacity utilisation creates a downward spiral leading to a slump; finally the growing unemployment and the stowing down of inflation create conditions for a new spurt of industrial growth as government investment picks up once again and so eventually does private investment.