19 - Michel Kalecki's Theory of Economic Dynamics: An Essay on Cyclical and Long-Run Changes in the Capitalist Economy: a review

Summary

This book consists of revised versions of Mr Kalecki's earlier works, Essays in the Theory of Economic Fluctuations and Studies in Economic Dynamics, which have been out of print for some time. The original papers have been rewritten and rearranged to lead up to a theory of cyclical fluctuations. Mr Kalecki first discusses the degree of monopoly and then postulates a number of relationships between income, profits, consumption and investment. Following the introduction of each relationship there is a regression analysis of relevant statistical data; but Mr Kalecki emphasises that the statistical analysis is intended to show the plausibility of the relation postulated rather to obtain the most likely value of the coefficients. The separation relationships are later combined in a dynamic model which exhibits cyclical fluctuations. Mr Kalecki favours the Frisch theory of dampened cycles continually excited by erratic shocks rather than the Hicks-Goodwin theory of limits cycles in a non-linear system, and has constructed some series to show that if the magnitude of the stocks are normally distributed fairly regular cycles are generated even when the system is rather heavily dampened. In the concluding chapters of the book a growth trend is added to the cyclical model and there is a brief and very formal treatment of the factors affecting long-run development.