ABSTRACT
In the industrial countries, the last few decades have witnessed a major shift in income distribution away from wages and towards non-labour incomes. Nonorthodox economists (economists, that is, who draw on Classical, Marxian and Keynesian traditions) have seen in this phenomenon a potential source of trouble for these economies, owing to its adverse impact on aggregate demand. The latter impact was more than counterbalanced by the mounting indebtedness of the private sector ever since the 1980s, particularly in the US, which, however, contributed to the increasing financial fragility of the system right up to the current crisis (Foster and Magdoff, 2009; Barba and Pivetti, 2008, among others). The view that current income distribution represents a structural problem for advanced economies because of its effects on aggregate demand formation has been recently subscribed to also by influential mainstream economists.2 Though inconsistent with their theoretical views and academic production,3 this attention to the macro economic effects of changes in income distribution is a welcome novelty. Despite its magnitude, the phenomenon had been largely ignored by academics and major institutions alike, and only in the last few years have reports on the matter been produced by the IMF (2007a, 2007b) and Organisation for Economic Co-operation and Development (OECD) (2008).
