ABSTRACT
In his General Theory Keynes takes the social structure as given, with the result that the level of employment is determined independently of changes in the distribution of income. That such is a good first approximation is generally admitted on the ground that over the short run, especially without great institutional change, the distribution of income is found to remain rather stable. Over the long run, however, the whole complex of society is liable to undergo significant change. It is necessary, then, to introduce the “distribution effect” as an explicit variable in the relevant macro-economic functions affecting employment and secular growth. Only thus can we hope to mitigate those “outstanding faults of the economic society in which we live … its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes” which Keynes stresses in his concluding long-run digression. 1 But he made no analysis to justify his “operationalism” along those lines. It is the aim of this essay to analyze the relationship between income distribution and secular employment in the interest of “progressive equilibrium.” 2
