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Macroeconomics with Conflict and Income Distribution

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  • Thomas Palley

Abstract

This paper presents a Post Keynesian model explaining the determination of employment and income distribution. A major innovation is the incorporation of the insider-outsider description of labor markets into a macro framework. This introduces power and conflict into the macro process. Microeconomic bargaining considerations are central to macroeconomic outcomes. Endogenous government deflicits can sustain profitability in an otherwise contractionary environment. Firm level profit maximization may not produce macroeconomic profit maximization because firms fail to internalize the effects of economic activity on profitability.

Suggested Citation

  • Thomas Palley, 1998. "Macroeconomics with Conflict and Income Distribution," Review of Political Economy, Taylor & Francis Journals, vol. 10(3), pages 329-342.
    • Handle: RePEc:taf:revpoe:v:10:y:1998:i:3:p:329-342
    DOI: 10.1080/09538259800000037
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    References listed on IDEAS

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    1. Dutt, Amitava Krishna, 1992. "Conflict inflation, distribution, cyclical accumulation and crises," European Journal of Political Economy, Elsevier, vol. 8(4), pages 579-597, December.
    2. Samuel Bowles & Herbert Gintis, 1990. "Contested Exchange: New Microfoundations for the Political Economy of Capitalism," Politics & Society, , vol. 18(2), pages 165-222, June.
    3. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    4. Gilbert L. Skillman, 1991. "Efficiency vs. Control: A Strategic Bargaining Analysis of Capitalist Production," Review of Radical Political Economics, Union for Radical Political Economics, vol. 23(1-2), pages 12-21, March.
    5. Herbert Gintis & Herbert Gintis, 1976. "The Nature of Labor Exchange and the Theory of Capitalist Production," Review of Radical Political Economics, Union for Radical Political Economics, vol. 8(2), pages 36-54, July.
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    Cited by:

    1. Mario Cassetti, 2006. "A note on the long-run behaviour of Kaleckian models," Review of Political Economy, Taylor & Francis Journals, vol. 18(4), pages 497-508.
    2. Mark Setterfield & Robert A. Blecker, 2022. "Structural change in the US Phillips curve, 1948-2021: the role of power and institutions," Working Papers 2201, New School for Social Research, Department of Economics.
    3. Thomas Palley, 2018. "Unemployment and growth," FMM Working Paper 21-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Thomas Palley, 2023. "Theorizing Varieties of Capitalism: economics and the fallacy that 'there is no alternative (TINA)'," Chapters, in: Thomas Palley & Esteban Pérez Caldentey & Matías Vernengo (ed.), Varieties of Capitalism, chapter 1, pages 1-38, Edward Elgar Publishing.
    5. Greg Hannsgen, 2014. "Fiscal Policy, Chartal Money, Mark-up Dynamics and Unemployment Insurance in a Model of Growth and Distribution," Metroeconomica, Wiley Blackwell, vol. 65(3), pages 487-523, July.
    6. Greg Hannsgen, 2012. "Fiscal Policy, Unemployment Insurance, and Financial Crises in a Model of Growth and Distribution," Economics Working Paper Archive wp_723, Levy Economics Institute.
    7. Thomas I. Palley, 2018. "Three globalizations, not two: rethinking the history and economics of trade and globalization," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 15(2), pages 174-192, September.
    8. Philipp Heimberger, 2021. "Do higher public debt levels reduce economic growth?," FMM Working Paper 74-2021, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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