Structural stability and Goodwin's growth cycle

The methodological prescription that a structurally unstable model should be rejected is critically analysed by considering Goodwin's predator–prey model [GPPM; Goodwin, R.M., 1967. A growth cycle. In: Feinstein, C.H. (Ed.), Socialism, Capitalism and Economic Growth. Cambridge University Press, Cambridge; Goodwin, R.M., 1972. A growth cycle. In: Hunt, E.K., Schwartz, J.G. (Eds.), A Critique of Economic Theory. Penguin, Harmondsworth]. It is argued that structural instability is not sufficient to reject GPPM and that structurally stable extensions yielding limit-cycles are not necessarily more appropriate formalisations of distributive conflict, from both a theoretical and an empirical viewpoint. An interpretation of GPPM and of the empirical evidence is proposed, which takes into account structural instability.