Models on Concentration and Growth


in It's Not Over

Published in print January 2013 | ISBN: 9780198088417
Published online January 2013 | e-ISBN: 9780199082292 | DOI:
Models on Concentration and Growth

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Chapter 4 presents a brief overview of the existing theories in the heterodox economics tradition, which study the linkages between income inequalities and growth trajectories. It includes a review of the Kalecki-Steindl tradition in its original avatar as well as its contemporary interpretations. Steindl had argued that with increase in income inequalities and business concentration, a tendency towards stagnation sets in under capitalism because workers have a higher propensity to consume out of their wages as compared to the capitalist class, a process which was named underconsumption. However, contemporary Steindlian models have studied this relationship in the context of possibilities of debt-financed consumption, wealth and financialisation and found that these could run counter to the stagnationist tendency. One important component that most of these explanations miss is Steindl’s argument on underinvestment which results from an increase in business concentration as the need to build capacity decreases with a decline in competitiveness.

Keywords: Michal Kalecki; Josef Steindl; underconsumption; underinvestment; capacity utilisation; financialisation; debt; wealth; stagnation

Chapter.  3435 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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