Kalecki

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MICHAL.KALECKI (1899-1970)

Michal Kalecki was born in Poland, well educated an Oxford graduate who went onto a career in the United Nations. The works of Kalecki cover both the problems of capitalism and how to develop communist economies.

Kalecki, can be described as one of the few economists of the twentieth century to have come across the two faces of Capitalism and Communism. Much of Kalecki's work in a true manner.

Kalecki wrote at a time frame when during the 1950's the world was seeing mass economic growth, as countries were emerging from the aftermath of world war two, at the same Kalecki's writing also looked at the global economic downturn of the late 1960's.

Much of his work worked was concerned with the development of microeconomics.

We shall now briefly discuss the main areas of his work:

CAPITALISM - 'The capitalist system is not a 'harmonious' regime, whose purpose is the satisfaction of the needs of its citizens, but an 'antagonistic' regime which is to secure profits for capitalists'

POWER OF SUPPLIERS - In his theory of mark-up pricing, Kalecki suggest that suppliers of raw material exert very little power. The power rests with manufacturers who strive for their own profit margins. Hence the suppliers are limited as to what they can afford to pay their own workers. Kalecki suggests that manufacturers will tend to restrict the profit margins the suppliers have, as to prevent competitors thinking they can generate equal profit rates by entering the same market.

KALECKI & MARX - In analysing income distribution in society, Kalecki uses the multiplier approach of Marx to suggest where industries have high raw material content they will often have very low wages. He was not an adamant believer in the uprising of workers due to low wages, he accepted different skills of workers would mean different wages.

Kalecki has been described as Marxist, indeed some of his work does show Marxist tendencies. He is best described as a realist, understanding the strengths and weaknesses of both capitalism and communism.

KALECKI & WAGES - Although Kalecki suggested poor wages in raw material sectors, he did suggest that in more skilled production would mean increased wages. Kalecki rejected the belief that high wages will lead to a reduction in output and mean higher unemployment as proposed by the classical school.

TAXATION - Kalecki suggested taxation would not harm industry, rather the reverse. His earlier work, points to the positive uses of taxation income used to regenerate industry.

INVESTMENT - Kalecki made great strides in analysing the role of government in terms of taxation and looking at investment in general from businesses. Investment and the resulting technical innovations in productivity as viewed by Kalecki showed that taxation did not adversely affect business, as they understood the need for investment to bring about technical innovations to reduce costs, improve output and enter new markets.

It was in this area that Kalecki was challenging his peers, economic growth was not simply down to economists managing the economy, business played it's own role!

ESSENTIAL FEATURES OF THE WORKS OF MICHAL KALECKI

Accepted both capitalism and communism.
Developed theory of mark-up pricing.
Understood different skills resulted in different wages.
Taxation did not need to be an evil of government.
Investment in industry aided technical growth which in turn aided economic growth, it was not just government who promoted growth. Taxation did not have an overbearing effect on investment levels.

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