Money, Distribution Conflict and Capital Accumulation: Contributions to ‘Monetary Analysis’

223 Pages·2008·1.21 MB·English

by  Eckhard Hein (auth.)

Money, Distribution Conflict and
Capital Accumulation
AlsobyEckhardHein:
EckhardHein(author)
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VERTEILUNGUNDWACHSTUM
Eine paradigmenorientierte Einführung unter besonderer Berücksichtigung der post-
keynesianischenTheorie
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FINANZPOLITIKINDERKONTROVERSE
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MACROECONOMICPOLICYCO-ORDINATIONINEUROPEANDTHEROLEOFTHETRADE
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LÖHNE,BESCHÄFTIGUNG,VERTEILUNGUNDWACHSTUM
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MONEY,DISTRIBUTIONANDECONOMICPOLICY
AlternativestoOrthodoxMacroeconomics
PhilipArestis,EckhardHeinandEdwinLeHeron(editors)
ASPECTSOFMODERNMONETARYANDMACROECONOMICPOLICIES
Money, Distribution
Conflict and Capital
Accumulation
Contributions to ‘Monetary Analysis’
Eckhard Hein
©EckhardHein2008
Foreword©PhilipArestis2008
Softcover reprint of the hardcover 1st edition 2008 978-0-230-52157-5
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Hein,Eckhard,1963–
Money,distributionconflictandcapitalaccumulation:
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Contents
ForewordbyPhilipArestis viii
Acknowledgements ix
ListofTablesandFigures xi
ListofVariables xiii
1 Introduction:Money,DistributionConflictandCapital
Accumulation 1
PartI: RealandMonetaryAnalysisinEconomicParadigms 5
2 RealandMonetaryAnalysisinEconomicParadigms:
IntroductiontoPartI 7
3 RealAnalysisinClassical,Neoclassical,NeoclassicalSynthesis,
Monetarist,NewClassical,NewKeynesian,andNew
ConsensusTheories 9
4 MonetaryAnalysisinClassicalEconomics:BankingSchool
andNeo-RicardianMonetaryTheoryofDistribution 13
5 MonetaryAnalysisinMarx’sEconomics 16
5.1 Marx’s‘monetarytheoryofvalue’ 16
5.2 Thelevelofprices,therejectionofSay’slawandthe
endogeneityofmoney 18
5.3 Credit,rateofinterestandrateofprofit 23
5.4 ImplicationsofMarx’smonetaryanalysisforthe
theoryofaccumulationandcrisis 26
6 Keynes’s‘MonetaryTheoryofProduction’andthe
Post-KeynesianResearchProgramme 30
6.1 Keynes’s‘monetarytheoryofproduction’ 30
6.2 ThedevelopmentofthePost-Keynesianresearch
programme 35
6.3 Fundamentaluncertainty,liquiditypremiumand
theinterestrate 37
v
vi Contents
6.4 Interestrate,profitrateandinvestment 40
6.5 Exogenousinterestrateandendogenouscredit
andmoney 43
6.6 SummaryofPost-Keynesianmonetaryanalysis 53
7 RealandMonetaryAnalysisinEconomicParadigms:
SummaryandImplicationsofPartI 56
PartII: InterestRate,DistributionandCapital
Accumulation–Post-KeynesianModels 59
8 InterestRate,DistributionandCapitalAccumulation–
Post-KeynesianModels:IntroductiontoPartII 61
9 Post-KeynesianMonetaryTheoryandtheModelsof
DistributionandGrowth 63
10 TheModelEconomy 68
10.1 Production,prices,interest,andcredit 68
10.2 Endogenousmoney,creditandfinanceina
monetarycircuit 70
10.3 Interestrateandfunctionalincomedistribution 79
11 TheRateofInterestintheKaldor–RobinsonModelof
DistributionandGrowth 82
11.1 Themodel 82
11.2 Limitationsofthemodel 85
12 TheRateofInterestinKaleckianModelsofDistribution
andGrowth 87
12.1 Thebasicstructure:endogenousrateofcapacity
utilization,mark-uppricing,andclassicalsaving
hypothesis 87
12.2 Thechoiceoftheinvestmentfunction 91
12.3 TherateofinterestintheRowthorn–Dutt–
Amadeomodel 95
12.4 TherateofinterestintheBhaduri/Marglinmodel 97
13 KaleckianModelsExtended 100
13.1 Extensions 100
13.2 TheRowthorn–Dutt–Amadeomodelextended 103
13.3 TheBhaduri/Marglinmodelextended 114
14 InterestRate,DistributionandAccumulationin
Post-KeynesianModels:SummaryandConclusionsofPartII 124
Contents vii
PartIII: DistributionConflict,InflationandMonetary
PolicyinaCreditEconomy 129
15 DistributionConflict,InflationandMonetaryPolicy
inaCreditEconomy:IntroductiontoPartIII 131
16 AKaleckianAlternativetotheNewConsensusonMonetary
PolicyandWageBargaining:TryingtoMakeSenseof
theNAIRU 133
16.1 Introduction 133
16.2 Thebasicmodel 135
16.3 Employment,wagebargainingandinflation:the
GEREandtheSIRE 138
16.4 Theshort-runstabilityoftheNAIRU/theSIRE 140
16.5 Thelong-runendogeneityoftheNAIRU/theSIRE 144
16.6 Resultsandimplicationsformonetarypolicyand
wagebargaining 150
17 Onthe(In-)stabilityandtheEndogeneityoftheNormal
RateofCapacityUtilizationinaPost-Keynesian/Kaleckian
‘Monetary’DistributionandGrowthModel 153
17.1 Introduction 153
17.2 Thebasicmodel 155
17.3 Capacityutilization,wagebargaining,inflation
andmonetarypolicyintervention:theGERCU
andtheSIRCU 157
17.4 Short-runstabilityoftheSIRCUandmonetary
policyinterventions 158
17.5 Thelong-runendogeneityoftheSIRCU 160
17.6 Theparadoxofthriftandtheparadoxofcosts 164
17.7 Conclusions 166
18 SummaryandConclusions:Money,DistributionConflict
andCapitalAccumulation 169
Notes 177
References 189
Index 210
Foreword
PhilipArestis
Thisisareallyexcitingbookandonethatfullyjustifiesitstitle: Money,
Distribution Conflict and Capital Accumulation. There is a great deal on
each aspect that the title clearly suggests. The analysis is not only
sufficientlyrich,butalsoextremelyopen-minded.Itoffersextensivecov-
erage of those approaches that emphasize money, distribution conflict
and capital accumulation. These are different from the more standard
approaches, such as the ‘New Consensus’ theories, but the book does
a great deal of justice to both sets, and this is commendable. At the
same time, however, the book has a focus on those paradigms, which
embedinthemanumberofcharacteristicshighlightedinthetitleofthe
book.Mostimportanttotheanalysisisthefullintegrationoftheroleof
money and credit into the models of distribution and growth, thereby
contributing to the research programme of a ‘monetary theory of pro-
duction’.Themaincharacteristicofthisprogrammeistheideathatboth
thevolumeofcreditandthequantityofmoneyaredeterminedendoge-
nously. The driving force of this research programme is the validity of
the‘principleofaggregatedemand’,intheshortandinthelongrun,an
importantingredient,whichreplacesSay’slaw,thebackboneofmanyof
theotherparadigmsdiscussedinthebook.Itisalsotrue,however,that
there are important differences amongst the approaches to ‘monetary
analysis’discussedinthebook.Thesearehighlightedandcloselyexam-
ined, along with their theoretical and policy implications. Above all,
thebookprovidesitsownapproachtomoney,distributionconflictand
capitalaccumulationinawaythatavoidsanumberofproblemsinthe
otherapproaches.Overall,thebookpresentsimportantcontributionsto
asynthesisofmonetaryanalysis,distributionandgrowththeory,onthe
onehand,andtoanalternativetomodernmainstreamNewConsensus
macroeconomics,ontheotherhand.
viii
Acknowledgements
Iamgratefultotheeditorsandpublishersofthejournalsnamedbelow
forpermissionstodrawonmypaperspublishedintheirjournals:
‘Money,creditandtheinterestrateinMarx’seconomics.Onthesim-
ilarities of Marx’s monetary analysis to post-Keynesian economics’,
InternationalPapersinPoliticalEconomy,2004,11(2):1–43(Chapter5).
‘Money,interestandcapitalaccumulationinKarlMarx’seconomics:
a monetary interpretation and some similarities to post-Keynesian
approaches’,EuropeanJournaloftheHistoryofEconomicThought,2006,
13:113–40(Chapter5).
‘Interest, debt and capital accumulation – a Kaleckian approach’,
International Review of Applied Economics, 2006, 20: 337–52 (Section
13.2).
‘Interest rate, debt, distribution and capital accumulation in a post-
Kaleckianmodel’,Metroeconomica,2007,58:310–39(Section13.3).
‘Wage bargaining and monetary policy in a Kaleckian monetary dis-
tribution and growth model: trying to make sense of the NAIRU’,
Intervention:JournalofEconomics,2006,3:305–29(Chapter16).
‘On the (in-)stability and the endogeneity of the “normal” rate of
capacity utilisation in a post-Keynesian/Kaleckian “monetary” dis-
tribution and growth model’, Indian Development Review, 2006, 4:
129–50(Chapter17).
I am indebted to the referees of these journals for helpful comments
on the papers I had submitted. Above all, I am most grateful to Philip
Arestis for reading the whole manuscript, for extremely helpful com-
mentsandforhiskindreadinesstocontributeaforeword.Forcomments
andsuggestionsconcerningdifferentpartsofthebook,Iwouldalsolike
to thank Amit Bhaduri, Amitava Dutt, Giuseppe Fontana, Geoff Har-
court, Gustav Horn, Costas Lapavitsas, Marc Lavoie, Özlem Onaran,
Sergio Rossi, Claudio Sardoni, Malcolm Sawyer, Klaus Schüler, Engel-
bertStockhammer,AndranikTangian,Hans-MichaelTrautwein,Andrew
TriggandAchimTruger.Ihavealsobenefitedfromthediscussionofsome
of the material contained in this book at conferences and seminars in
ix