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Cadrisme within a Post-Keynesian Model of Growth and Distribution

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  • Marc Lavoie

Abstract

The 1990s, especially in the United States, witnessed an unprecedented change in income distribution, with a large redistribution towards rentiers on the one hand, and towards the upper ranks of the managerial bureaucracy on the other hand, as became ever more obvious after the financial scandals affecting large corporations such as Enron and Worldcom. This has also been accompanied by large capital gains that benefited top-file managers as well as shareholders. Ordinary employees and workers, as a counterpart, have seen their real purchasing power stagnate. Despite all this, and in contrast to the predictions of the canonical Kaleckian growth model, many countries achieved respectable growth rates of capital and output. The purpose of the present paper is to explain this paradox and to provide a consistent post-Keynesian model of growth that would model the main features identified above, making a distinction between managerial labour, basically overhead labour, and workers, essentially direct labour - a distinction that was recommended, but never implemented by Kaldor. The model is based on target-return pricing procedures. We then study the implications of cadrisme, a managerial-friendly regime based on large pay packages for the managerial class.

Suggested Citation

  • Marc Lavoie, 2009. "Cadrisme within a Post-Keynesian Model of Growth and Distribution," Review of Political Economy, Taylor & Francis Journals, vol. 21(3), pages 369-391.
  • Handle: RePEc:taf:revpoe:v:21:y:2009:i:3:p:369-391
    DOI: 10.1080/09538250903073396
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    Citations

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    Cited by:

    1. 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.
    2. Kemp-Benedict, Eric, 2015. "New ways to slice the pie: Span of control and wage and salary distribution within firms," MPRA Paper 77072, University Library of Munich, Germany, revised 24 Feb 2017.
    3. Eckhard Hein, 2010. "Shareholder Value Orientation, Distribution And Growth-Short- And Medium-Run Effects In A Kaleckian Model," Metroeconomica, Wiley Blackwell, vol. 61(2), pages 302-332, May.
    4. Eckhard Hein & Till van Treeck, 2010. "‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 13 Edward Elgar Publishing.
    5. Eckhard Hein, 2009. "A (Post-) Keynesian perspective on "financialisation"," IMK Studies 01-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Amitava Krishna Dutt & Sébastien Charles & Dany Lang, 2015. "Employment Flexibility, Dual Labour Markets, Growth, and Distribution," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 771-807, November.
    7. Hein, Eckhard, 2011. "Distribution, ‘Financialisation’ and the Financial and Economic Crisis – Implications for Post-crisis Economic Policies," MPRA Paper 31180, University Library of Munich, Germany.
    8. Yun K. Kim & Mark Setterfield & Yuan Mei, 2014. "A theory of aggregate consumption," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(1), pages 31-49, April.
    9. Hein, Eckhard & Dodig, Nina, 2014. "Financialisation, distribution, growth and crises: Long-run tendencies," IPE Working Papers 35/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    10. Eckhard Hein & Till van Treeck, 2007. "'Financialisation' in Kaleckian/Post-Kaleckian models of distribution and growth," IMK Working Paper 07-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    11. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.
    12. Hiroaki Sasaki & Jun Matsuyama & Kazumitsu Sako, 2012. "The Macroeconomic Effects of the Wage Gap between Regular and Non-Regular Employment and Minimum Wages," Discussion papers e-12-003, Graduate School of Economics Project Center, Kyoto University.
    13. Sasaki, Hiroaki & Matsuyama, Jun & Sako, Kazumitsu, 2013. "The macroeconomic effects of the wage gap between regular and non-regular employment and of minimum wages," Structural Change and Economic Dynamics, Elsevier, vol. 26(C), pages 61-72.
    14. Ogawa, Shogo, 2018. "Dynamic Analysis of a Disequilibrium Macroeconomic Model with Dual Labor Markets," MPRA Paper 84107, University Library of Munich, Germany.
    15. Kemp-Benedict, Eric, 2015. "A middle-manager model of wage and salary distribution within firms," MPRA Paper 64303, University Library of Munich, Germany.
    16. Petra Duenhaupt, 2011. "The Impact of Financialization on Income Distribution in the USA and Germany: A Proposal for a New Adjusted Wage Share," IMK Working Paper 7-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    17. Thomas I. Palley, 2012. "A neo-Kaleckian - Goodwin model of capitalist economic growth: Monopoly power,managerial pay, labor market conflict, and endogenous technical progress," IMK Working Paper 105-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    18. Ryunosuke Sonoda & Hiroaki Sasaki, 2015. "Differences in Wage-Determination Systems between Regular and Non-Regular Employment in a Kaleckian Model," Discussion papers e-14-018, Graduate School of Economics Project Center, Kyoto University.

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