著者

中谷 武

出版者

経済理論学会

雑誌

季刊経済理論 (ISSN:18825184)

巻号頁・発行日

vol.46, no.4, pp.6-14, 2010-01-20

---

This paper attempts to evaluate the significance of wage-led economy of Post Keynesian economics. In order to achieve longterm sustainable economic growth under the low growth and the environmental constraints, the switch from profit-led economy to wage-led economy will be effective and also inevitable. The main points are as follows: 1) Our current economic crisis can not be resolved by simply resuming the Keynesian demand policies in face of environmental constraints, growing fiscal deficits and low birthrate and an aging population. What is important is that we have to consider both demand side and supply side simultaneously, which mutually interrelate in determining the output and employment levels. The supply side of Keynesian theory is the core of the issue, which is neglected for long because Keynes himself disregarded it. The main stream economics has picked up this point and criticized Keynes but falsely. 2) There are three ways to shift the supply curve downwards: (1) technical improvement, (2) cutting labor cost and (3) cutting profit margin. The ways employed by neo-liberals which are theoretically based on the main stream economics since eighties are the first and the second ones, whose effectiveness has shown to be restrictive because they shift the demand curve downwards as well as supply curve. In this sense the supply side policies are rebelled against by demand side; consumption demand is sharply depressed by deteriorating expectation in future wages and employment insecurity. On the other hand, the wage-led economy is to pursue the third way of downwards shift of supply curve. 3) The possibility of wage-led economy depends on both characteristics of investment and saving functions. We can say firstly that under the condition of low economic growth the characteristics of saving function become more important compared with those in investment function, secondly that a lower saving rate of laborers leads to greater possibility of wage-led economy, and thirdly that a more progressive tax system makes wage-led economy more possible. These Post Keynesian claims are of importance in face of recent regressive tax reforms and the relatively higher saving rate in Asian countries. 4) Blecker (1989) and Bhaduri and Marglin (1990) argued that the increasing international price competition prevents the potential of wage-led economy even if the domestic economy is wage-led. In this paper we discussed that this claim is not confined to wage-led economy: the profit-led economy is also not sustainable under the severe international competition. Therefore a domestic price increase can not be maintained regardless of whether it is wage-led or profit-led domestically under global competition. In other words, in face of international competition we need to improve the supply condition. Here we must consider again by which way we realize the shift of supply curve. 5) We discussed four cases of two-country economy composed of two-by-two combinations: wage-led or profit-led and domestic country or foreign country. An increase in wage share in domestic country with profitled foreign country has positive effects to both countries: the domestic production as well as foreign production increase. The effects of an increase in the wage share in wage-led domestic country become ambiguous, however, when the foreign country is also wage-led, but it affects favorably to domestic country compared to foreign country. 6) Finally we examine the necessary conditions of sustainable economic growth from longer run perspectives. If we maintain both the inside equilibrium condition and the outside equilibrium condition at the same time, how can the wage rate increase in the long run? By inside we consider the labor market and by outside we mean the trade balance. Then we argue that the wage rate increase depends on the natural growth rates of domestic and foreign economies, the elasticity of trade, the growth rate of labor productivity and the pass-on effect to profit share. Especially, the wage rate must increase at a higher rate when the foreign natural rate of growth is higher than that of domestic one.