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This paper presents a theoretical explanation for the enigmatic discontinuity of the relationship between inflation and unemployment that has registered the U.S. economy since the early 1950s onwards. I argue that by distinguishing between two different historical episodes after World War II, the Golden Age and the Age of Decline, some insights in the Phillips curve puzzle can be gained and the analysis helps us to substantiate the existence of both downward sloping and upward sloping species of the curve. The regime change is illustrated here by building on a commonly used Post-Keynesian model of distribution and growth, which is enhanced to allow for an inflation process based on a conflicting claims approach and a growth rate form of Okun’s law. The model shows that the long-run Phillips curve can be either downward-sloping or upward-sloping, conditioned to the distribution of market power between business and labor.

Power and conflict are issues that loom large in the work of David Gordon. They are also issues that are largely absent in conventional macroeconomics. This paper shows how these concepts can be introduced within alternative macroeconomic traditions, and it shows how their significance depends on the particulars governing the construction of the macroeconomic process. The paper details the implicit economic process embedded in the new classical, neo-Keynesian, classical Marxist, and Kaleckian constructions of macroeconomics. It then develops a general post Keynesian model that fuses the insights of the classical Marxist and Kaleckian models regarding the significance of conflict and income distribution, with the insights of the neo-Keynesian model regarding the place of finance. Last, the paper argues that finance matters both for aggregate demand and as a worker discipline device. This represents a supply side channel for finance that links with modern new classical models that emphasize credit rationing.

This paper reformulates Marxian investment theory so that it can provide an explanation of key "stylized" facts describing capital accumulation in U.S. goods producing industries in the past fifteen years. This requires two theoretical innovations: a demonstration that Keynesian-Minskian ideas about uncertainty and financial fragility flow logically from Marx's core assumptions; and a reconceptualization of the contradictory relation between competition and investment in the accumulation process.