A critique of Mr Kaldor's model of income distribution and economic growth *

Since 1956 Mr Kaldor has been developing a model of income distribution and economic growth in order to explain the observed constancies in the capital-output ratios, the distribution of income, and the rates of profit on capital of the United Kingdom and United States economies. ¹ Whether or not the three ratios are in fact constant is in dispute. For example, the participants in the recent conference on capital theory at Corfu, faced with the same empirical evidence concerning the capital-output ratio of the United States, split into two groups – one arguing that it was stable, the other that it was not (see Lutz and Hague, 1961, pp. x-xi). However, the dispute is irrelevant to the present discussion which is concerned with the technical features of Kaldor’s model. Moreover, his views on the forces which determine the distribution of income and the rate of growth of capitalist economies warrant consideration independently of whether their formal expression in a model implies constancy of the above ratios.