Distribution and Growth after Keynes
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Distribution and Growth after Keynes

A Post-Keynesian Guide

Eckhard Hein

In the first part of the book, Eckhard Hein presents a comprehensive overview of the main approaches towards distribution and growth including the contributions of Harrod and Domar, old and new neoclassical theories including the fundamental capital controversy critique, the post-Keynesian contributions of Kaldor, Pasinetti, Thirlwall and Robinson, and finally the approaches by Kalecki and Steindl. In the second part of the book neo- and post-Kaleckian models are gradually developed, introducing saving from wages, international trade, technological progress, interest and credit. Issues of ‘financialisation’ are also explored and empirical results related to the different models are presented.
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Chapter 5: Post-Keynesian distribution and growth theories II: Kalecki and Steindl

Eckhard Hein


An alternative post-Keynesian approach to distribution and growth to the one drawing on the contributions by Kaldor and Robinson can be based on the works of Michal Kalecki and Josef Steindl. As acknowledged, in particular by Robinson (1965, 1969, 1977), Klein (1975) and King (2002, chap. 2) among other authors, Kalecki had invented the ‘principle of effective demand’, that is the idea that the level of output and employment in an economy is governed by aggregate demand and that aggregate supply will adjust towards this level, even before Keynes, in a series of papers originally published in Polish. Revised and translated versions became available in English only in the late 1930s (Kalecki 1939), and the English translations of the original versions were only published in the late 1960s (Kalecki 1969a). Kalecki’s approach towards aggregate demand was highly influenced by Karl Marx’s (1885) schemes of reproduction in Capital, Volume 2, and in particular by Rosa Luxemburg’s (1913) The Accumulation of Capital. Kalecki’s approach differed from Keynes’s in that Kalecki developed the theory of effective demand in a dynamic context and explicitly considered distributional issues right from the start. Kalecki’s theory of effective demand is therefore inseparably linked with the theory of distribution and growth.

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