Kaldor in His Time — and Ours

Abstract

With the exception of An Expenditure Tax, all Kaldor’s books were collections of essays, speeches and reports, most of them previously published.¹ The earlier volumes, at least, were widely reviewed, by some of the most prominent theorists of the day. Some of the plaudits for An Expenditure Tax from authorities like Arnold Harberger and Richard Musgrave were reported in Chapter 5. Another reviewer concluded that, ‘[i]n the true Marshallian tradition, even the footnotes are immensely interesting’ (Break 1956, p. 177). This did not prevent the reviewers from being critical — in some cases, sharply critical — of the substance of the book. Musgrave objected that the distinction between consumption and saving was less clear-cut than Kaldor supposed: ‘Why are outlays for schooling and health to be considered “spending”, while those for housing or rare pictures are considered “investment”?’ (Musgrave 1957, p. 202). Although Musgrave did not say so, this highlighted a more general problem with Kaldor’s economics: a complete lack of interest in human capital, which might (and probably should) have played an important part in his analysis of economic growth. Musgrave also raised doubts about the administrative difficulties associated with the taxation of expenditure, a criticism developed at some length in the Economic Record by the Australian tax official D. Steele Craik (1957).²