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Distribution and Steady-State Growth Revisited

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  • Mark Setterfield

    (Department of Economics, New School For Social Research, USA)

Abstract

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.

Suggested Citation

  • Mark Setterfield, 2025. "Distribution and Steady-State Growth Revisited," Working Papers 2502, New School for Social Research, Department of Economics.
    • Handle: RePEc:new:wpaper:2502
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Wage-led growth; profit-led growth; natural rate of growth; technical change; human capacities;
    All these keywords.

    JEL classification:

    • B54 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Feminist Economics
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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