Michal Kalecki

The Polish macroeconomist Michal Kalecki (1899-1970) was a prolific author. His key contributions were theories of political business cycles, determinants of investment, and third world development.

Kalecki was born in Lodz, Poland. His first major article on political business cycles, "An Essay on the Theory of the Business Cycle," was published in 1933 by the Research Institute of Business Cycle and Prices (RIBCP) where he had worked since 1929. Kalecki presented the paper at the International Econometrics Association, and it was published in Revue d'Economie Politique and Econometrica in 1935. This preempted the seminal 1936 work of John Maynard Keynes (1883-1946), the General Theory of Employment, Interest and Money. Kalecki moved to England in the 1930s where he worked in Oxford, Cambridge and the London School of Economics. It was in England that he met Keynes in 1937.

Kalecki differed from Keynes in that he believed investment was undertaken predominantly out of profits. He assumed that capitalists saved, but not workers. Consequently, if capitalists ceased to invest, they would make nothing, since he posited that capitalist income depends on capitalist expenditure. This also led Kalecki to observe that the time lag between investment decisions and actual investment was very significant. According to Kalecki's understanding, until actual investments are made, there cannot be any profit and consequently there cannot be any further investment until the initial intention to invest is actualized.

When Nazi Germany occupied Poland in 1939, Kalecki, of Jewish origins, extended his stay in England but never sought naturalization. During World War II, Kalecki advised the British government, particularly with respect to rationing and the wartime economy. Later in life he would advise the United Nations and developing nations, including Cuba, India, Israel and Mexico. He returned to Poland briefly after the war, in 1946, and was an advisor for the Ministry of Economics. The same year, he accepted a United Nations Secretariat position in New York. As a socialist, Kalecki was a potential target for Senator Joseph McCarthy's anticommunist campaign, which probably drove him back to Poland in 1955. Kalecki initially advised the socialist state but was considered too pessimistic and returned to research and teaching at the Warsaw Institute of Research on Business Cycles and Prices.

Kalecki's Essays in the Theory of Economic Fluctuations (1939) established Kaleckian economics. Like Keynes, Kalecki believed that government spending could achieve full employment. However, he emphasized the need for political will to achieve that. He considered that the main obstacle to full employment was the political influence of business interests opposed to trade unionism and the enforcement of more rigorous working conditions. In his 1943 paper "The Political Aspects of Full Employment," Kalecki pessimistically predicted, correctly, that perfect competition would never be achieved in a free market economy, because the market is too susceptible to domination by a few businesses in positions of power.

In his 1954 Theory of Economic Dynamics, Kalecki published a simple formula for understanding the total volume of gross profits in a given period. Kalecki selected a model of a closed economy with no tax or government spending. He observed that gross investment and consumption would equal gross national product. He then divided employer and worker gross national product. Gross profits were taken to include rent, interest, depreciation, dividends, withdrawals and undistributed profits. Kalecki again used the assumption that workers do not invest, allowing him to draw the conclusion that their consumption was equal to their wages. This could be reduced to the simple formula: "Gross profits = Gross investment + Capitalist consumption."

In 1959 Kalecki, Oskar Lange and Czeslaw Bobrowski directed a seminar on third world socio-economic problems. Kalecki remained involved in third world development almost up to the end of his life through the Centre of Research on Underdeveloped Economies. He chaired the Research Board but resigned in 1968 on ideological grounds. Kalecki considered that in the developing world the problem of unemployment resulted from a shortage of capital equipment and necessities. Since increased government expenditure would exacerbate inflationary pressure, he considered that the solution lay in the expansion of productive capacity by increasing investment. Kalecki concluded that political obstacles were the main barrier to breaking out of the cycle of economic backwardness. Kalecki observed that in some developing countries, such as Bolivia and India, landowning classes had gone, but political power had passed into the hands of the lower middle classes. To retain control and independence from foreign capital, he argued, these groups carried out land reform. This favored the lower middle classes but, Kalecki maintained, further impoverished the proletariat.

Kalecki's approach, emphasizing political factors underlying economic policies and their effects, was novel and influential on post-Keynesian economists. Much of his work was only translated from Polish posthumously.

Michal Kalecki: Selected full-text books and articles

Kalecki's Economics Today By Zdzislaw L. Sadowski; Adam Szeworski Routledge, 2004
Capitalism, Economic Dynamics By MichaŁ Kalecki; Jerzy Osiatyński; Chester Adam Kisiel Clarendon Press, 1991
Socialism--Functioning and Long-Run Planning By Michal Kalecki; Jerzy Osiatynski; Bohdan Jung Clarendon Press, 1992
Socialism: Economic Growth and Efficiency of Investment By Michal Kalecki; Jerzy Osiatynski; Bohdan Jung Clarendon Press, 1993
Developing Economies By Jerzy OsiatyŃski Clarendon Press, 1993
Readings in the Theory of Income Distribution By Frank E. Norton The Blakiston Company, 1946
Librarian’s tip: Chap. 11 "The Distribution the National Income" by Michael Kalecki
What Are the Questions? And Other Essays: Further Contributions to Modern Economics By Joan Robinson M. E. Sharpe, 1981
Librarian’s tip: Chap. 5 "Accumulation and Exploitation: An Analysis in the Tradition of Marx, Sraffa and Kalecki"
New Keynesian Economics/Post Keynesian Alternatives By Roy J. Rotheim Routledge, 1998
Librarian’s tip: Chap. 15 "A Kaleckian View of New Keynesian Macroeconomics"
How Economists Model the World into Numbers By Marcel Boumans Routledge, 2005
Librarian’s tip: Discussion of Michal Kalecki begins on p. 6
Interactions in Political Economy: Malvern after Ten Years By Steven Pressman Routledge, 1996
Librarian’s tip: Chap. 6 "Prices, Expectation and Investment"
An Outline of the History of Economic Thought By Ernesto Screpanti; Stefano Zamagni Oxford University Press, 2005 (2nd edition)
Librarian’s tip: Chap. 7.3. "Michal Kalecki"
Post Keynesian Price Theory By Frederic S. Lee Cambridge University Press, 1998
Librarian’s tip: Chap. 7 "The Origin of the Doctrine of Mark Up Prices: Michal Kalecki's Microanalysis" and Chap. 8 "Kalecki's Microanalysis and the War Years" and Chap. 9 "Kalecki and the Cambridge Contributions"
Keynes, Post-Keynesianism and Political Economy By Claudio Sardoni; Peter Kriesler Routledge, 1999
Librarian’s tip: "Life is a Traverse" begins on p. 408
Profit Theory and Capitalism By Mark Obrinsky University of Pennsylvania Press, 1983
Librarian’s tip: "Kalecki: Monopoly and Surplus" begins on p. 134
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