Title the degree of monopoly and the relative share. The firms operating under monopoly or monopolistic competition, with a downward sloping demand curve and so enjoying pricesetting power, are able to make positive profits. Kalecki is now able to establish a constant relation between income and profits allowing deriving a new expression of the multiplier. Kaleckis theory of distribution of the national product between wages and. Rugitsky the aim of this paper is to analyse the concept of class struggle in michal kaleckis writings. Ricardian theory, marxian theory, neoclassical theory, kaleckis degree of monopoly theory and keynesiankaldors theory.
Kalecki pays more attention to the degree of monopoly in his distribution theory. The degree of monopoly is a firm is measured by pa. Critical evaluation of monopoly theory of profits it cannot be denied that monopoly is,a very important source of profit. In this way capitalistsconsumption and investment conjointly with the distribution. Introduction we have shown that income distribution plays a key role in kaleckis theory of effective demand. A steindlian account of the distribution of corporate pro. Mr online michal kalecki and the economics of development. Joan robinson has attacked the marginal productivity theory on various grounds. In the later versions of his theory kalecki abandoned the link between the degree. Kalecki attempted to explain labours share in terms of the overall degree of monopoly in the economy.
These parameters are affected by such factors as the degree of industrial concentration, the effect of trade unions as well as the importance of fixed costs in relation to variable costs as cited in kaleckis study arestis, 1996. Kaleckis theory of income distribution is based, notwithstanding the sometimes heroic. In short, kaleckis theory of pricing and distribution consisted of positing a link between what he called the degree of monopoly of firms and the functional distribution of income. Another feature of the postkeynesian theory is the difference not fully resolved between those who draw their inspiration from keynes and those who base their work on the ideasand work of polish economist, m. Manual workers, to the determination of whose share in. We show that, changes in the degree of monopoly and in the composition of prime costs have had a great impact on income distribution. Reynolds in short, kaleckis formulation is not the answer to any maidens prayer.
We discuss the main factors that have shaped this evolution during the period of 1994 to 2009 and we analyze this issue on the basis of kaleckis theory of income distribution, but adapting to an open economy. Michal kaleckis famous theory of distribution, which applied the prof. The economic concept of monopoly focuses on the number and size of firms in an industry. Kalecki generalized this for a polygon of 2n sides. On kaleckis theory of income distribution springerlink. Kalecki, that monopoly is the sole source or determinant of. In kaleckis corrected growth model, it is possible to specify the effects of changes in the structure of taxation on the conditions for economic stability under alternative shifting assumptions. 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. Keyness degree of competition v3 durham university. This led kalecki to posit that the distribution of income is determined by the priceunit cost ratio, or degree of monopoly, a term summarizing a variety of oligopolistic and monopolistic factors. Title determinants of macrodistribution under imperfect competition sub title author feiwel, george r. A brief history of economics world scientific publishing. Then it deals with the theory of investment, and finally it studies money and finance in the principle of effective demand. Product exhaustion theorem concept, eular theorem module 8.
Kaleckis birth and the end of the present millennium provide an occasion for a consideration of kaleckis analysis and assumptions. According to my second theory the relative share of profits in national income is determined by the degree of monopoly kalecki 1991, p. Alternative theories of distribution income economics. Oligopoly, distribution and the rate of profit sciencedirect. The primary determinant of the distribution between wages and pro ts in kaleckis economics is the average degree of monopoly. Conversely, the consensus holds that the general theory does not depend on the assumption of imperfect competition, in contrast with kaleckis theory of employment davidson, 2000. Firms set prices as a xed markup over marginal labour costs which are therefore also constant. This paper assesses the role of the degree of monopoly in kaleckis theory of pricing and income distribution.
The many modern keynesians a brief history of economics. But a stronger reason is the changes in capitalist economies, national, regional and global, in the nearly thirty years since kaleckis death in 1970. Because his father lost a small textile workshop, kalecki had to obtain a job as an accountant. Kaleckis degree of monopoly 497 to say that the degree of monopoly determines the distribution of income. Distribution undetermined leaves income indeterminate, in a two class world with differing inclinations to save. The imperfection of competition and kaleckis degree of monopoly.
He was a very able student and he formalized a generalization of pascals theorem, concerning a hexagon drawn within a seconddegree curve. Class conflict and the cambridge theory of income distribution abstract the paper expands the cambridge kaleckian model of income distribution to include a labor market class conflict channel that is distinct from the product market competition channel. Drawing on this theory of income distribution, showing the share of profit is equal to the degree of monopoly. As we have seen, in kaleckis theory capitalist consumption and investment. Kalecki and keynes on the loanable funds fallacy lars p. In kaleckis model, capitalists are assumed to spend on investment and luxury consumption. The average degree of monopoly for the whole economy being a weighted mean. Unfortunately, appreciation of the behavioral content of the analysis is often obscured by reference to an early version of the degree of monopoly theory which appeared in econometrica 1938, reprinted in essays in the theory of economic. The author concludes that it would be difficult to disregard the importance of kaleckis theory of the profit share based on the. Kaleckis theory of prices and distribution springerlink. In short, kalecki s theory of pricing and distribution consisted of positing a link between what he called the degree of monopoly of firms and the functional distribution of income.
Political aspects of kaleckis pricing and distribution theory. Northholland labours share, market structure and trade unionism martin j. Theoretical approaches in the subjects of distribution of income after kalecki 1. Kaleckian economics may be broadly defined as the economic theories enunciated by michal kalecki 18991970 and the extensions of those theories by economists who were influenced by him. We begin by examining kaleckis theory of prices, focusing on the meaning and role of the degree of monopoly. In short, kaleckis theory of pricing and distribution consisted of positing a link. Many other macro theories have been developed on the basis of keynesian ideas. Kalecki, the distribution of the national income, first appeared in econometrica, april. For an analysis of the evolution of kaleckis analysis of pricing decisions and distribution in terms of the pricecost markup and the degree of monopoly, see kriesler. It says the smaller the number of firms in an industry, and the larger those firms are, the more monopoly power that exists in that industry. We highlight the importance of the raw materialwage cost rw ratio.
Political aspects of kaleckis pricing and distribution theory article pdf available october 20 with 185 reads how we measure reads. The crucial point seems to be that kaleckis pricing theory, relying on the concept of a degree of monopoly, provides the basis for a theory of distribution that shifts the focus away from the struggle between capitalists and workers and towards imperfections in 5. In chapter i we argued that in the authors theory output and. Cowling, oligopoly, distribution and rate oj profit 197 capitalism, we will be determining the industry markup of price on marginal cost kaleckis degree of monopoly or oligopoly in terms of the structure of the industry in question and in terms of the effective recognition by the firms in the industry of their mutual interdependence. But the degree of monopoly is a different and very specific term in kaleckis theory, since it refers solely to the pricecost ratio, and is determined by several factors. The relation between class struggle and degree of monopoly in his writings will be approached in the next section section 2.
Kaleckis theory of price formation was critical in relating aggregate income to its distribution in advanced capitalist economies. Conyon institute aeconomics and statistics, manor road, oxford 0x1 3 u l, uk the queens college, oxford 0x1 4a w, uk final version accepted february 1993 using british manufacturing data this paper tests kaleckis degree of monopoly theory of the determination of. Kaleckis point and is tied in with his notion of the degree of monopoly, in need of greater elaboration. This paper claims that the theory of aggregate employment in the general theory. Individual and social welfare, role of value judgment. If the address matches an existing account you will receive an email with instructions to reset your password.
According to kalecki, the distribution of national income into profits and wages depends upon the degree of monopoly in the economy. Kalecki pays more attention to the degree of monopoly in. Kalecki scored a breakthrough by introducing the degree of monopoly into his macrodynamic model. There is much in a brief history of economics to provide pleasant reading for a wide audience. A steindlian account of the distribution of corporate pro ts and leverage. Kaleckis theory of distribution free download as powerpoint presentation. Kaleckis theory of income determination and modern. Great thinkers in economics is designed to illuminate the economics of some of the great historical and contemporary economists by. Thirlwall is professor of applied economics, university of kent, uk. It says monopoly power can arise naturally out of the market simply by firms becoming the only firm in an industry. This markup in turn depends upon the degree of monopoly, which reflects forces such. This article provides keynes and kalecki expertise guide to postkeynesian economics. It is worth emphasizing that kalecki s model does not involve price rigidity.
Kaleckis macroeconomics is notable for having been the first to be built, unlike keynes but alike the contemporary new keynesian macroeconomic models, in an imperfectly competitive framework and, at the same time, for linking the theory of distribution, on the one side, and the theory of income determination, on the other. The paper considers, in the first place, the theory of prices and the theory of distribution. Labours share, market structure and trade unionism. This paper assesses the role of the degree of monopoly in kalecki s theory of pricing and income distribution. Kaleckis degree of monopoly theory according to kalki, the distribution of national income into profits and wages depends upon the degree of monopoly in the economy. Specialists in economic thought will be attracted by the easy writing style combined with the coherent historical development of post. In 1933, kalecki published his first analysis of the business cycle under capitalism, arguing that it was due to the instability of investment, which in turn was caused by fluctuations in. He offered a theory of distribution that was independent of the neoclassical tradition. The former was the determinant of the pricing decisions of firms, which set their prices by markingup their average prime costs comprising wages and materials. The impact on the rate of depreciation depends on the rate of technical progress. On occasion he goes beyond this simplification and considers distinctions between.
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