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Chapter 4: The Post-Keynesian Theories of Growth and Distribution: A Survey
* Heinz D. Kurz and Neri Salvadori 1 Introduction The main idea underlying the post- or neo-Keynesian theories of growth and distribution is that of aggregate savings adjusting to an independently given volume of aggregate investment. The adjustment of savings to investment, rather than the other way round, is seen to be a central, if not the central, message of Keynes’s General Theory (see Keynes, CW, VII). As Keynes emphasized in the year following the publication of his book, “the initial novelty” of The General Theory “lies in my maintaining that it is not the rate of interest, but the level of income which ensures equality between saving and investment” (Keynes, 1937, p. 250). The idea that investment, governed by “animal spirits”, is independent of savings, was dubbed the “Keynesian hypothesis” by Nicholas Kaldor (1955–56, p. 95). The following argument will be largely based on this hypothesis. Since many of the ideas that play an important role in the field of research surveyed in this chapter can be traced back to contributions by Michal Kalecki, one could also speak of a post-Kaleckian theory. The post-Keynesian theories of growth and distribution are essentially an offspring of the principle of the multiplier, developed by Richard Kahn (1931) and then adopted by Keynes (CW, VII, Chapter 10). There are essentially two channels by means of which the adjustment of savings to investment can take place. As Kaldor pointed out, the principle of the multiplier can be “alternatively applied to a determination of the...
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