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Michal Kalecki

Authors: Julio G. López, Michaël Assous

Publisher: Palgrave Macmillan UK

Book Series : Great Thinkers in Economics

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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About this book

This book presents a thorough evaluation of Michal Kalecki's theory of the capitalist economy. It provides readers with a complete view of Kalecki's theory, including his very important writings on the economics of underdeveloped countries.

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Table of Contents

Frontmatter

1. Michal Kalecki’s Life and Work

Abstract

In 1933 Michael Kalecki, a young self-taught economist, published in Poland a small book: An Essay on the Theory of the Business Cycle. In this book he proposed his version of the theory of effective demand; a theory which was to initiate, albeit in John Maynard Keynes’s version, a new phase in the history of economic ideas and policymaking.

Julio G. López, Michaël Assous

2. Kalecki’s Theory of Profits and Output

Abstract

Kalecki formulated the principle of effective demand in the context of his theory of economic dynamics, dealing with the equilibrium of income occurring at a given point of the cycle. Thus, he put forward his short-term analysis in the framework of a dynamic process, whereby the economy is subject to a long-run trend and cycles. The short- and long-term aspects of his analysis were a part of his methodology; first, allowing centring on situations he labelled “quasi-equilibria” or “shortperiod equilibria” situations in which the stock of capital is assumed given, and second, explaining how, as soon as the capital stock is assumed to vary, the economy is likely to enter in a continual movement through a series of short-period equilibriums or quasi-equilibriums.

Julio G. López, Michaël Assous

3. Genesis and Originality of Kalecki’s Theory

Abstract

As mentioned in Chapter I, Kalecki set up for the first time the essential of his formulation of the principle of effective demand already in 1933 in his booklet Essay on the Business Cycle Theory, which was followed by several other publications, where he further developed his theory. The first objective of this chapter is to present the main steps in the development of Kalecki’s theory of profits, output and employment; whose final version we presented in the previous chapter. The second objective will be to show the originality of Kalecki’s formulation of the principle of effective demand. In this context we will discuss whether or not he anticipated some of the main ideas that Keynes put forward in The General Theory of Employment, Interest and Money, as well as some differences between the two authors. Our last objective will be to contrast Kalecki’s theory with the neoclassical synthesis into which J.R. Hicks embedded Keynes’s theory shortly after the publication of The General Theory.

Julio G. López, Michaël Assous

4. The Theory of Prices and Income Distribution

Abstract

In chapter 2 we argued that in Kalecki’s theory output and employment depend on capitalist expenditure, and on the distribution of income; and more precisely on the share of profits in the national income. We will now present Kalecki’s theory of income distribution, which is closely related to his theory of price determination. The latter, in turn, is related to his view that modern capitalism is characterized by market imperfections, both on the labour market and product market. By focusing on these imperfections, Kalecki took into account two important differences between perfect and imperfect competition.

Julio G. López, Michaël Assous

5. Kalecki’s Long-Run Theory of Effective Demand: The Trend and Business Cycles

Abstract

In 1933, when constructing a macrodynamic business-cycle model, Kalecki’s purpose was to explain observed cycles with a macroeconomic theory capable of mathematical expression, leading to a dynamic system whose solutions are endogenous, deterministic cycles of constant amplitude. In substance, the demonstration of the intrinsic instability of capitalist economies was at stake. With this purpose in mind, using a linear mixed difference and differential equation, Kalecki tried to show at the 1933 Leyden meeting of the Econometric Society that this aim had been reached, showing in particular that his system gave rise to a cyclical solution of constant amplitude for a special value of the parameters. But,

Alas, Frisch was there to point out that since the Greeks it has been accepted that one can never say an empirical quantity is exactly equal to a precise number. Given his aim, this was a deadly blow to Kalecki […]. (Goodwin 1989, in Sebastiani 1989: 249–250)

Owing to the remarks he received, Kalecki afterwards temporarily accepted Frisch’s Swinging System approach whereby the economy has a natural tendency to reach a stationary equilibrium and cycles occur due to exogenous shocks. Pushing momentarily into the background the demonstration of the intrinsic instability of capitalist economies, he thus centred his efforts on the explanation outlined in the conclusion of his 1934 article “Three Systems” (Kalecki 1934a [1990]).

Julio G. López, Michaël Assous

6. Kalecki’s Macroeconomics of Public Finance and of Monetary Policy

Abstract

After many years of being considered a forbidden weapon by both governments and many economists and as a consequence of the depth of the current world financial crisis, public spending, and even deficit spending, has regained a place of honour in the arsenal of acceptable economic policy instruments. This new situation is hailed by publicists and pundits as a revival of Keynes and Keynesianism.

Julio G. López, Michaël Assous

7. Kalecki’s Open Economy Macroeconomics

Abstract

In previous chapters our discussion has been confined to Kalecki’s analysis of a closed economy. The aim of this chapter is to show how he included the effects of foreign trade in his approach to effective demand. Maybe not everybody, not even Kalecki’s most unconditional admirers, would entirely subscribe to Joan Robinson’s assertion: “Keynes’s General Theory was worked out in terms of a closed system. … Here also Kalecki’s work claims priority” (Robinson, Preface to Kalecki (1969)). But we claim that Kalecki had a very original and novel approach to analyse open economy macroeconomics. Of course, some of the points he raised are now of common knowledge. However, we submit that in any case this part of his theory is still worth studying because, as is usually the case with this author, one can always find something which is unique and appealing in his reasoning.

Julio G. López, Michaël Assous

8. Michal Kalecki: A Pioneer of Development Economics

Abstract

Kalecki made important contributions to development economics, which rank him among the founding fathers of this area of economics. The objective of this chapter is to give an account of his contributions, mostly by letting the author speak for himself. We will start the presentation of his ideas summarizing one of the last papers he wrote on the subject (Kalecki (1966b [1993]), where he presented in his usual concise style his overall outlook.

Julio G. López, Michaël Assous

9. Kalecki: The Socialist Economist

Abstract

Kalecki was a convinced socialist during his whole lifetime. He was part of that fascinating group of Central and Eastern European intellectuals that suffered directly from the ravages ensuing from the great crisis of the 1930s, who were greatly influenced by Marx’s ideas. We must keep in mind, though, that during the formative years of that group, Marxism was a very vital intellectual current. Outside of the Soviet Union and the communist parties — of which Kalecki was never a member1 — there was not an “official” Marxist school of thought, with enough power to impose its own theoretical vision above the rest.

Julio G. López, Michaël Assous

10. Michal Kalecki’s Intellectual Legacy

Abstract

At the end of our journey, when we want to assess Michal Kalecki’s intellectual legacy, we will probably be amazed by the range, the depth, the importance and the originality of his work. Perhaps we should underlie this last point. Nobel Prize winner Robert Solow (1975) remarked, “Michal Kalecki … seems to have sprung, full-grown, from his own brow; and his important work on macroeconomics is written not in opposition to the orthodoxy of the time, but in utter independence of it”.

Julio G. López, Michaël Assous

Backmatter

Title: Michal Kalecki
Authors: Julio G. López
Michaël Assous
Copyright Year: 2010
Publisher: Palgrave Macmillan UK
Electronic ISBN: 978-0-230-29395-3
Print ISBN: 978-1-349-54775-3
DOI: https://doi.org/10.1057/9780230293953