Increasing Returns and Stability

19 Pages Posted: 3 Sep 2011 Last revised: 20 May 2015

See all articles by Egmont Kakarot-Handtke

Egmont Kakarot-Handtke

University of Stuttgart - Institute of Economics and Law

Date Written: September 2, 2011


Increasing returns are an incontrovertible fact since Adam Smith hailed them as the very originators of wealth, yet they play havoc with general equilibrium. They fit, in marked contrast, nicely into the structural axiomatic framework. This indicates that it is worthwhile to replace the behavioral axioms of standard economics by objective structural axioms. These are in the present paper applied to the question of how increasing returns affect the systemic interrelations in the pure consumption economy. To invite a reality check the logical implications of the structural employment equation are set in relation to three well-known statistical relationships.

Keywords: new framework of concepts, structure-centric, axiom set, employment, productivity, credit, Verdoorn’s law, Phillips curve, Okun’s law, empirical cross-check

JEL Classification: D24, E23, E24

Suggested Citation

Kakarot-Handtke, Egmont, Increasing Returns and Stability (September 2, 2011). Available at SSRN: or

Egmont Kakarot-Handtke (Contact Author)

University of Stuttgart - Institute of Economics and Law ( email )

Keplerstrasse 17

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