A Kaleckian Theory of Income Distribution

Abstract

A Kaleckian theory of income distribution. This paper draws together the various elements of Kalecki's analysis of income distribution. It is argued that what a higher degree of monopoly makes possible and protects is the rate of return of the main firms in an industry. This degree of monopoly is reflected in the mark-ups over unit prime costs used to set prices. Employment and the level of profits are determined in this model by capitalists' expenditures. A key assumption is that a higher proportion of profits than of wages is saved. With overhead labour, changes in effective demand, as well as changed mark-ups, affect the share of profits.