Distribution Conflict, Inflation and Monetary Policy in a Credit Economy: Introduction to Part III

In the third part of the book we will introduce the inflationary consequences of distribution conflict and monetary policy reactions fighting inflation acceleration, omitted in the previous part, into the monetary Kaleckian distribution and growth models developed in chapter 13, the extended Rowthorn-Dutt-Amadeo model and the extended Bhaduri/Marglin model. In undertaking this analysis, we shall address and clarify two important problems in Kaleckian models: First, which is the role of an ‘inflation barrier’ or a ‘Non-Accelerating Inflation Rate of Unemployment’ (NAIRU) in these kind of models and how are these models related to modern mainstream macroeconomic New Consensus models which are built on the notion of a NAIRU determining long-run equilibrium unemployment? Secondly, how can we cope with the possibility of a deviation of the long-run equilibrium rate of capacity utilization from the ‘normal rate’ of utilization conceived by firms when planning new investment in capital stock? Can the main results of the Kaleckian models, the ‘paradox of thrift’ and at least the possibility of a ‘paradox of costs’, be sustained if this problem is addressed? And how are the results of the Kaleckian distribution and growth models related to orthodox Classical and Marxian results?