------ EH.NET BOOK REVIEW ------
Title: Michal Kalecki

Published by EH.NET (December 2011)

Julio G. López and Michaël Assous, /Michal Kalecki/. New York: Palgrave
Macmillan, 2011. x + 258 pp. $110 (hardcover), ISBN: 978-1-4039-9937-5.

Reviewed for EH.Net by Jan Toporowski, Economics Department, School of
Oriental and African Studies, University of London.

The excellence of Tony Thirlwall’s series for Palgrave on Great Thinkers in
Economics is confirmed by this volume on Michał Kalecki, written by
Kalecki’s former student, Julio López Gallardo (Professor at UNAM, Mexico
City), and Michaël Assous (Maître de Conferences at the University of
Paris, Panthéon-Sorbonne). The book is important in part because of the very
enigmatic quality of Kalecki’s ideas which, expressed by him in a dry,
lapidary style with few references, appear to have come from nowhere to
anticipate the Keynesian Revolution that Keynes labored so long to wrest from
the legacy of Alfred Marshall. As Robert Solow, quoted in this book (p. 214),
remarked: “Michal Kalecki ... seems to have sprung, full-grown, from his
own brow; and his important work on macroeconomics is written not in
opposition to the orthodoxy of his time, but in utter independence of it.”

That dry, lapidary style of Kalecki’s does no favors to authors expounding
his views, who can rarely do this with the clarity of the original. That
style therefore constitutes another hurdle to writing about Kalecki. If
Keynes was famous for changing his views, Kalecki’s ideas (as opposed to
his equations) seem hardly to have changed over his lifetime. Many who have
written about Kalecki could therefore have saved themselves and their readers
much trouble by simply directing their readers to any of Kalecki’s own
writings.

The authors of this book overcome these difficulties by structuring
Kalecki’s ideas around their central core and by providing interesting and
original material. The book has a clear focus on the key relation in
Kalecki’s macroeconomics, his theory of profits which is discussed in the
first substantive chapter on Kalecki’s economics, preceded only by a
chapter on Kalecki’s life and work. This theory is further discussed in a
chapter on the “Genesis and Originality of Kalecki’s Theory,” before
being extended in a chapter on the trend and business cycle with the title of
“Kalecki’s Long-Run Theory of Effective Demand,” a title that evidently
reflects recent discussions among Post-Keynesian economists. This is followed
by chapters on public finance and monetary policy and open economy
macroeconomics. A chapter on Kalecki’s development economics then leads
into two concluding chapters, one on “Kalecki: The Socialist Economist,”
that is mostly concerned with Kalecki’s relation to the ideas of Karl Marx
and his policy proposals for stabilizing capitalism, rather than Kalecki’s
writings on the socialist economy that he found on his return to Poland in
1955.

The authors’ work inevitably invites comparison with the two previous books
on Kalecki, both published over a quarter of a century ago. The first, by
George Feiwel, appeared in 1975, followed ten years later by Malcolm
Sawyer’s book on Kalecki. The book under review is a major advance on those
earlier works in large part because the authors have had access to the
/Collected Works of Michał Kalecki/, which were published with extensive
editorial annotations by Jerzy Osiatyński in Polish during the 1980s, and in
English during the 1990s. /The Collected Works/ gave us Kalecki’s writings
in Polish during the 1930s, and after 1955, while Osiatyński’s
commentaries linked up those writings to the literature that Kalecki read and
the discussions in which he participated. Without them, Feiwel and Kalecki
were not able to go much beyond Kalecki’s English-language publications and
the memories of those, mainly in England, who knew him in the two decades
that he spent in that country and at the UN.

A second feature of this book that makes it worth adding to existing works on
Kalecki are the notes that López contributes in this volume from Kalecki’s
lectures in Warsaw in 1967 and 1968. The notes confirm what other students of
Kalecki’s have already said informally, namely that his lectures were lucid
accounts of his own theory, but revealed nothing about what any other
economist might have written or said about the subject of those lectures.

A third reason to value this book is its clear statement of the scope of
price theory in capitalism in general, and in Kalecki’s analysis in
particular. In Kalecki’s analysis of capitalism, profits are determined by
capitalists’ consumption and their investment, plus the fiscal deficit,
plus the trade surplus, if we leave aside workers’ saving. The function of
the price system is to distribute that surplus among the capitalists and
firms in the economy. This is a key point that distinguishes Kalecki’s
theory from that of many Ricardian Marxists, and Post-Keynesians, for whom
profits are a mark-up on labor costs, so that the price system determines the
distribution of income between wages and profits. López and Assous even cite
(p. 197) a nice quotation from Marx, from Volume III of Capital in which the
great political economist states clearly that the price system distributes
profits around the economy, rather than determining those profits.

Towards the end of the book, the authors attempt to find parallels between
the business cycle theory of Kalecki with that of Roy Harrod. The private
papers of Kalecki and the recollections of those who met him during the
1950s, among them John Kenneth Galbraith, reveal Kalecki to have been
extremely critical of Harrod’s theory, regarding it as mechanical and even
pre-Keynesian concerning the role of saving. It is to be hoped that Palgrave
will correct the many copy-editing errors in this fine book when it is
reprinted. However, these do not detract from the authors’ achievement in
publishing important new material on Kalecki, presenting his macroeconomics
(around the theory of profits and aggregate demand) in a way the conveys the
essence of Kalecki’s thought, and demonstrating the clear common
inspiration between the work of the twentieth century’s greatest economist
and the insights of Marx and Keynes.

References:

George R. Feiwel (1975), /The Intellectual Capital of Michał Kalecki: A
Study in Economic Theory and Policy/, Knoxville, TN: University of Tennessee
Press.

Malcolm C. Sawyer (1985), /The Economics of Michał Kalecki/, Armonk, NY:
M.E. Sharpe.

Jerzy Osiatyński et al (1990-97), /The Collected Works of Michal Kalecki/,
Oxford: Oxford University Press.

Jan Toporowski is working on an intellectual biography of Michał Kalecki.

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Geographic Location: Europe
Subject: History of Economic Thought; Methodology
Time: 20th Century: Pre WWII, 20th Century: WWII and post-WWII