An introduction to land in demand-led growth

Abstract

This paper incorporates land and rents into demand-led growth theory, examining how a tripartite class structure - workers, capitalists, and landlords - shapes income distribution and accumulation. Within a one-sector economy with normal-cost pricing, we derive income shares under two contractual rent forms, fixed costs and tithes, and show that their distributional consequences differ qualitatively. For the Kaleckian closure, the introduction of landlords dissolves the binary wage-led versus profit-led regime taxonomy: rent-led growth e!ects emerge as a genuine possibility; multiple distributional effects can coexist; and the economy may be purely rent-led when landlords are sufficiently less thrifty than capitalists. For the Sraffian supermultiplier, distributional changes are confined to level effects on fully adjusted output, the wage-led effect is unconditional, and profit-led and tithe-led effects are mutually exclusive, a contrast arising from the absence of autonomous investment sensitivity to profitability. Finally, we derive minimal conditions under which land conservation is compatible with demand-led growth, and show that the simultaneous achievement of ecological limits, full employment, and balanced external accounts cannot be expected to arise from the normal functioning of the economy under either closure.