The Impact of the Division of Labor on Market Relations

Abstract

Lord Kaldor, or Nicky as most of us called him, was my teacher at the London School of Economics and later became a good friend. My debt to his teaching is evident from several of my early writings, which were based on ideas I first encountered in his published work and which I criticized or developed a little further. More fundamentally, I also learned from him to always focus on the facts (or as he called them ‘stylized facts’) of the real world and guard against being seduced by elegant theories into mistaking their simplifying assumptions for reality. Remember how he chafed against the assumption of linear homogeneous production functions underlying most economic theories, and how he tried to incorporate increasing returns to scale into growth theory.