Distribution and Steady-State Growth Revisited

Motivated by extensions to the neo-Goodwinian framework pioneered by Lance Taylor (and others), this paper investigates the two-way interaction between growth and distribution in a `Marx-Keynes-Schumpeter' (MKS) system in which the principle of effective demand, distributive conflict, and technical change are the (interacting) drivers of capitalist macrodynamics. A particular concern is with the effects of distribution on both the actual (demand-led) and natural rates of growth, and the reconciliation of these growth rates in a steady-state growth configuration consistent with a constant but indeterminate rate of employment. A baseline model is developed in which the medium-run equilibrium rate of growth is profit-led by hypothesis, but the steady-state long-term rate of growth is nevertheless wage-led. This baseline result is then shown to be generally robust to the introduction of different sources of technical change and both the demand- and supply-side effects of human capacities accumulation (whether through unpaid domestic production or expenditure on marketed services). The paper ends with suggestions for further research. These include extending the model to incorporate interactions between the economy and the environment in the manner suggested by Lance Taylor in his later work.