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A neo-Kaleckian–Goodwin model of capitalist economic growth: monopoly power, managerial pay and labour market conflict

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  • Thomas I. Palley

Abstract

This paper presents a neo-Kaleckian–Goodwin model of growth and distribution. The key innovation is the introduction of managerial pay. Kaleckian monopoly power determines the functional distribution of income and Goodwin labour bargaining power determines the wage-bill division. The model helps explain slower US growth over the past 30 years. For much of that period the functional distribution of income was relatively constant, but growth slowed because income inequality increased owing to a wage-bill shift from workers to managers. The wage-bill division effect explains why economies can display wage-led and profit-led characteristics. Economies can be profit-led regarding functional income distribution and wage-led regarding wage-bill distribution.

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  • Thomas I. Palley, 2014. "A neo-Kaleckian–Goodwin model of capitalist economic growth: monopoly power, managerial pay and labour market conflict," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(6), pages 1355-1372.
    • Handle: RePEc:oup:cambje:v:38:y:2014:i:6:p:1355-1372.
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    File URL: http://hdl.handle.net/10.1093/cje/bet001
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    Cited by:

    1. Gries, Thomas, 2019. "Income polarization and stagnation in a stochastic model of growth: When the demand side matters," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203576, Verein für Socialpolitik / German Economic Association.
    2. Fernando Rugitsky, 2016. "Growth, distribution, and sectoral heterogeneity: Reading the Kaleckians in Latin America," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 17(3), pages 265-278.
    3. Ashish Kumar Sedai, 2019. "Wages in Imperfect Markets: A Post-reforms Study of Indian Manufacturing," Journal of South Asian Development, , vol. 14(3), pages 257-280, December.
    4. Tonni, Lorenzo, 2021. "Personal income distribution and the endogeneity of the demand regime," MPRA Paper 108298, University Library of Munich, Germany.
    5. Thomas Gries, 2020. "A New Theory of Demand-Restricted Growth: The Basic Idea," The American Economist, Sage Publications, vol. 65(1), pages 11-27, March.
    6. Soon Ryoo, 2016. "Inequality of Income and Wealth in the Long Run: A Kaldorian Perspective," Metroeconomica, Wiley Blackwell, vol. 67(2), pages 429-457, May.
    7. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    8. Steven M Fazzari & Piero Ferri & Anna Maria Variato, 2020. "Demand-led growth and accommodating supply," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(3), pages 583-605.
    9. Arthur Brackmann Netto, 2018. "From Classes to Individuals: Standardizing a Link Between Personal and Functional Distribution," Working Papers, Department of Economics 2018_15, University of São Paulo (FEA-USP).
    10. Gries, Thomas, 2018. "A New Theory of Demand-Restricted Growth," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181515, Verein für Socialpolitik / German Economic Association.

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