IDEAS home Printed from https://ideas.repec.org/p/uma/periwp/wp323.html
   My bibliography  Save this paper

Demand, Production, and the Determinants of Distribution: A Caveat on “Wage-Led Growth”

Author

Listed:
  • Paulo dos Santos

Abstract

The incomes of workers and capitalists pertain to different moments of accumulation. Wages are shares of capital outlays sustaining production; profits are shares of commodity sales. If aggregate demand and the scale of productive undertakings are shaped with a measure of mutual autonomy, the class distribution of income and the measure of economic activity are jointly determined by the same processes. In those settings “wage-led growth” has neither analytical nor policy purchase as associations between wage shares and levels of output (or growth) are confounded consequences of distinct effects on each measure of broader developments in the economy. A more appropriate dichotomy is that between “investment-led” and “consumption-led” growth, with the former resulting in comparatively higher wage shares. After advancing and illustrating these points, this paper motivates its approach to class income flows and the role of demand--which draw on the Circuit of Capital--in relation to the equivalent Kaleckian approaches sustaining arguments for “wage-led growth.”

Suggested Citation

  • Paulo dos Santos, 2013. "Demand, Production, and the Determinants of Distribution: A Caveat on “Wage-Led Growth”," Working Papers wp323, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:periwp:wp323
    as

    Download full text from publisher

    File URL: https://per.umass.edu/fileadmin/pdf/working_papers/working_papers_301-350/WP323.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Foley, Duncan K., 1982. "Realization and accumulation in a Marxian model of the circuit of capital," Journal of Economic Theory, Elsevier, vol. 28(2), pages 300-319, December.
    2. Paulo L dos Santos, 2013. "A Note on Credit Allocation, Income Distribution, and the Circuit of Capital," Working Papers 181, Department of Economics, SOAS University of London, UK.
    3. Onaran, Özlem. & Galanis, Giorgos., 2012. "Is aggregate demand wage-led or profit-led? National and global effects," ILO Working Papers 994786233402676, International Labour Organization.
    4. Graziani,Augusto, 2003. "The Monetary Theory of Production," Cambridge Books, Cambridge University Press, number 9780521812115, January.
    5. Amit Bhaduri, 2008. "On the dynamics of profit-led and wage-led growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(1), pages 147-160, January.
    6. Taylor, Lance, 1985. "A Stagnationist Model of Economic Growth," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 9(4), pages 383-403, December.
    7. Engelbert Stockhammer & Ozlem Onaran, 2013. "Wage-led growth: theory, evidence, policy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 61-78, January.
    8. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275, March.
    9. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 8(1), pages 25-40, March.
    10. repec:ilo:ilowps:478623 is not listed on IDEAS
    11. Michalis Nikiforos & Duncan K. Foley, 2012. "Distribution And Capacity Utilization: Conceptual Issues And Empirical Evidence," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 200-229, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jo Michell, 2014. "A Steindlian account of the distribution of corporate profits and leverage: A stock-flow consistent macroeconomic model with agent-based microfoundations," Working Papers PKWP1412, Post Keynesian Economics Society (PKES).
    2. Paulo L. Santos, 2014. "A Note on Credit Allocation, Income Distribution and the Circuit of Capital," Metroeconomica, Wiley Blackwell, vol. 65(2), pages 212-236, May.
    3. Jo Michell, 2014. "Factors generating and transmitting the financial crisis; Functional distribution of income," Working papers wpaper41, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    2. Engelbert Stockhammer & Ozlem Onaran, 2013. "Wage-led growth: theory, evidence, policy," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 61-78, January.
    3. Robert A. Blecker, 2016. "Wage-led versus profit-led demand regimes: the long and the short of it," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 373-390, October.
    4. Schoder, Christian, 2014. "Instability, stationary utilization and effective demand: A structuralist model of endogenous cycles," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 10-29.
    5. Paulo L. Santos, 2014. "A Note on Credit Allocation, Income Distribution and the Circuit of Capital," Metroeconomica, Wiley Blackwell, vol. 65(2), pages 212-236, May.
    6. Gahn, Santiago José, 2021. "On the adjustment of capacity utilisation to aggregate demand: Revisiting an old Sraffian critique to the Neo-Kaleckian model," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 325-360.
    7. Eric Kemp‐Benedict, 2020. "Convergence of actual, warranted, and natural growth rates in a Kaleckian–Harrodian‐classical model," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 851-881, November.
    8. Christian Schoder, 2012. "Instability, stationary utilization and effective demand: A synthesis of Harrodian and Kaleckian growth theory," IMK Working Paper 104-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    9. Brenck, Clara & Carvalho, Laura, 2020. "The equalizing spiral in early 21st century Brazil: a Kaleckian model with sectoral heterogeneity," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 298-310.
    10. Julia Burle Gonçalves, 2018. "Distribuição De Renda E Demanda Agregada No Brasil(1995-2015): Uma Análise De Extensões Aos Modelos Neo-Kaleckianos Pelo Método Var," Anais do XLIV Encontro Nacional de Economia [Proceedings of the 44th Brazilian Economics Meeting] 80, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Roberto Veneziani & Luca Zamparelli & Michalis Nikiforos & Gennaro Zezza, 2017. "Stock-Flow Consistent Macroeconomic Models: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1204-1239, December.
    12. Armon Rezai, 2015. "Demand and distribution in integrated economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(5), pages 1399-1414.
    13. Caiani, Alessandro & Russo, Alberto & Gallegati, Mauro, 2020. "Are Higher Wages Good For Business? An Assessment Under Alternative Innovation And Investment Scenarios," Macroeconomic Dynamics, Cambridge University Press, vol. 24(1), pages 191-230, January.
    14. Storm, Servaas. & Naastepad, C.W.M.,, 2012. "Wage-led or profit-led supply : wages, productivity and investment," ILO Working Papers 994709303402676, International Labour Organization.
    15. Christian Schoder, 2015. "A Keynesian Dynamic Stochastic Labor-Market Disequilibrium model for business cycle analysis," IMK Working Paper 157-2015, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    16. Eckhard Hein, 2006. "Interest, Debt and Capital Accumulation—A Kaleckian Approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 337-352.
    17. Ohno, Takashi, 2014. "The role of the Taylor principle in the neo-Kaleckian model when applied to an endogenous market structure," Structural Change and Economic Dynamics, Elsevier, vol. 31(C), pages 32-42.
    18. Eckhard Hein, 2007. "Interest Rate, Debt, Distribution And Capital Accumulation In A Post‐Kaleckian Model," Metroeconomica, Wiley Blackwell, vol. 58(2), pages 310-339, May.
    19. Peter Skott, 2017. "Weaknesses of 'wage-led growth'," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(3), pages 336-359, July.
    20. Michalis Nikiforos, 2014. "Distribution-led Growth in the Long Run," Economics Working Paper Archive wp_814, Levy Economics Institute.

    More about this item

    Keywords

    Income Distribution; Circuit of Capital ; Marxian Analyses;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uma:periwp:wp323. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Judy Fogg The email address of this maintainer does not seem to be valid anymore. Please ask Judy Fogg to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/permaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.