Cadrisme within a Post-Keynesian Model of Growth and Distribution

The 1990s, especially in the United States, witnessed an unprecedented change in income distribution, with a large redistribution towards rentiers on the one hand, and towards the upper ranks of the managerial bureaucracy on the other hand, as became ever more obvious after the financial scandals affecting large corporations such as Enron and Worldcom. This has also been accompanied by large capital gains that benefited top-file managers as well as shareholders. Ordinary employees and workers, as a counterpart, have seen their real purchasing power stagnate. Despite all this, and in contrast to the predictions of the canonical Kaleckian growth model, many countries achieved respectable growth rates of capital and output. The purpose of the present paper is to explain this paradox and to provide a consistent post-Keynesian model of growth that would model the main features identified above, making a distinction between managerial labour, basically overhead labour, and workers, essentially direct labour - a distinction that was recommended, but never implemented by Kaldor. The model is based on target-return pricing procedures. We then study the implications of cadrisme, a managerial-friendly regime based on large pay packages for the managerial class.