Wood's ‘Golden Age’ model

There are a number of papers on the determination of the size of the mark-up in the post-Keynesian literature – Ball (1964); Eichner (1973, 1976); Harcourt and Kenyon (1976; Harcourt 1982); Wood (1975), for example. I concentrate here on the contributions of Adrian Wood and Peter Kenyon and myself because each in their own way reveals the strengths and the limitations of the analysis. James Ball's contribution must be accorded a pioneering role and his contribution has been shamefully neglected in subsequent discussions. The other contributions are relatively well known, with Alfred Eichner's articles and books probably the most widely known. However, I shall not discuss his particular version of the theory, while acknowledging its originality and influence, because it is dependent upon Keynes' theory of investment expenditure, the mec and all that as set out in The General Theory. As we argue in chapter 4, there are serious flaws – or at least unnecessary limitations – in the details of Keynes' theory. Subsequently, these have been removed by the criticisms and contributions of Abba Lerner, Kalecki, Joan Robinson and Tom Asimakopulos.

We use Wood's model and then Harcourt and Kenyon's model because Wood's analysis is explicitly ‘Golden Age’, logical time analysis, while Harcourt and Kenyon attempt to make an analysis set in historical time, as advocated by Kalecki (implicitly) and Joan Robinson (explicitly).