Abstract
PurposeThe neo-Kaleckian model follows the ideas of Marx, Keynes and Kalecki, that investment is a key influencing factor in the dynamics of the capitalist mode of production. Through the discussion of different forms of investment decision function, this paper constructs the analysis framework of wage-led and profit-led economic growth regimes.Design/methodology/approachThe model has become an important theoretical paradigm for current Western heterodox economists regarding the research on the impact of functional income distribution on economic growth, and it has a very large impact on both theoretical and empirical research. Starting from Marx's reproduction theory, this article discusses the theoretical shortcomings of the neo-Kaleckian growth regime model.FindingsThis paper mainly focuses on three aspects: (1) the ideological legacy of “Smith's Dogma”; (2) neglecting the restrictions on income distribution from the organic composition of capital and the surplus value rate; (3) technological progress and the formation of a new long economic wave.Originality/valueThe authors believe that the neo-Kaleckian model unilaterally emphasizes the demand-side factors in the economy and, unconsciously or not, ignores the role of the supply-side, which makes it encounter certain limitations in explaining long-term growth. Even if some empirical conclusions are employed to bridge functional income distribution and technological progress, there is still a lack of a theoretical basis for accurately describing long-term economic changes using this model. In order to better promote high-quality economic development and accelerate the formation of a new pattern of economic development in which the domestic large-scale cycle is the mainstay and the domestic and international double cycles promote each other, the authors need to adopt a policy combination with the supply-side as the main and the demand-side as the supplement, and to work from both sides.
Highlights
Income distribution and economic growth have been key topics of economic discussion for a long time, and economists of different schools have discussed and analyzed those two themes at different levels and from different perspectives
Those models formed an alternative path diverging from the neoclassical growth model and brought into view the thought of effective demand inherited from Kalecki and Keynes. Both Keynes and Kalecki attached great importance to the issue of effective demand in the economy. Unlike the former, who emphasized psychological factors, Kalecki held that the capitalist system was structurally unstable, and functional income distribution in the economy was the key to the study and analysis of economic growth and fluctuations
Some studies link income distribution with technological progress through a number of empirical conclusions, this model still lacks the theoretical basis for accurately depicting long-term economic change
Summary
Income distribution and economic growth have been key topics of economic discussion for a long time, and economists of different schools have discussed and analyzed those two themes at different levels and from different perspectives. In the 1980s, based on the Kaldor–Robinson model and through absorption of some thoughts of Polish economist Michal Kalecki, they created the neo-Kaleckian model and put forward the wage-led growth regime concept, providing an important new tool to analyze the relationship between macro labor-capital income distribution and economic growth According to their studies, the growth regimes of major developed economies all exhibited a structural “wage-led” characteristic. Unlike the former, who emphasized psychological factors, Kalecki held that the capitalist system was structurally unstable, and functional income distribution in the economy was the key to the study and analysis of economic growth and fluctuations This notion constitutes the core thought of the neo-Kaleckian model. With an increased profit share (a declined wage share), the capacity utilization and growth rate of the economy will fall
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