Distribution and Growth: A Critical Note on "Stagnationism"

Abstract

In the "stagnationist" macroeconomics, the long-term problem of growth and distribution has been discussed in a short-period Kaleckian framework which abstracts from labor market-output market interaction to determine real wages. However, even in this framework, one can challenge the stagnationist conclusion that there is no trade-off between wage and profit and between distribution and growth. One way of doing this is to bring in the role of foreign price competition. Another way is to allow the possibility of saving out of wage income in a closed "stagnationist" framework presented here. Evidently, in a general framework, there is no unambiguous relationship between distribution and growth. So distributive justice should be taken as a separate objective on its own merit.