Income Distribution and Business Cycles  Article excerpt
Despite a century of work, significant disagreement remains on
what causes business cycles. A literature survey of business
cycle theory and empirical research demonstrates how extensive
the work is in this field (see Zarnowitz for an overview of
business cycles). Not only is there a lack of consensus across
schools of thought, but substantial theoretical differences
exist within the Neoclassical school. Controversy persists over
whether cycles are created endogenously or exogenously, whether
the real or financial sector is more important, and whether the
economy is fundamentally stable or unstable. However,
progressive economists agree that profits, profit rates, the
price-cost cycle, and the functional distribution of income are
central in generating cycles.  The purpose of this study is to
argue for the importance of income distribution in generating
capitalist cycles because of its affect on profitability and
investment. Specifically, the objective