Distribution and Growth after Keynes

Distribution and Growth after Keynes

A Post-Keynesian Guide

Eckhard Hein

In the first part of the book, Eckhard Hein presents a comprehensive overview of the main approaches towards distribution and growth including the contributions of Harrod and Domar, old and new neoclassical theories including the fundamental capital controversy critique, the post-Keynesian contributions of Kaldor, Pasinetti, Thirlwall and Robinson, and finally the approaches by Kalecki and Steindl. In the second part of the book neo- and post-Kaleckian models are gradually developed, introducing saving from wages, international trade, technological progress, interest and credit. Issues of ‘financialisation’ are also explored and empirical results related to the different models are presented.

Chapter 4: Post-Keynesian distribution and growth theories I: Kaldor, Pasinetti, Thirlwall and Robinson

Eckhard Hein

Subjects: economics and finance, history of economic thought, post-keynesian economics


As already argued in Chapter 2 of this book, since the very start the main purpose of post-Keynesian distribution and growth theory has been to extend Keynes’s principle of effective demand from the ‘short period’ or the ‘short run’, taking the capital stock as a constant and given, to the ‘long period’ or the ‘long run’, in which the capital stock is a variable. This means that aggregate demand determines not only the level of output and employment in the short period but also the growth of productive capacities and their utilization in the long period. Investment is the driving force of the system, and saving adjusts to investment not only in the short period but also in the long period. Whereas in short-period considerations the focus is on the income effects of investment, abstracting from the effects of investment on the capital stock and on productive capacities, in the long period these effects have to be taken into account. In this chapter we deal in particular with the founding mother and fathers of Cambridge, UK post-Keynesian distribution and growth theory. In Section 4.2 we start with the contributions of Nicholas Kaldor, adding some extensions by Luigi L. Pasinetti, on the one hand, and Anthony P. Thirlwall, on the other hand. Then, in Section 4.3, we treat Joan Robinson’s contributions.

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