Michal Kalecki Biography Theory

Michal Kalecki: A Comprehensive Challenge to Orthodoxy

Michal Kalecki Biography and Theory, Kalecki Economics

Michal Kalecki was born in Poland in 1899. He died in 1970 after a distinguished and sometimes controversial career at Oxford, the United Nations (where he encountered McCarthyism), and in Poland (where he clashed with Stalinism). Originally he studied engineering but the sad state of the Polish economy in his youth forced him to leave these studies unfinished. By a series of fortuitous accidents Kalecki joined the economics profession. He brought to it certain technical skills in mathematics and statistics, insights into the nature of firms, and above all a deep concern for his fellow man forged by his experience of the Great Depression. Further, perhaps because he had been a journalist, Kalecki had that rare ability to express new and exciting ideas clearly and succinctly, in contrast to many of the great 'tree destroyers' of our time.

Kalecki's contribution to economics is wide-ranging, covering the dynamics of the advanced capitalist economies — the subject matter of this chapter - planned socialist or underdeveloped economies and war economies. His work is characterised by a strong practical content, as one would expect of the man who was concerned with the UN's World Economic Reports and the Polish Planning Commission's Perspective Plan. Further, Kalecki's writings contain a pronounced sociopolitical element, for his main concern was to effect policy changes that would improve the conditions of the masses. In this very real way Kalecki was a political economist who devoted his attention to real problems by attempting to construct a complete system of theories integrating the micro and macro elements and applying this to, say, the crucial issue of income distribution as well as income deter­mination.

Kalecki could be considered a pre-Keynesian, for in an article (1933) somewhat shorter than the chapter you are reading he outlined the major features of the General Theory some years before Keynes. However he is perhaps best considered as the leading inspiration for the post-Keynesians. For example, the influential Cambridge Journal of Economics, claiming 'strong emphasis on realism of analysis', cites Kalecki together with Marx and Keynes as its intellectual mentors. However Kalecki's work, given its nature and enormous relevance, possesses for us one really surprising feature - and that is the limited recognition which it has gained. Lawrence Klein comments: 'Kalecki was truly a phenomenon, known well to a select few but with a lasting impact on the economics of our age . . . some scholars generate "fan clubs", and Kalecki had his, although it was reserved, discrete, and not apparent to the outside world, including the bulk of professional economists'.

This lack of appreciation cannot be explained solely by Kalecki's natural modesty and his unwillingness to market himself as have some economists. No, an important consideration must be the nature of ruling ideologies and their relation to challenges to them, an issue Kalecki recognised (1943b). The purpose of this essay is to outline the main elements of Kalecki's comprehensive challenge to orthodoxy; to indicate some of the instances where his ideas have been influential and to discuss why his ideas have failed to gain as wide an audience as they deserve. Many of the widely accepted ideas of today concerning advanced capitalist economies were developed in the 1950s and 1960s when these economies were experiencing an unprecedented period of economic growth. However the experience of the 1970s has again focused attention on the crucial issue of the causes and conditions which generate a trend towards recovery and growth within a framework of cyclical fluctuations. Further, there is a growing dissatisfaction with 'inflationary gap' explanations of inflation based on general excess demand in relation to supply. Re-examination of macroeconomic theories of employment and income has resulted in some cases in a search for a set of microeconomic foundations and thereby to a rediscovery and acceptance of Kalecki's ideas. At the same time the post-Keynesians have been endeavouring to construct a complete, logically consistent complex of theories dealing with employment, prices, income distribution, accumulation and growth. In its entirety Kalecki's work embraces these issues and any attempt to evaluate his contribution to contemporary economics must adopt this same approach. This is precisely what has not been done in the past.

Post-Keynesians have rejected the Hicksian IS/LM interpre­tation of Keynes's work. They consider that IS/LM over­emphasizes some aspects whilst rudely neglecting others, thus giving a false impression of the essence of Keynes's ideas. They feel that it is impossible to repair this 'deformation' within mainstream economic thinking. Instead they have chosen to draw on Kalecki's concepts, for his work is influenced by the Marxian tradition rather than the Marshallian approach which con­taminates Keynes's work.

Post-Keynesians have consciously attempted to formulate a complete theoretical complex influenced by the heated discus­sions following the publication of Kuhn's Structure of Scientific Revolutions (Kuhn, 1962). The problem was that important criticisms of some aspects of orthodox economics (for example studies of monopolistic competition, or the work of Veblen and even that of Keynes) could not break its hold over the profession and policy making. Typically the criticisms would be translated into 'common terms', i.e. they were filtered and their emphases changed; then they were treated as an example of a special case, a slight aberration from the powerful general line. Certainly they were not discussed as an alternative to the orthodoxy; rather they were destined for incorporation in a modified form or to be forgotten. Disequilibrium economics can be considered to have passed through this process.

In this context post-Keynesians were well aware of the need to develop a total theoretical system, for all new contributions to economics are evaluated by comparison to the ruling theory. Such a process ensures the continuation of orthodoxy as all isolated criticisms will be translated or transformed and thereby made to appear a mere footnote. What then are the central elements of Kalecki's analysis of developed capitalism?