Distribution as a macroeconomic problem

Based on the views of Keynes, this chapter presents the argument that distribution is a macroeconomic question, because a distribution of purchasing power heavily skewed towards the owners of capital assets creates a problem of deficient demand. Although Keynes was relatively indifferent to questions of inequality and distribution per se, he shed light on the under-consumption phenomenon of capitalism, theorizing about the impact of such a phenomenon on the occurrences of crises. Therefore, Keynes’s theory still rings true today, since modern under-consumptionist theory starts with a big increase in inequality, rekindling an interest in distributional issues. Indeed, new under-consumptionism attaches great causal importance to the financialization that serves to redistribute income from productive activities to non-productive finance. Overall, in Keynesian terms, a situation in which the inducement to invest is falling, but income inequality is rising, is the worst possible basis for both stability and growth. This is the situation in which we find ourselves today.