Progressive supply-side economics: an explanation and update of the Rehn-Meidner model

Good jobs versus bad jobs

Lennart Erixon ()

Cambridge Journal of Economics, 2018, vol. 42, issue 3, 653-697

Abstract: The Swedish Rehn-Meidner model is a unique economic- and wage-policy program for the simultaneous achievement of full employment, price stability, growth and equality. This article presents, specifies and develops the model’s underlying macroeconomic theory. The Rehn-Meidner theory is a synthesis between a flex-price Kaldorian model of profit margins and a Kaleckian model where profit margins are squeezed under full-employment conditions. The theory deviates from both the Kaldorian and Kaleckian models by stressing the importance of low profit margins for productivity growth. Moreover, in the Rehn-Meidner program, full employment is guaranteed irrespective of the level of aggregate demand. The Rehn-Meidner theory and policy deserve a prominent place in macroeconomics even in the age of globalization and financialization. However, some weaknesses of the model make it necessary to modify the arguments for and partly the composition of its policy program.

Keywords: Swedish model; Labor market policy; Wage policy of solidarity; Structural change; Productivity growth; Inflation (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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