Distribution Theories: Keynesian

Abstract

As Kaldor has pointed out, Keynes was never interested in the problem of distribution of income as such; the determination of its level was his main concern: ‘One may nevertheless christen a particular theory of distribution as ‘Keynesian’ if it can be shown to be an application of the specifically Keynesian apparatus of thought’ (Kaldor 1956, p. 94). Since the middle Fifties a large number of neo-or post-Keynesian models of economic growth and income distribution have appeared, originating mainly in the University of Cambridge. Post-Keynesian distribution theory now occupies an undisputed place in most macro-economic textbooks. These models have been labelled as ‘post-Keynesian’ since savings passively adjust to the externally given full-employment investment, via redistribution of income between wages and profits and/or among social classes. This contrasts with the pre-Keynesian or neo-classical framework, where investment is governed by saving, and where the production function and marginal productivity theory play a crucial role in determining income distribution. The ‘post-Keynesian’ model also differs from the static Keynesian scheme, where changes in the level, rather than in the distribution, of income ensure equality between saving and investment.