Abstract
Kalecki’s statistical investigations did not distract him from his attempts to explain his theories more clearly after his set-backs in Cambridge. But in a profession which increasingly aspired to mathematical precision and took for granted the reliability of statistics, his method of bold approximations occasionally followed by consideration of complicating factors was ill attuned to readers who took received theory as the starting points for enriching, even occasionally modifying that theory, and who therefore had difficulty in placing themselves at the starting point of Kalecki’s analysis.
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- 1.
Kalecki called this replacement cost ‘real’ capital.
- 2.
Kalecki ‘Some Remarks on Keynes’s Theory’ 1936.
- 3.
Kalecki ‘A Theorem on Technical Progress’ 1941h.
- 4.
Kalecki ‘“New” Industries and the Overcoming of the Crisis’ 1932a.
- 5.
Kalecki Studies in Economic Dynamics 1943, Chap. 5.
- 6.
Keynes, letter to Joan Robinson, dated the 4 February 1941 in Keynes 1983, pp. 829–830.
- 7.
Joan Robinson letter to Keynes dated 4 February 1941, Keynes 1983, p. 830.
- 8.
Keynes letter to Joan Robinson dated 14 February 1941, Keynes 1983 p. 831.
- 9.
Robinson letter to Keynes, dated 14 February 1941, Keynes 1983, pp. 831–832. Such is the credulity of our economics profession, or the nature of scientific progress in the discipline, that half a century later it was accepted in the highest circles of the discipline that firms could not but operate at full capacity through the deepest slump.
- 10.
Keynes letter to Joan Robinson, dated 18 February 1941, Keynes 1983, p. 832.
- 11.
Robinson 1936. Joan Robinson’s essay in fact is based on the idea that the capital stock adjusts to the rate of interest in the Keynesian ‘marginal efficiency of capital,’ a view that Kalecki rejected. See Kalecki ‘Some Remarks on Keynes’s Theory’ 1936.
- 12.
Robinson letter to Keynes, dated 24 February 1941, Keynes 1983, pp. 832–833.
- 13.
Keynes letter to Robinson, 4 March 1941, Keynes 1983, p. 833.
- 14.
Keynes letter to Kaldor, 4 March 1941, Keynes 1983, p. 834.
- 15.
Letter of Joan Robinson to Keynes, 6 March 1941, Keynes 1983, pp. 834–835.
- 16.
Letter of Keynes to Joan Robinson, 12 March 1941, Keynes 1983, pp. 835–836. Kalecki makes clear in his paper that what he means by the ‘actual’ system is not what actually happens in any real economy but, as indicated above, the institutional or market consequences of technical change, as opposed to their technical effects in the system of production.
- 17.
Letter of Joan Robinson to Keynes 13 March 1941, Keynes 1983, p. 836.
- 18.
Letter of J.M. Keynes to N. Kaldor, dated 18 March 1941, Keynes 1983, p. 836.
- 19.
Kalecki ‘Essai d’une théorie du mouvement cyclique des affaires’ 1935b; and ‘A Macrodynamic Theory of Business Cycles’ 1935c.
- 20.
The algebra of this is simple: Without government or foreign trade, all money income must be generated by some expenditure by capitalists or workers. Workers are employed in three sectors producing wage goods, investment, and capitalists’ consumption goods sectors, where revenue in each sector is divided into wages and profits as follows:
Wages goods sector W = W w + P w
Investment goods sector I = W I + P I
Capitalist consumption goods sector C = W C + P C
The total wage bills of the three sectors, W w , W I , and W c must by definition equal the sales revenue of the wage goods sector, W or W = W w + W I + W c . It follows that profits must be equal to expenditure on investment plus capitalists’ consumption, or P = I + C = P W + P I + P C .
- 21.
Kalecki ‘A Theory of Profits’ 1942e.
- 22.
Ibid.
- 23.
See Toporowski Michał Kalecki An Intellectual Biography volume 1 Chap. 7.
- 24.
Kalecki Essays in the Theory of Economic Fluctuations p. 45; Marx Capital Volume II 1974a, Chap. XXI. See also Toporowski Michał Kalecki An Intellectual Biography volume 1 pp. 118–119 and Kowalik Rosa Luxemburg Theory of Accumulation and Imperialism 2014, Appendix 1.
- 25.
Kalecki was later to add here, in parentheses, ‘(If salary rates do not rise relative to wage rates the real salary bill falls as well.)’ Kalecki, Studies in Economic Dynamics 1943b, p. 50.
- 26.
Kalecki, ‘A Theory of Profits’ 1942e. See also Lopez and Assous Michał Kalecki 2010, p. 197 and Kriesler, Kalecki’s Microanalysis 1987, Chap. 7. Karl Marx originally put forward the idea of the price system as a mechanism for the distribution of profits in Capital Volume III 1974b, p. 861. His insight was extended in Hilferding Finance Capital pp. 190–191.
- 27.
Kalecki ‘A Theory of Profits’ 1942e. It should be pointed out that Kalecki was comparing the average rate of profit for an economy and its minimum level during the business cycle. In fact, as he was later to write, it is individual firms that invest, rather than capitalists, as a whole. This means that rather than looking at the average rate of profit for the economy as a whole, it is necessary to look the marginal rate of profit facing individual firms. As shown in the essay on Costs and Prices in Studies in Economic Dynamics that, given the overall degree of monopoly, or ratio of profits to wages, a given firm’s marginal rate of profit would consist of the average rate of profit plus a margin representing its market power. That margin may be positive or negative. But the sum of those margins overall for the economy as a whole would be zero. This is further discussed in Chap. 5.
- 28.
Keynes, Treatise on Money Volume 1 1930, p. 139. The ‘widow’s cruse’ is a Biblical allusion to the First Book of King, verse 17, in which a widow feeds the prophet Elijah from her cruse or jar that is never depleted by her charity.
- 29.
Keynes ‘Unemployment as a World Problem’ Harris Memorial Foundation, Chicago University, in Keynes 1973a, p. 353.
- 30.
Ibid., p. 354.
- 31.
Toporowski Theories of Financial Disturbance 2005, pp. 85 and 124–125.
- 32.
Keynes letter to Kalecki of 2 January 1942, in Keynes 1983, p. 837–838.
- 33.
Kalecki letter to Keynes, dated 9 January 1942, in Keynes 1983, p. 838.
- 34.
Keynes, General Theory 1936, pp. 177–178.
- 35.
Keynes letter to Kalecki of the 10 January 1942, ibid., pp. 838–839.
- 36.
Kalecki letter to Keynes of the 15 January 1942, ibid., pp. 839–840.
- 37.
Keynes letter to Kalecki of the 20 January 1942, ibid., p. 840.
- 38.
Kalecki letter to Keynes of the 27 January 1942, ibid., pp. 840–841.
- 39.
Keynes letter to Kalecki of the 28 January 1942, ibid., p. 841.
- 40.
Kalecki ‘A Theory of Profits’ 1942e.
- 41.
Lange’ Review of Kalecki’s Essays in the Theory of Economic Fluctuation 1941.
- 42.
Kalecki, letter to Kaldor dated 22 July 1942.
- 43.
Kaldor, ‘Alternative theories of distribution’ 1955. See also Kriesler Kalecki’s microanalysis 1987, pp. 106–111.
- 44.
Kaldor Papers, NK/3/30/126/14.
- 45.
Letter of Kaldor to Kalecki dated 31 July 1941, Kaldor Papers NK/3/30/126/10-11.
- 46.
Ibid.
- 47.
Letter of Kalecki to Kaldor dated 6 August 1942, Kaldor Papers NK/3/30/126/8.
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Toporowski, J. (2018). Progress and Profit. In: Michał Kalecki: An Intellectual Biography. Palgrave Studies in the History of Economic Thought. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-69664-5_5
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