The role of autonomous demand growth in a neo-Kaleckian conflicting-claims framework’

Abstract

This paper incorporates the role of an independently growing autonomous demand component into a neo-Kaleckian model of growth and distribution where the distribution of income is fully endogenized. A peculiar feature of these autonomous expenditures is that in contrast to investment they are non-capacity creating. The model presents the combined dynamic effects of a conflicting-claims theory of inflation, the Sraffian supermultiplier, the Harrodian instability mechanism and mechanisms based on a reserve army of labor effects. The key features of the model include the convergence towards a long-run steady state where the normal rate of utilization of capacity is being attained and where stable rates of employment and inflation are being achieved. Despite the achievement of a fully-adjusted position, the model vindicates some of the main Keynesian or Kaleckian tenets, in the sense that both the average rates of capital accumulation and capacity utilization decrease during the whole traverse after either an increase in the marginal propensity to save out of profits, an upward adjustment in the claims on profits, or an enhancement of the bargaining power of firms relative to workers.