Michał Kalecki

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"By 1959 the policy makers had forsaken rationality altogether and had reverted to "hurrah planning". Constraints on the growth rate were disregarded under the spell of optimism engendered by the good performance in 1956–57. Although Kalecki remained with the Commission of the Perspective Plan for another year beyond 1959, all concerned knew that it was a pro forma function. The end of 1958 had marked the beginning of the erosion of his influence." Still holding some of his government appointments, Kalecki spent much of the rest of his professional life in teaching and research, as a university professor from 1956 (Central School of Planning and Statistics and the University of Warsaw) and member of the Polish Academy of Sciences from 1957. In 1959, he began directing a seminar on socioeconomic problems of the Third World, along with Oskar R. Lange and Czesław Bobrowski. He was instrumental in the establishment and functioning of the Department of Economic Problems in Developing Countries, operated jointly by Warsaw University and the School of Planning and Statistics. When the 1968 Polish political crisis unfolded, Kalecki retired in protest against the wave of antisemitic dismissals and firings that affected many of his colleagues. He also devoted…Citește mai mult

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Background and overview Despite the fact that Kalecki authored many theoretical economic constructs, his interest in economics was more practical than academic and resulted from his work in engineering, journalism, credit investigation, use of statistics and observation of business operations. Full-time university teaching, for which he did not have formal qualifications (a degree), he did only during the last thirteen years of his career. He was contemptuous of abstract research and declined Keynes's invitation to undertake a critique of Jan Tinbergen's econometric business cycle work, for which he would also lack an in-depth knowledge of statistical theory. Kalecki stressed that the predominant economic growth models were built on the assumption of an idealized laissez-faire capitalism and did not properly take into account the crucial and empirically demonstrable role of the government sector, the state's intervention and the interaction between the state and private sectors. In 1943 Kalecki wrote: '... "discipline in the factories" and "political stability" are more appreciated by the business leaders than are profits. Their class instinct tells them that lasting full employment is unsound from their point of view and that unemployment is an integral part of the normal capitalist system.' The capitalists therefore want to limit…Citește mai mult

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Profit equation The volume of economic literature written by Kalecki during his life was very large. Although in most of his articles he returned to the same subjects (business cycles, determinants of investment, socialist planning), he often did it from a slightly unusual perspective and with original contributions. Kalecki's most famous contribution is his profit equation. Kalecki, whose early influences came from Marxian economists, thought that the volume of profits and their sharing in a capitalist society were vital points to be treated. This followed from Karl Marx's work on relationships such as the rate of surplus value or the organic composition of capital (and even a forecast about the overall trend of profits). However, Marx was not able to make a meaningful statement about the total volume of profits in a given period. Kalecki derived this relationship in an extremely concise, elegant and intuitive way. He starts by making simplifications which he later progressively eliminates. These assumptions are:

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Divide the whole economy into two groups: workers, who earn only wages, and capitalists, who earn only profits. Workers do not save. The economy is closed (there is no international trade) and there is no public sector. With these assumptions Kalecki derives the following accounting identity:

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Michał

Michał Kalecki (Polish: [ˈmixaw kaˈlɛt͡skʲi]; 22 June 1899 – 18 April 1970) was a Polish Marxian economist. Over the course of his life, Kalecki worked at the London School of Economics, University of Cambridge, University of Oxford, and Warsaw School of Economics, and was an economic advisor to the governments of Poland, France, Cuba, Israel, Mexico, and India. He also served as the deputy director of the United Nations Economic Department in New York City. Kalecki has been called "one of the most distinguished economists of the 20th century" and "likely the most original one". It is often claimed that he developed many of the same ideas as John Maynard Keynes before Keynes but remains much less known to the English-speaking world. He offered a synthesis that integrated class analysis of Marxism and the new literature on oligopoly theory, and his work had a significant influence on both the neo-Marxian (Monopoly Capital) and post-Keynesian schools of economic thought. He was one of the first macroeconomists to apply mathematical models and statistical data to economic questions. Being also a political economist and a person of left-wing convictions, Kalecki emphasized the social aspects and consequences of economic policies. Kalecki made major theoretical…Citește mai mult

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Early years: 1899–1933 Michał Kalecki was born on 22 June 1899 in Łódź, Congress Poland, then part of the Russian Empire, to a middle-class Ashkenazi Jewish family. Information about his early years is very sparse, part of it being lost during the German occupation. He grew up in a major labor-turbulent industrial center, which affected his future views. In 1917 Kalecki enrolled at the Warsaw Polytechnic to study civil engineering. He was a very able student and formalized a generalization of Pascal's theorem, concerning a hexagon drawn within a second-degree curve: Kalecki generalized it for a polygon of 2n sides. Because his father lost a small textile workshop, Kalecki was forced to work as an accountant. During his first year in Warsaw he continued working sporadically and precariously. After finishing his first year of engineering studies, he had to interrupt his studies from 1918 to 1921 to complete military service. Upon leaving the military he joined Gdańsk Polytechnic, where he stayed until 1923, but because of the family financial situation had to leave the institution just before graduating.

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During these years he first approached economics, although informally. He read mostly "unorthodox" works, particularly those of Mikhail Tugan-Baranovsky and Rosa Luxemburg. Years later they influenced some of his writings related to the potential growth of a capitalist system. Having to enter the job market full-time, Kalecki abandoned his formal studies for good. His first job was to collect data on companies seeking credit. In this same period he tried unsuccessfully to start a newspaper, but instead ended up writing articles for two existing periodicals, Polska gospodarcza ('Economic Poland') and Przegląd gospodarczy ('The Economic Review'). Probably when writing these articles he began to acquire skills in obtaining and analyzing empirical information, which he later used in his professional works. In 1929 Kalecki applied for work at the Institute of Research on Business Cycles and Prices (Instytut Badania Koniunktur Gospodarczych i Cen) in Warsaw and obtained a job there because of his ability to use statistics. He stayed there for seven years. On 18 June 1930, Kalecki married Ada Szternfeld. At the Institute he met Ludwik Landau, whose knowledge of statistics influenced Kalecki's work. His first publications were of a practical character and were concerned with establishing relationships between macro-magnitudes. The…Citește mai mult

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Revolution of Kalecki and Keynes: 1933–1939 In 1933 Kalecki wrote Próba teorii koniunktury ('An Attempt at the Theory of the Business Cycle'), an essay that brought together many of the issues that dominated his thought for the rest of his life. In the essay Kalecki for the first time developed a comprehensive theory of business cycles. The foundations of his macroeconomic theory of effective demand presented in the paper anticipated similar ideas published three years later by John Maynard Keynes in The General Theory of Employment, Interest and Money. According to Lawrence Klein (1951), Kalecki "created a system that contains everything of importance in the Keynesian system, in addition to other contributions". In an introduction to the essay's 1966 English translation, Joan Robinson wrote: "Its sharp and concentrated statement provides a better introduction to the general theory of employment, interest and money than any that has yet been produced." Except for a small number of economists (in particular econometricians) familiar with his work, Kalecki's contributions, originally in Polish, failed to gain recognition. In October 1933 he read his essay to the International Econometrics Association in Leiden and in 1935 published it in two major journals: Revue d'Economie Politique and Econometrica.…Citește mai mult

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The scholarship enabled Kalecki to travel with his wife to Sweden, where followers of Knut Wicksell were trying to formalize a theory similar to Kalecki's. In Sweden in 1936 he learnt of the publication of Keynes's General Theory. Kalecki was working on a comprehensive elaboration of the economic ideas he had previously developed, but having found in Keynes's book much of what he was going to say, he interrupted his work and traveled to England. He first visited the London School of Economics and afterward went to Cambridge. Thus began his friendships with Richard Kahn, Joan Robinson and Piero Sraffa, which left an indelible mark on all of them. In 1937 Kalecki met Keynes. The meeting was cool and Keynes kept aloof. Although the conclusions they had reached in their work were very similar, their characters could not have been more different. Kalecki graciously neglected to mention that he had a priority of publication. As Joan Robinson stated:

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"Michal Kalecki's claim to priority of publication is indisputable. With proper scholarly dignity (which, however, is unfortunately rather rare among scholars) he never mentioned this fact. And, indeed, except for the authors concerned, it is not particularly interesting to know who first got into print. The interesting thing is that two thinkers, from completely different political and intellectual starting points, should come to the same conclusion. For us in Cambridge it was a great comfort." Later Kalecki always acknowledged that the "Keynesian Revolution" was an appropriate name for the movement in economics, as he realized the importance of Keynes's established position, the recognition Keynes enjoyed and his decisive role in the promotion and causing eventual acceptance of the ideas that Kalecki pioneered. In 1939 Kalecki wrote one of his most important works, Essays in the Theory of Economic Fluctuations. Although his conception changed through the years, all the essential elements of Kaleckian economics were already present in this work: in a sense his subsequent publications would consist of mere elaborations on the ideas propounded here. While Kalecki was generally enthusiastic about the Keynesian Revolution, in his article Political Aspects of Full Employment, which Anatole Kaletsky called one of the most…Citește mai mult

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Kalecki was hired by the Oxford Institute of Statistics (OIS) early in 1940. His job there consisted mainly of writing statistical and economic analysis for the British government of the management of war economy. Occasionally he gave lectures at Oxford University. The elaborate reports Kalecki prepared for the government were chiefly about the rationing of goods, and the scheme he developed was very close to the policies adopted later when rationing was introduced. According to George Feiwel, "Kalecki's work of the war period is far less known than it deserves to be". Several of Kalecki's wartime articles were devoted to the subject of inflation. He argued, on economic grounds, against the government's efforts to suppress inflation by official regulation of prices and by government wage stabilization (freezing of wages), recommending in each case economic rationing instead (especially the full rationing system rather than the wage stabilization program). Some of Kalecki's major works were written during this period. In 1943 he produced two articles, one dealing with new additions to the traditional business cycle theory, and one presenting his completely original theory of business cycles caused by political events. The latter was published in 1944 and was based on the premise…Citește mai mult

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Postwar years: 1945–1955 Kalecki went to Paris for a while, then moved to Montreal, where he stayed for fifteen months working at the International Labour Office. In July 1946 he accepted the Polish government's invitation to head the Central Planning Office of the Ministry of Economics, but he left some months later. By the end of 1946, he assumed the job of Deputy Director in the Department of Economic Affairs of the United Nations Secretariat in New York. He remained there until 1955, mainly preparing the World Economic Reports. Kalecki resigned that position as a result of McCarthyist pressures. It was argued that he was punished on political grounds (a non-merited economic planner stance was attributed to him). He became depressed by Senator Joseph McCarthy's witch-hunt, as many of his close friends were directly affected. Denounced in the US Senate as a supporter of communism, Kalecki ultimately failed to achieve professional success in the US (although he influenced the future post-Keynesians there), unlike in England, where he had a large following and was supported especially by his friend Joan Robinson.

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In 1955 Kalecki returned to Poland, never to work abroad for any extended period again. Hopeful for an opportunity to participate there in reforms that were socially advantageous, he believed that socialism would avoid the miseries brought by capitalist policies. He became economic advisor to the Office of the Council of Ministers. In 1957, he was appointed chairman of the Central Commission for Perspective Planning. The perspective plan had a time horizon of 1961 to 1975 and basically meant a practical implementation of Kalecki's theories of growth in socialist economies. However, the final plan developed by Kalecki was dismissed by board members as defeatist. Then things got worse, as related by Feiwel:

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Kalecki kept writing research articles. During his last visit to Cambridge in 1969, his seventieth birthday was celebrated. Kalecki gave a University Lecture on the theories of growth under various social systems, after which he was greatly applauded for the soundness of his arguments as well as for the overall trajectory of his life. Keynes had said that knowledge of the laws governing capitalist economy would make people more prosperous, happy and more responsible regarding economic decisions taken. Kalecki contested this view, arguing that the idea of political business cycle (governments can force situations to their advantage) seems to point in the opposite direction. As he grew older, Kalecki was ever more convinced of this, and his view of humanity was getting increasingly pessimistic. Michał Kalecki died on 18 April 1970 at the age of 70, and although he was bitterly disappointed with political developments, he lived long enough to see the recognition of the value of his many original contributions to economics. Feiwel wrote the following summary of Kalecki's life:

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"With Michal Kalecki's death, the world lost a unique individual of extremely high principles, powerful energy, and brilliant mind, and economics lost a model and inspiration. His legacy, however, cannot be erased. ... He demanded perfection, or at least an unalloyed commitment to that goal, he could not tolerate slovenly thought or superficial minds, and, most significant, he simply would not compromise his principles. Looking back over his troubled years, Kalecki once made the sad but true observation that the story of his life could be compressed into a series of resignations in protest-against tyranny, prejudice, and oppression."