Abstract
This paper develops a three-class predator-prey model for the behavior of the macro economy. The nexus of class relations between labor, industrial capitalists and financial capitalists captures important struggles over the distribution of income observed during the neoliberal era. Financial capitalists are added to the typical capital-labor interaction and are modelled as super-predators. In this role, financial capitalists are shown to be responsible for a finance capitalist-induced profit squeeze.
The unsustainable nature of neoliberal macro dynamics that resulted in the Great Recession is captured by a basic model. A key result is that unregulated finance capital results in a financial profit squeeze crash. An extended model that incorporates bounding mechanisms results in a continuum of undesirable outcomes from chaotic bursts to irregular limit cycles and to damped cycles often at depressed levels of economic activity.
The main conclusions are that increases in the relative and/or absolute power of financial capitalists lead to increased instability and in general unbalanced power relations among the three classes, depending on its particular nexus, results in various crisis generating mechanisms ranging from financial capitalist, reserve army or double profit squeezes to under-consumption problems.
