Placing Human Capacity at the Heart of Post-Keynesian Analysis: Reconsidering the Supply-Side Constraint and Lessons for Public Policy

This paper aims to contribute to post-Keynesian growth theory by placing the accumulation of human capacities – rather than economic growth – at the center of analysis. We develop a demand-led theoretical model comprising two interrelated spheres: market-paid production and the unpaid care economy. Care provision depends on both government investment in care-related activities and the allocation of labor time outside market production, and is essential for offsetting the depletion of human capacities. Our results identify a feminist reinterpretation of Harrod’s first problem, in which time can also be seen as a supply constraint. This is accompanied by a condition of time poverty, in which the time available after market work is insufficient to sustain the recovery of human capacities. This condition generates instability in labor supply dynamics under scenarios of accelerated economic growth, even though the demand-led growth rate may remain unaffected. We show that public policies toward care provisioning can mitigate time poverty and help prevent such instability. Moreover, we examine the cyclical dimension of care provision, the gendered nature of time poverty, and a concept of full employment that explicitly incorporates the expansion of human capacities. The paper concludes by outlining several avenues for future research to further extend the proposed framework.