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The middle class in macroeconomics and growth theory: a three-class neo-Kaleckian–Goodwin model

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  • Thomas I. Palley

Abstract

This paper presents a three-class growth model with labour market conflict. The classes are workers, a middle-management middle class and a ‘top’ management capitalist class. The model introduces personal income distribution that supplements conventional concerns with functional income distribution. Endogenously generated changes in personal income distribution can generate endogenous shifts from profit-led to wage-led regimes and vice versa. A three-class economy generates richer patterns of class conflict because the middle class has shared interests and conflicts with both capitalists and workers. Changes that benefit the middle class do not necessarily increase growth or employment or benefit workers.

Suggested Citation

  • Thomas I. Palley, 2015. "The middle class in macroeconomics and growth theory: a three-class neo-Kaleckian–Goodwin model," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(1), pages 221-243.
    • Handle: RePEc:oup:cambje:v:39:y:2015:i:1:p:221-243.
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    File URL: http://hdl.handle.net/10.1093/cje/beu019
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    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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