kohler on global effective demand

gernot kohler's "Globalization as a Shaikh-Pasinetti Dynamic" is now
available on the World-Systems Archive at
http://csf.colorado.edu/wsystems/archive/papers/kohler/dyn.htm

Synopsis:
Neoclassical economists tend to be of the opinion that technological
progress is the main engine of  worldwide economic growth.  In contrast,
this study claims that technological progress is only a necessary, not a
sufficient condition for global income and output growth; and that
economic growth is also dependent on the growth of effective demand,
both nationally and within the world-system. The article discusses
Shaikh's isomorphism, explains it as a result of a Pasinetti-type
growth process, and applies these notions at the world level. According
to that view, long-term economic growth is driven by two "engines of
growth", not just one -- namely, by  technological innovation (similar
to Schumpeter's notion) and by growth of effective demand (similar to
Keynesian notions). Inadequate growth of  global demand in an
environment of  global technological progress leads to economic growth
rates below potential, to income polarization, unemployment and
underemployment. In other words, whereas both supply constraints and
demand constraints may exist in the circular flow of the  world economy
(or a national economy), the growth potential of the present world as a
whole tends to be relatively more demand-constrained  than
supply-constrained. This is explained in terms of a Pasinetti dynamic.
The institutions of  world society must intervene in order to strengthen
the growth of global demand and improve its distribution, while
supporting technological innovation at the same time.