This paper studies a proposition. That is, can a natural economy operate in the violent structural changes caused by creative destruction? A fundamental awareness of problem is that a fundamental cause of economic crises is a deviation from natural economy. To analyse this proposition, we demonstrate that the macro-economic game in Akimoto (2016)* is continuous to the Pasinetti’s vertically integrated model at natural economy.
Akimoto (2016) demonstrated a natural economy could operate in the macro-economy and obtained an important result that a Nash equilibrium which brought about natural economy was played in the macro-economic game. The production sectors in Akimoto (2016) are constructed by two-sector-model and their technical coefficients are fixed. However, the real economy has the complicated production sectors which can be modelled by the input-output model. In addition, the structure of the input-output model is always violently destroyed by creative destruction. Therefore, the problem is whether a natural economy can operate in the creative destruction.
This paper tries to link the macro-economic game at natural economy with Pasinetti’s vertically integrated model which can analyse creative destruction and to demonstrate how natural economy can be operated in creative destruction.
*Akimoto, K. (2016), “Can a Natural Economy Operate in Macroeconomy? A Caution for Deviation from Natural Economy,”