An assessment of the debates over income distribution and growth in the Neo-Kaleckian literature (original) (raw)
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Research Papers in Economics, 2018
A feature of Kaleckian models of distribution and growth that is often overlooked is that they describe a nonlinear relation between functional income distribution and demand and growth, because the size of the multiplier is affected by redistribution from wages to profits and vice versa. This paper addresses the nonlinearity of the standard post-Kaleckian model by examining its so-called IS-curves. It is found that changes in functional income distribution affect the "distribution-ledness" of an economy: redistribution towards wages reinforces the wage-led or profit-led character of an economy, while redistribution towards profits does the opposite. In addition, redistribution towards wages can turn an intermediate regime wage-led. A standard post-Kaleckian model with nonlinear investment behaviour is then presented. This model yields substantially different IS curves, such that an optimal functional income distribution can be derived. However, it is found that unlike in ...
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Cambridge Journal of Economics, 1995
This paper analyses the newer Kaleckian models of growth and distribution and the criticisms that have been addressed to them by neo-Marxian and neo-Ricardian authors. The models discussed assume overhead labour costs and target return pricing. The main issues are the form of the investment function and the notions of normal rates of profit and of normal rates of capacity utilisation. Despite the relevance of (and often the similarity between) the neo-Marxian and neo-Ricardian critiques, it is shown that the main features of the Kaleckian growth model may still be preserved.
Kalecki's Contribution to the Theory of Income Distribution
Distribution undetermined leaves income indeterminate, in a two class world with differing inclinations to save. Kalecki pays more attention to the degree of monopoly in his distribution theory. We highlight the importance of the Raw Material-Wage Cost (r-w) ratio. Kalecki, no doubt, was aware of the role of r-w ratio, but for some reason he glossed over it. Strangely all the criticisms levelled against his theory are beamed only towards the degreee of monopoly. R-W ratio has generally escaped evaluation by critics. In this thesis we have attempted to redress this neglect. Kalecki showed how the choice of price by capitalists influenced distribution. But capitalists also choose technology, which influences distribution. In this thesis we have tried to show the importance of technology in distribution. While examining the role of r-w ratio, an interesting by product hits the eye. The Keynesian multiplier is not always greater than one: it can be less than one also. Inherent in Kalecki's theory of profit is a strand of thought that pointedly leads to a 'profit multiplier', though Kalecki himself did not seize this very interesting result. We have coined this name to popularize the idea. Kalecki's startling conclusions stem from his assumption that workers do not save. This is a very strangling assumption. We relax this assumption and present his theory in the new light.
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This paper incorporates human capital accumulation through provision of universal public education by a balanced-budget government to a Neo-Kaleckian analytical framework of distribution and growth. Human capital accumulation positively impacts on workers’ productivity in output production and their bargaining power in wage negotiations. Differences in tax rates on wage and profit income have distributive implications for consumption and investment and so shape how effective demand varies with income distribution. In the long-run equilibrium, a rise in workers’ (capitalists’) bargaining power raises (lowers) the pre- and after-tax wage share, which raises (reduces) the rates of physical capital utilization, employment (which also measures the rate of human capital utilization) and output growth. Meanwhile, a rise in a uniform tax rate (which also denotes the share of tax spending in public education in output) lowers the long-run equilibrium values of the pre- and after-tax wa...
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This paper studies the effects of an (exogenous) increase of nominal wages on profits, output, and growth. Inspired by an article by Michał Kalecki (1991), who concentrated on the effects on total profits, the paper develops a model that explicitly considers the dynamics of demand, prices, profits, and investment. The outcomes of the initial wage rise are found to be path dependent and crucially affected by the firms' initial response to an increase in demand and a decrease in profit margins. The present model, which relates to other Post Keynesian/Kaleckian contributions, can offer an alternative to the mainstream approach to analyzing the effects of wage increases.
Income distribution, inflation and economic growth: A post-Keynesian approach
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The dispute between social classes for fractions of income was a central theme for economic analysis at least since David Ricardo and Karl Marx. Its importance as an interpretative key declined with the marginalist revolution of the late nineteenth century and did not regain its central role in the conventional economic approach ever since. However, its relevance was maintained among heterodox economists such as Michal Kalecki and reinvigorated by post-Keynesian thinking. This paper seeks to offer three analytical contributions to the post- Keynesian literature: (1) it presents an integrated framework on the relationship between distributive conflict, inflation and economic growth in an open economy with government; (2) it proposes the use of a general framework, based on liquid preference, assets own interest rates, currency hierarchy and productivity differentials to understand the determinants of the spot exchange rate; and (3) it suggests a distinct monetary rule to take into ac...
Kalecki's Theory of Income Determination: A Reconstruction and an Assessment
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Abstract: The paper considers the legacy for modern macroeconomics of Kalecki's theory of income determination. The latter is reconstructed in its analytical constituent parts referring in detail to the original sources. The critical appraisal of its historical relevance is made from the vantage point of the specific strain of contemporary New-Keynesian macroeconomics that is also based, after a long historical gap, on imperfectly competitive microeconomic foundations.
Kalecki's Theory of Income Determination and Modern Macroeconomics
SSRN Electronic Journal, 2000
Kalecki's model of income determination can be decomposed into two parts. In the first we have the theory of profits, where the latter, given a set of specific behavioural hypotheses, are functionally determined by current investment. As in the short-run the capital stock is exogenous, profits 3 In this section I draw some arguments from my "Introduzione" in Chilosi (1979), and from Chilosi (1988).
Growth Regimes in a Structural Economic Dynamic Approach to the Neo-Kaleckian Model
Brazilian Keynesian Review
Following the insight that profits influence investment, providing not only the motive for it but also the means,we consider the natural rate of profit as one of the determinants of investment in a disaggregated version of the Neo-Kaleckian model of economic growth.By adopting this approach, it is shown that the structural economic dynamic is conditioned not only to the patterns of evolving demand and diffusion of technological progress but also to the distributive features of the economy, which can give rise to particular regimes of economic growth. From this perspective, it is possible to conclude that a wage-led regime is the most probable outcome in a closed economy where the natural rate of profit is one of determinants of investment. Following the insight that profits influence investment, providing not only the motive for it but also the means,we consider the natural rate of profit as one of the determinants of investment in a disaggregated version of the Neo-Kaleckian model ...