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