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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.

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  • 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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    Cited by:

    1. 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.
    2. 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.
    3. Eckhard Hein & Till van Treeck, 2010. "‘Financialisation’ in Post-Keynesian Models of Distribution and Growth: A Systematic Review," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 13, Edward Elgar Publishing.
    4. Stamegna, Marco, 2022. "A Kaleckian growth model of secular stagnation with induced innovation," MPRA Paper 113794, University Library of Munich, Germany.
    5. Clara Zanon Brenck, 2022. "Inequality, Debt Dynamics and the Incidence of Tax Rates: Addressing Macroeconomic Instability in a Post Keynesian Model," Working Papers 2212, New School for Social Research, Department of Economics.
    6. Sasaki, Hiroaki & Asada, Yasukuni, 2020. "Quantifying Goodwin Growth Cycles with Minimum Wage Shares," MPRA Paper 99926, University Library of Munich, Germany.
    7. 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.
    8. 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.
    9. 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.
    10. Parui, Pintu, 2021. "The Macroeconomic Effects of Financialization and the Wage Gap between Blue and White Collar Workers," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 416-443.
    11. Hein, Eckhard, 2011. "Distribution, 'financialisation' and the financial and economic crisis: Implications for post-crisis economic policies," IPE Working Papers 09/2011, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    12. 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.
    13. Kemp-Benedict, Eric, 2015. "A middle-manager model of wage and salary distribution within firms," MPRA Paper 64303, University Library of Munich, Germany.
    14. 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.
    15. Parui, Pintu, 2021. "Financialization and endogenous technological change: A post-Kaleckian perspective," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 221-244.
    16. 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.
    17. Ryunosuke Sonoda & Hiroaki Sasaki, 2019. "Differences in wage-determination systems between regular and non-regular employment in a Kaleckian model," Review of Keynesian Economics, Edward Elgar Publishing, vol. 7(3), pages 341-360, July.
    18. Eckhard Hein, 2009. "A (Post-) Keynesian perspective on "financialisation"," IMK Studies 01-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    19. Shogo Ogawa, 2019. "Dynamic analysis of a disequilibrium macroeconomic model with dual labor markets," Metroeconomica, Wiley Blackwell, vol. 70(3), pages 525-550, July.
    20. 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.
    21. 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).
    22. Eckhard Hein, 2012. "The Macroeconomics of Finance-Dominated Capitalism – and its Crisis," Books, Edward Elgar Publishing, number 14931.
    23. Prante, Franz J., 2019. "Income distribution and the multiplier: An exploration of nonlinear distribution effects in linear Kaleckian distribution and growth models," IPE Working Papers 121/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    24. Stamegna, Marco, 2022. "Wage inequality and induced innovation in a classical-Marxian growth model," MPRA Paper 113805, University Library of Munich, Germany.

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