A note on “zero growth and structural change in a post Keynesian growth model”

Abstract

This note is a critique of the results found by Rosenbaum concerning zero growth and structural change in a post-Keynesian growth model, some of which are shown to be problematic. First, the (im)possibility for a neo-Kaleckian model of growth and distribution to generate a profit-led growth regime is discussed. Next, we review the role played by the “paradox of costs” when introducing the depreciation of capital and how this changes the stability characteristics of the model presented by Rosenbaum. Finally we show that, contrary to what is claimed in the article, the proposed model is not able to show that zero growth is compatible with a positive net rate of profit.

Keywords:

• Zero growth
• Kaleckian
• stability
• wage-led/profit-led
• profit rate

JEL CLASSIFICATIONS:

• E12
• E22
• E24
• O41
• O44

Notes

1 As a limit case, one could consider the specification $\mathit{\beta }=0.$ This leads equation (5) to be equal to zero and thus also rules out the possibility of profit-led growth.

2 Rowthorn (1981) presents the paradox of costs and shows that the phenomenon holds for any “real cost of production” (wages, fixed capital requirements, taxes, and capital depreciation).

3 In the particular case where $\mathit{s}=0,$ the net rate of profit could be positive. However, as we have argued in the first section, this case is implicitly dismissed by Rosenbaum. Indeed he assumes that the Keynesian stability condition is verified, and in his model this is only possible when $\mathit{s}>0.$

Additional information

Notes on contributors

Antoine Monserand

Antoine Monserand is at CEPN, Université Paris 13 and Sorbonne Paris Cité, Villetaneuse, France. I am grateful to Marc Lavoie, Louison Cahen-Fourot, Jeffrey Althouse and an anonymous reviewer for valuable comments and suggestions. All potential errors remain mine.