Abstraction and closure: a methodological discussion of distribution-led growth

This paper presents a methodological discussion of two recent ‘endogeneity critiques’ of the Kaleckian model and the concept of distribution-led growth. From a neo-Keynesian perspective, it is criticized because it treats distribution as quasi-exogenous, while in Skott (2017. Weaknesses of ‘wage-Led growth.’ Review of Keynesian Economics, 5(3), 336–359), distribution is viewed as endogenously determined by a series of (exogenous) institutional factors and social norms, and therefore one should focus on these instead of the functional distribution of income per se. The paper discusses how abstraction is used in science and economics, and uses the criteria proposed by Lawson (1989. Abstraction, tendencies and stylised facts: A realist approach to economic analysis. Cambridge Journal of Economics, 13(1), 59–78) and Mäki (1992. On the method of isolation in economics. Poznan Studies in the Philosophy of the Sciences and the Humanities, 26, 19–54; 1994. Isolation, idealization and truth in economics. Poznan Studies in the Philosophy of the Sciences and the Humanities, 38, 147–168) for what constitutes an appropriate abstraction. Based on this discussion, it concludes that the criticisms are weak, although some of the issues raised by Skott provide some interesting directions for future work within the Kaleckian framework.