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Chapter 7: Kaldor and the Kaldorians
John E. King 1 Kaldor 1.1 Introduction Nicholas Kaldor was born in Budapest in 1908. He was educated at the University of Berlin and the London School of Economics, where he spent 20 years (1927–47) as undergraduate, research student and lecturer. After two years at the United Nations Economic Commission for Europe in Geneva he returned to academic life in October 1949 as Fellow of King’s College, Cambridge. Kaldor was appointed to a personal chair in 1966. He retired in 1975 but remained very active in research and policy advocacy right up to his death in 1986. There are three intellectual biographies (Thirlwall, 1987; Targetti, 1992; King, 2009). Kaldor’s thinking on economic growth passed through four phases, which are detailed below. His ideas were distinctly “alternative” throughout. He maintained that economic theorists must never take refuge in imaginary worlds of their own creation, but must locate their analysis of growth in actual historical experience and should aim to explain the “stylised facts” of real-world capitalist economies. Kaldor rejected both the marginal productivity theory of distribution and the use of aggregate production functions, denying the validity of growth accounting exercises based on them. He also made no attempt to provide neoclassical microeconomic foundations for his growth models, and his own microeconomics was Marshallian, not Walrasian. He emphasised the diversity of economic agents; the crucial role of capitalist expenditure decisions and the relative unimportance of classless individual consumers; the prevalence of oligopoly in the product market; the pervasiveness of uncertainty, which...
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