Endogenous money and the theory of long-period effective demand

The paper is a contribution to a monetary theory of demand-led growth with elements from Sraffian supermultiplier analysis, monetary circuit theory, Modern Monetary Theory and endogenous money theory. The Sraffian supermultiplier is indicated as the most promising heterodox approach to growth and instability in capitalism. This approach allows consideration of such non-capacity-creating autonomous components of aggregate demand as autonomous consumption, public spending and exports, as the ultimate sources of growth and instability in modern capitalism. Following Steindl, capital gains are included among these components. Autonomous demand and investment are typically fed by endogenous money creation. The paper articulates the relation between autonomous demand and investment on one hand, and endogenous finance on the other, in the light of Keynes’s distinction between initial and final finance.