The present chapter, which is supplemented in Chapter 18 by the study of a decline in the rate of growth of labor supply, contains the core of our investigations. Although it concentrates on a change in the rate of labor supply but disregards changes in the rate of return and in technology, it will set the pattern for describing, in slow motion and in quantitative precision, the sectoral contortions of the traverse that lead from an initial level of dynamic equilibrium to a higher level. Because in this chapter we try to reproduce the complexity of the actual phenomena, analysis of these contortions will prove a very intricate undertaking. To facilitate understanding, we shall carry it out in several stages of decreasing abstraction.

Following the procedure outlined in our literary presentation of the traverse, we shall build up in Sections II–IV a Primary Model that insulates the strategic sectoral shifts, as an initial growth stimulus sets them in motion, from other events occurring at the same time. The subsequent sections will integrate these events into a more complex Secondary Model. In Chapter 15, we shall-underpin our structure analysis by a complementary force analysis and also illustrate the findings symbolically expressed in the present chapter with a numerical example.

Assume a market system reduced to the two-strata organization defined earlier, moving in dynamic equilibrium with a growth rate a of labor supply. Assume further that the dynamic process of growth can be subdivided into finite periods.