Reflections on neo-Kaleckian growth regimes: a Marxian reproduction perspective

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.

An Analytical Economic Dynamic Model Considering Unemployment and Incorporating SIR’s Approach

“…The neo-Kaleckians economists are known as the second generation, and the post-Kaleckians are the third generation we recommend to read Hein (2014) Chapter 6 orZhao, Tian, and Duan (2021) where they define each Economic School.…”

“…Zhao et al (2021) express their concerns about the minimum attention to the labor market in the role neo-Kaleckian approach. In this paper, we demonstrate (theoretically and numerically) that they are right to be worried since the model behaves differently once the (un)employment is considered, especially on the conduction of the capacity utilization to its normal level, which guarantees full employment in the long run.…”