Michał Kalecki in the 21st Century

Michał Kalecki in the 21st Century

Palgrave Studies in the History of Economic Thought Series Palgrave Studies in the History of Economic Thought publishes contributions by leading scholars, illuminating key events, theories and individuals that have had a lasting impact on the development of modern-day economics. The topics covered include the development of economies, institutions and theories. Titles include : Jan Toporowski and Łukasz Mamica ( editors ) MICHAL KALECKI IN THE 21ST CENTURY Tadeusz Kowalik ROSA LUXEMBURG THEORY OF ACCUMULATION AND IMPERIALISM Riccardo Bellofiore, Ewa Karwowski and Jan Toporowski ( editors ) ECONOMIC CRISIS AND POLITICAL ECONOMY Volume 2 of Essays in Honour of Tadeusz Kowalik Riccardo Bellofiore, Ewa Karwowski and Jan Toporowski ( editors ) THE LEGACY OF ROSA LUXEMBURG, OSKAR LANGE AND MICHAŁ KALECKI Volume 1 of Essays in Honour of Tadeusz Kowalik Timothy Shenk MAURICE DOBB: Political Economist Jan Toporowski MICHAŁ KALECKI: AN INTELLECTUAL BIOGRAPHY Volume 1 Rondezvous in Cambridge 1899 1939 Forthcoming titles: Anthony Thirlwall ( editor ) ESSAYS ON KEYNESIAN AND KALDORIAN ECONOMICS Jan Toporowski MICHAŁ KALECKI: AN INTELLECTUAL BIOGRAPHY Volume 2 1939 1970 The full list of titles available is on the website: www.palgrave.com/economics Palgrave Studies in the History of Economic Thought Series Standing Order ISBN 978 1 137 35018 3 ( outside North America only ) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and the ISBN quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, England

Michał Kalecki in the 21st Century Edited by Jan Toporowski School of Oriental and African Studies, University of London, UK Łukasz Mamica Cracow University of Economics, Poland

Introduction, selection and editorial matter Jan Toporowski and Łukasz Mamica 2015 Individual chapters Contributors, 2015 Softcover reprint of the hardcover 1st edition 2015 978-1-137-42827-1 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2015 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-49137-7 ISBN 978-1-137-42828-8 (ebook) DOI 10.1057/9781137428288 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress.

Contents List of Figures List of Tables Notes on Contributors vii ix x Introduction 1 Łukasz Mamica and Jan Toporowski Part I Kalecki and Macroeconomics 1 The Failure of Economic Planning: The Role of the Fel dman Model and Kalecki s Critique 9 Peter Kriesler and G. C. Harcourt 2 Are Rigid Prices the Cause of Unemployment? 29 Jerzy Osiatyński 3 Kalecki and Post-Keynesian Economics 51 Marc Lavoie 4 Effective Demand and Path Dependence in Short- and Long-Run Growth 68 Amit Bhaduri 5 Kaleckian Traverse, Socialist Planning and Hayekian Objections 80 Roni Demirbag and Joseph Halevi 6 The Impact of Innovations on Investments and Economic Growth in the Thought of Kalecki 99 Łukasz Mamica 7 Dr Kalecki on Mr Keynes 108 Hanna Szymborska and Jan Toporowski Part II Kalecki and Crisis in the 21st Century 8 Michał Kalecki s Capitalist Dynamics from Today s Perspective 119 D. Mario Nuti v

vi Contents 9 Kalecki s Profits Equation after 80 years 131 Kazimierz Łaski and Herbert Walther 10 Kalecki and Kowalik on the Dilemma of Crucial Reform in the United States and Poland 157 Gary A. Dymski 11 A Kaleckian Perspective on Changes in the Aggregate Income Distribution in the US 182 Tracy Mott and Mark Evers 12 Addressing the Great Recession Using Kalecki s Macroeconomic Analysis 198 Malcolm Sawyer 13 Economic Policies for Exit from Crisis, in a Post-Kaleckian Model 212 Edwin Le Heron 14 Firm Heterogeneity, Finance and Development: A Kaleckian Perspective 239 Jago Penrose 15 The Kalecki-Steindl Theory of Financial Fragility 252 Jan Toporowski Index 265

List of Figures 1.1 Growth rate of net output as a function of the degree of industrialization 14 1.2 The choice of technique in China 20 7.1 Determination of short-run equilibrium in Kalecki s interpretation 110 7.2 Impact of an increase in capitalist expenditure on the short-run equilibrium in Kalecki s interpretation 111 9.1 Lowering the wage share 138 9.2 The Kaleckian cross 139 9.3 US sectoral financial balances 147 9.4 The uses of gross corporate profits 151 9.5 Increasing income inequality in the US 152 10.1 Annual US unemployment rates in post-1980 expansions, trough to peak (truncated at 6 years) 169 10.2 Annual US long-term unemployment rates in post-1980 expansions, trough to peak (truncated at 6 years) 170 10.3 Annual percentage changes in components of US GDP growth, 1992 2010 171 10.4 Annual Polish unemployment rates in post-1990 expansions, trough to peak 176 10.5 Annual Polish labour-force participation rates in post-1990 expansions, trough to peak 176 10.6 Annual Polish youth unemployment rates in post-1990 expansions, trough to peak 177 10.7 Annual Polish long-term unemployment rates in post-1990 expansions, trough to peak 177 10.8 Annual percentage changes in components of Polish GDP growth, 1992 2010 178 11.1 Degree of unionization 188 11.2 NIPA mark-up 192 11.3 BLS mark-up 192 11.4 BLS and mixed mark-up comparison 193 11.5 Real corporate dividends 195 13.1 Inflation curve 226 13.2 Inflation and state of confidence of firms and banks in France effects on the economic growth 227 vii

viii List of Figures 13.3 Three hypotheses for fiscal policy 229 13.4 Better income distribution effects on economic growth 230 13.5 Lower wages effects on economic growth 231 15.1 Household saving & firms retained profits in industrial capitalism 256 15.2 Household saving & firms retained profits in financialized capitalism 262

List of Tables 11.1 Labour Income and Productivity in the US 185 11.2 Unemployment in the United States 186 11.3 The Mark-up in the United States 190 ix

Notes on Contributors Amit Bhaduri is Emeritus Professor of Economics at the Jawaharlal Nehru University, Delhi, India. Roni Demirbag is Lecturer at the Department of Political Economy at the University of Sydney, NSW Australia. Gary A. Dymski is Professor of Applied Economics at the University of Leeds, UK. Mark Evers is Adjunct Professor in the Economics Department, University of Denver, USA. Joseph Halevi is Senior Lecturer in the Department of Political Economy in the University of Sydney. He is also a member of CRIISEA at the Université de Picardie, Amiens France and of the International University College, Turin Italy. G.C. Harcourt is Visiting Professorial Fellow at the University of New South Wales, Australia, Emeritus Reader in the History of Economic Theory at the University of Cambridge, UK, and Emeritus Professor of Economics at the University of Adelaide, Australia. Peter Kriesler is Associate Professor of Economics at the University of New SouthWales, Australia. Marc Lavoie is Professor in the Department of Economics at the University of Ottawa, Canada, and IMK research fellow at the Institut für Makroökonomie in Düsseldorf, Germany. Edwin Le Heron is Associate Professor in Economics at the Bordeaux Institute of Political Sciences, France, and Researcher at GREThA of the University of Bordeaux. Kazimierz Łaski is Emeritus Professor of Economics at the University of Linz, Austria, and the Vienna Institute for International Economic Studies. Łukasz Mamica is Associate Professor in the Department of Public Economy and Administration, Cracow University of Economics, Poland. Tracy Mott is Associate Professor in the Economics Department, University of Denver, USA. x

Notes on Contributors xi D. Mario Nuti is Professor of Comparative Economic Systems at the University of Rome La Sapienza. Jerzy Osiatyński is a member of the Monetary Policy Committee of the National Bank of Poland, Professor of Economics at the University of Bielsko-Biała, and Professor of Economics at the Institute of Economics of the Polish Academy of Sciences; from 2007 to 2013 he chaired the Institute s Board of Studies. He edited the Collected Works of Michał Kalecki. Jago Penrose is Economic Adviser to the UK Government at the Department of Transport in London. Malcolm Sawyer is Emeritus Professor of Economics, University of Leeds, UK. Hanna Szymborska is a postgraduate student in the Department of Economics, University of Leeds. Jan Toporowski is Professor of Economics and Finance at the School of Oriental and African Studies, University of London, and Visiting Professor of Economics at the University of Bergamo, and International University College, Turin. Herbert Walther is Professor of Economics and Director of the Institute of Labour Economics at the Vienna University of Economics and Business.