Collected Works of Michal Kalecki: Volume II: Capitalism: Economic Dynamics

324 Pages·1991·262.531 MB·English

by  Michał Kalecki, Chester Adam Kisiel

Collected Works of
MICHAL KALECKI
"'
VOLUME II
C APITALI SM~
L-
Economic Dynamics J
Edited by
JERZY OSIA TYNSKI
Translated by
CHESTER ADAM KISIEL
MICHAL KALECKI
CLARENDON PRESS · OXFORD
1991
Le"y
He
5'7 Oxford University Press, Walton Street, Oxford OX2 6DP
Oxford New York Toronto
Delhi Bombay Calcutta Madras Karachi
.K~l'tl.3 Contents
Petaling Jaya Singapore Hong Kong Tokyo
Nairobi Dar es Salaam Cape Town
qcrb
I Melbourne Auckland
and associated companies in
Berlin Ibadan List of Tables vii
Oxford is a trade mark of Oxford University Press
Lists of Abbreviations and of Polish Journals xi
Published in the United States
by Oxford University Press, New York
Editor's Note xiii
© Estate of Michal Kalecki 1991
© Editorial matter Jerzy Osiatynski 1991
All rights r~served. No part of this publication may be reproduced,
stored m a relrleval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without PART 1
the prior permission of Oxford University Press Factors in the Distribution of National Income 1
'This book h~s been prepared in collaboration with the Polish Academy
of Sciences and the State Economic Publishers, Warsaw.' The Determinants of Distribution of National Income 3
Money and Real Wages 21
British Library Cataloguing in Publication Data
Ka/ecki, Michal 1899-1970 The Supply Curve of an Industry under Imperfect
Collected works of Michal Kalecki.
Vol. 2: Capitalism Competition 51
1. Economics. Theories of Kalecki, Michal, 1899-1970
I. Title II. Osiatynski, Jerzy 1941- Ill. Michal A Theory of Long-Run Distribution of the Product of
Kalecki, dziela. English Industry 79
330.155
ISBN 0-19-828664-3 A Model of Hyper-inflation 90
Library of Congress Cataloging in Publication Data Class Struggle and Distribution of National Income 96
Kalecki, Michal.
. . [Kapitalizm, dynamika gospodarcza. English]
Capllalzsm,_eco?o"!icd ynamics/Micha/ Ka/ecki; edited by Jerzy
Oszatynskz; translated by Chester Adam Kisiel.
PART 2
p. cm.- (Col/ected works of Michal Kalecki; v:2)
Translation of-Kapitalizm, dynamika gospodarcza. Elements of Economic Dynamics 105
Includes bibliographical references and index.
I. Economic history-1918-1945 . 2. Economic history-1945- A Theorem on Technical Progress 107
3. Business cycles. 4. Full employment policies. J. Title.
ll. Series: Kalecki, Michal. Works. English. 1990; v. 2. Studies in Economic Dynamics 117
HC57, K3/4/3 1990 330.9'04-dc20 90-7525
ISBN 0-19-828664-3 A New Approach to the Problem of Business Cycles 191
Typeset by Macmillan India Ltd., Bangalore 25
Printed and bound in
Great Britain by Bookcraft ( Bath) Ltd,
Midsomer Norton, Avon PART 3
Theory of Economic Dynamics 203
Theory of Economic Dynamics: An Essay on Cyclical and
Long-Run Changes in Capitalist Economy 205
vi TABLE OF CONTENTS
PART 4
The Business Cycle and Armaments after the
Second World War 349 List of Tables
The Impact of Armaments on the Business Cycle after the
1. Relative Share of Manual Labour in the National Income
Second World War 351
of Great Britain, 1880-1928 4
Economic Problems of Production Automation in Capitalist
2. Relative Share of Manual Labour in the National Income
Countries (with Adam Szeworski) 374
of the USA, 1909-1935 6
The Economic Situation in the USA, 1956-1961 386
3. Price Structure and Output at a Given Degree of
Economic Aspects of West German Rearmament 402 Monopoly 14
4. Price Structure and Output at an Increased Degree of ,
PART 5
Monopoly 15
Further Developments of the Theory of
Economic Dynamics 409 5. Price Structure, Output, and Degree of Monopoly at
Increased Prices of Raw Materials 16
Observations on the Theory of Growth 411
6. Price Index of 'Finished Industrial Products' Sold in the
Trend and the Business Cycle 435 Domestic Market 41
The Problem of Effective Demand with Tugan-Baranovsky 7. Price Index of 'Finished Industrial Products' Sold in the
and Rosa Luxemburg 451 Domestic Market and Exported 42
The Marxian Equations of Reproduction and 8. Price Indices of Raw Materials for Industry (Imported or
Modern Economics 459 Produced by Home Agriculture) 43
Observations on the 'Crucial Reform' (with Tadeusz Kowalik) 467 9. Indices of Labour Cost 44
Editorial Notes and Annexes 477 10. Indices of Prime Costs in Industry 44
11. Ratio of Prices of 'Finished Industrial Products' to
Annex 1. M. Kalecki, 'Mr Whitman on the Concept of
"Degree of Monopoly": A Comment' 486 Prime Costs 45
Annex 2. L. Krzywicki, 'Preface to "Money and Real Wages"' 519 12. Ratio of Prices of 'Finished Industrial Products' to
Prime Costs, Industrial Production, and Employment 45
Annex 3. J. Steindl, 'Some Comments on the Three Versions of
Kalecki's Theory of the Trade Cycle' 597 13. Index of 'Real Wages' Based on Prices of Industrial
Annex 4. Kalecki's '12 Lectures on Dynamics of Capitalist Economy' 605 Consumer Products for the Home Market 47
Annex 5. A. Pesenti and T. Kowalik on the 'Crucial Reform' 611 14. Index of the Ratio of Cost of Labour to the Prices of
Industrial Consumer Goods 47
Index of Names 617 15. Index of Real Wages Based on Cost of Living 48
Index of Subjects 621 16. Index of Cost of Labour in Relation to Cost of Living 48
17. Indices of Money Wage Rates and of Industrial
Production and Employment 49
18. Ratio of Proceeds to Prime Costs and the Index of
Output in Four British Industries, 1922-1937 68
viii LIST OF TABLES LIST OF TABLES ix
19. Ratio of Proceeds to Prime Costs and Output Index 37. Analysis of Changes in the Relative Share of Wages in
in the US Manufacturing Industry, 1925-1935 73 Value Added in US Manufacturing, 1929-1933 233
20. 'Real' Value of Fixed Capital and Prices of Investment 38. Approximation to the Index of Relative Share of Wages
Goods in US Manufacturing, 1899-1923 86 in Gross Income of the Private Sector in the USA,
1929-1937 234
21. Average Interest in the USA as Shown by Bond Yields 88
22. Relative Share of Wages in Value Added in the US 39. Indices of Relative Share of Wages in National Income
Manufacturing Industry, 1869-1937 89 in the UK, 1929-1938 235
23. Percentage Gross Margin µ in the US Manufacturing 40. Relative Share of Wages and Salaries in Gross Income of
Industry 131 the Private Sector in the USA, 1929-1941 237
24. Percentage Gross Marginµ in Manufacturing Industry, 41. Determination of Profits in the USA, 1929-1940 250
Wholesale Trade, and Retail Trade in the USA 132 42. Gross Income of the Private Sector and Profits in the
25. Relative Share of Wages win Value Added in the US USA, 1929-1941 258
Manufacturing Industry, 1919-1927 134
43. Ratio of 'Gross Capital Formation' to 'Gross National
26. Ratio of Value of Production to Value of Capital and Income' in the USA, 1869-1913 261
Percentage Gross Margin in the US Manufacturing
44. Index of Velocity of Circulation and the Short-Term
Industry 136
Rate of Interest in the UK, 1930-1938 265
27. Index of Velocity of Circulation and Rate on
45. Short-Term Rate of Interest in the UK and the USA,
Treasury Bills 141
1929-1940 267
28. Yields of Consols and Discount Rate 147
46. Average Yield of Consols and Average Discount Rate,
29. Capital Intensity and the Ratio of Proceeds to
Selected Periods, 1849-1938 272
Prime Costs in Manufacturing in the USA, 1899-1914 218
47. The Long-Term Rate of Interest in the UK and the USA
30. Ratio of Proceeds to Prime Costs in Manufacturing
during the Great Depression 275
in the USA, 1879-1937 219
48. Determination of Investment in Fixed Capital in the USA,
31. Ratio of Proceeds to Prime Costs in Manufacturing and ,
1930-1940 (assuming 0 = 1) 294
Retail Trade in the USA, 1929-1937 221
49. Determination of Investment in Fixed Capital in the USA,
32. Indices of Prices of Raw Materials and of Hourly Earnings
1930-1940 (assuming 0 = 1/2) 296
in Manufacturing, Mining, Construction, and Railroads
in the USA, 1929-1941 222 50. Determination of Investment in Inventories in the USA,
1930-1940 (assuming 0 = 1) 298
33. Indices of Prices of Raw Materials, Consumer Goods,
and Investment Goods in the USA, 1929-1941 224 51. Determination of Changes in Inventories in the USA,
1930-1940 (assuming 0 = 1/2) 299
34. Relative Share of Wages in Value Added in the
US Manufacturing Industry, 1879-1937 229 52. Erratic Shocks and Cyclical Fluctuations 317
35. Relative Share of Wages in Home-Produced National 53. Schematic Impact of Armaments on Wages and Profits 364
Income of the UK, 1881-1924 230 54. National Income, Consumption per Head, and
36. Relative Share of Wages in Value Added in the Unemployment in the USA, 1956-1961 387
US Manufacturing Industry, 1929-1937 231 55. US National Income, 1956-1959 388
LIST OF TABLES
X
56. US National Income, 1959-1961 394
57. US National Income, 1956-1961 396
List of Abbreviations
58. National Income in the FRG, 1956-1960 403
59. Wages, Productivity, Labour Costs, Unemployment, and
COMECON
Cost of Living in the FRG, 1956-1960 408
(also CMEA) Council of Mutual Economic Assistance
60. Fixed Capital, Sales, and Overheads Plus Profits in the
EUI European University Institute (Florence)
US Manufacturing Industry, 1899-1923 489
GUS Gl6wny Urzl!d Statystyczny (Main Statistical
61. Proceeds, Prime Costs, and Output in Selected
Office, Warsaw)
Manufacturing Industries 491
IGS Instytut Gospodarstwa Spolecznego (Institute for
Social Problems, Warsaw)
ILO International Labour Organization
ISBCP Institute for the Study of Business Cycles and Prices
(Instytut Badania Koniunktur Gospodarczych
i Cen, Warsaw)
KiW Ksil!zka i Wiedza (Educational Books)
NBER National Bureau of Economic Research
PS Przegh1d Socjalistyczny
PWE Panstwowe Wydawnictwo Ekonomiczne (Polish
Economic Publishers, Warsaw)
PWN Panstwowe Wydawnictwo Naukowe (Polish
Scientific Publishers, Warsaw)
SGPiS Szkola Gl6wna Planowania i Statystyki (Main
School of Planning and Statistics, Warsaw)
List of Polish Journals Editor's Note
Dziennik Powszechny Commoner Paper
Ekonomista Economist Volume ii of Michal Kalecki's Collected Works contains his studies on
the theory of income distribution in oligopolistic capitalism, and on its
Koniunktura Gospodarcza Business Review
economic dynamics. In accordance with the arrangement of the
Koniunktura Wlokiennicza Textile Business
Collected Works as a whole, each part of this book consists of essays
Kwartalnik Statystyczny Statistical Quarterly devoted to a similar topic; individual papers in each part are arranged
Oeconomica Polona in chronological order. However, this rule is not strictly observed in
Part 5 which is more diversified.
Polish Perspectives
The editorial principles of this edition are set out in full in the
Polska Gospodarcza Polish Economy
Editorial Note to volume i; they will be only summarized here.
Przegl1:1dG ospodarczy Economic Review Kalecki's texts are published in the final version accepted by the
Przegl1:1dS ocjalistyczny Socialist Review author; important differences between successive versions of the same
paper are noted in editorial comments.
Przegl1:1dS ocjologiczny Sociological Review
Kalecki's footnotes-numbered consecutively through each
Przemysl i Handel Industry and Commerce
paper-appear at the foot of the relevant page. Editorial comments
Sprawy Mi£!dzynarodowe International Affairs
numbered consecutively within square brackets through each
Zeszyty Naukowe Uniwersytetu University of Lodz Discussion paper-are placed at the end of the volume. Cross-references to
Lbdzkiego Papers editorial notes also have the number set within square brackets. The
Z ycie Gospodarcze Economic Weekly first editorial note on each paper contains information on its original
publication, its reprints, revisions, and translations, and usually also
some brief information on the background of the paper in question
and the discussions associated with it; these notes are therefore of a
fairly general nature. Any subsequent editorial notes refer to more
specific questions. Annexes, also placed at the end of the volume and
meant as supplements to the main texts, contain the more important
polemical statements, extensions, or explanations by Kalecki or
others, directly connected with a given work. In order to avoid
repetition, the editorial note relating to the first essay in each part of
the volume is even more general, providing, among other things,
information about the relationship of Kalecki's ideas, developed in the
essays included in that part, to the ideas of contemporary economic
theory.
In the 'Editorial Comments and Annexes', Kalecki's own writings
are printed in larger type than the rest of the material in this section,
except for occasional short quotations, used in editorial material to
clarify the context, which are left in smaller type.
xiv EDITOR'S NOTE
The editorial notes make use of verbal information obtained from
Mrs Adela Kalecki and from Kalecki's friends and associates, as well
as their notes and reminiscences, and the correspondence which has PART 1
survived in Kalecki's papers, and/or which was made available to me
by other people. I am grateful to all who have contributed in this way FACTORS IN THE DISTRIBUTION
to the editorial matter in this volume.
OF NATIONAL INCOME
I sincerely thank Stanislaw Braun, Helena Hagemejer, Wlodzimierz
Hagemejer, Cezary Jozefiak, Tadeusz Kowalik, Mieczyslaw
Nasilowski, Wladyslaw Sadowski, Adam Szeworski, and the late Jozef
Zagorski for their comments on the earlier versions of the editorial
matter in the Polish edition of this volume. I thank the Director and
the staff of the Library of the Main School of Planning and Statistics
in Warsaw for their very great assistance in making use of the library's
collections.
I also wish to thank Professor J. R. Stone, who in February 1976
gave me a folder of papers and documents: 'Kalecki's Investigation for
the Cambridge Research Scheme into Price, Costs, Proceeds and
Output', which has been used in the editorial notes on Kalecki's paper
'The Supply Curve of an Industry under Imperfect Competition'.
Finally, I wish to thank those English-language publishers of
Kalecki who generously granted permission to reprint essays in the
Collected Works. More specific acknowledgements are made in the
editorial notes.
The main body of this volume differs from volume ii of the Polish
edition of Kalecki's works in that it contains the whole of Studies
in Economic Dynamics; moreover, in updating and revising the
editorial matter, it has been possible to include newly available
material such as the correspondence between John Maynard Keynes,
Joan Robinson, and Piero Sraffa and Kalecki.
J. 0.
Warsaw
March 1988
The Determinants of Distribution of the
National Income11
l
(1938)
In the present paper we try to investigate both statistically and
analytically the problem of the relative share of manual labour in the
national income. There are two reasons why we do not consider the
total share of labour, although it would be more interesting from
the social point of view. (i) The statistics of national income include in
the salaries the ,incomes of directors, managers, etc., which should
rather be placed under the heading of profits. In this way, what
statistics give as the total share of labour does not correctly represent
the distribution of the product of industry between profits and interest
on the one hand and wages and salaries on the other. (ii) The relative
share of manual labour in the national income is more suitable for
theoretical analysis.
It must be added that we shall deal here with the relative share of
manual labour not in net but in gross income, by which is meant the
income before deduction of maintenance and depreciation. (Gross
income = net income + maintenance and depreciation.) The reasons
for this are again both 'technical' and theoretical. (1) The statistics of
gross income are much more reliable than those of net income; the
latter are based on the net incomes of firms whose allowance for
depreciation1 is certainly more or less arbitrary. In adding to the net
national income aggregate depreciation, as given by the firms' accoun
ting, we obtain gross income free from this arbitrariness. (2) It is the
share of manual labour in the gross national income which-as we
shall see below-ex natura rei can be more easily treated theoretically.
The Statistical Data
1. The figures for Great Britain are based on Professor A. L.
Bowley's The Change in the Distribution of the National Income,
1 For the sake of brevity we shall speak throughout the paper of 'depreciation'
instead of 'maintenance and depreciation'.
4 THE DISTRIBUTION OF NATIONAL INCOME THE DETERMINANTS OF DISTRIBUTION 5
1880-1913 (Oxford, n.p., 1920), and Mr Colin Clark's National
Income and Outlay (London, Macmillan, 1937).
Using Professor Bowley's data on the distribution of national
income (p. 16) and deducting from total income the interest from
00
N°.. .'. . I N00 overseas (mentioned on p. 25), we obtain the relative share of manual
M
labour in home-produced income: 43.5% in 1880, and 39.3% in 1913.
~°..'. ., .,., (It is the distribution of home-produced income in which we are
r-
~ °.N. '. .. I M00 .M°. .'. . I~ interested.) The above figures are shares in net income-Professor
...., M M Bowley does not give data on depreciation and gross income. The rate
..r·s. . of increase of gross income in that period, however, is unlikely to differ
C·g<;::l:::s :l 'N°.°. '. . . I 0rM . .: ,.'°<..I,.'' .. ,. I ,rM.. ,..:, minucochm efr oimn t1h9a1t3 owf naes t oinnclyo maeb:o tuhte p8r%op, oartniodn. thoef dveoplruemciea tioofn ctaop intaelt
... equipment and national income in 1913 and 1880 show that this
c.::i .,., .,., ,.,., .,., percentage could not have undergone a great change within this
'o,
"' N°.. '. .. I r..: M°.. .'. . I r..: period. 2 Thus the relative share of manual labour in gross income
E M M
cu: :, altered within the period in question similarly to that in net income.
.s.:!. .
The figures for 1911 and 1924-35 are obtained on the basis of Colin
~.sS:! l 'N°.<. I.'' . . I N00 NM°.. .'. . I 00 0 Clark's data on 'Distribution of Income between Factors of Pro
M M
~ duction, 1911 and 1924-35' (National Income and Outlay, p. 94) and
~
'.5."r.s '. . M.~. . .. M°M ' °..,...,.'... .,.. I ,'0.°0, . , dfrreeolpamrtei octnhia ottsiooe ngg ri(ovpsepsn . hb8oy6m , Me1-6pr 9rCo).d lTaurhckee d (r pei.ln a9ct4iov)m eo ens lh(ysa erieen s T thahbaetlr ee t h1ce)a. y lc uarlaet etadk ednif fienr
;:s
c::,
..c:, We see that the relative share-of manual labour in the national
.<..:.:s: i .......... .,., 0 .,., income in Great Britain declined moderately between 1880 and 1913,
~;s::s! °..'. .. I 'M° °.M. '. .. I 'M° and showed a remarkable stability between 1913 and 1935, both in the
<::s
~ long and in the short term.
'o, .,.,
"..'. 00000 ,,.; °N°.. .''. . I Mr. .: 2. The figures for the USA are based on W. I. King, The National
..<,::::s '<I' M Income and Its Purchasing Power, 1909-1928 (New York, NBER,
C;:i
"' 1930) and a recent estimate of national income and depreciation by
-~
s ~;:Q" ~-~ S. KuznetsPl
e"t:': -t[Q,::J13 :-... [Q:J3 :-"... ' The relative shares of manual labour in the net national income in
....; 0~ 0~
-~; QeJ ~-; QeJ 1909 and 1928 are, according to King, 33.7% and 32.4%.3 Also here
:fQ"-0,J ' -..Qe0u.s.J - - g""0.-o.. '' .-.Qe0UsJ . · -.g""0.-o .'' . 2 The real capital per head increased by about 25%, the real income per head by
C: Oil C: Oil about 40% (see Clark, National Income and Outlay, pp. 273 and 232) while the rate of
C: C: C: C:
depreciation was probably to some extent higher in 1913 than in 1880.
3 The National Income, p. 80. We have excluded from income the services of
durable consumer goods which King treats as a part of national income (he calls this
part 'imputed income'). We have also excluded from King's figures for wage income
that of shop assistants, which we treat throughout (according to Clark) as salaries.
6 THE DISTRIBUTION OF NATIONAL INCOME THE DETERMINANTS OF DISTRIBUTION 7
the change of relative shares in gross income is probably not very With the exception of 1933, however, the divergence from the average
different. is not great.
For the period 1929-35 (most interesting from the standpoint of As we see on the basis of statistical data, the relative share of manual
short-period analysis), Dr Kuznets's estimates are used. These estim labour in gross income shows only small changes both in the long and
ates, however, give separate figures of wages and salaries only for in the short term. We shall try to explain this 'law' and to establish
selected industries (manufacturing, mining, construction, and trans conditions under which it is valid.
port). Thus here we could only calculate the share of manual labour in
the income of this part of the US economy. But in spite of this the
The Degree of Monopoly and the Distribution of the Product
figures obtained are quite valuable for our investigation. For a section
of Industry
of a national economy can of course be treated as an open economic
system, and in our theoretical analysis we do not suppose the system Let us consider an enterprise with a given capital equipment which
to be closed. (Otherwise the figures concerning the English national produces at a given moment an output x and sells it at price p. 6 The
income could not be taken into consideration either.) short-period marginal cost m (i.e. the cost of producing an additional
We obtained the gross income of 'selected industries' by adding to unit of product with a given capital equipment) is made up of the sum
their 'income produced' 4 the depreciation estimated by Dr Kuznets in of the short-period marginal costs of: depreciation dm (caused by
Gross Capital Formation. 5 The relative shares of manual labour in this greater use of equipment), salaries sm, wages wm, and raw materials rm:
gross income are given in Table 2.
Here, too, the long-run change between 1909 and 1928 is very small.
Fluctuations in the period 1929-35, however, are much greater than in
At the same time, the price is equal to the sum of the corresponding
Great Britain, no doubt owing to the violent disturbances in the US
average costs da, Sa, wa, ra and the average capitalist income (profit and
economy while the depression in Great Britain was relatively mild.
interest) ca per unit of output:
p = Ca + da + Sa + Wa + ra
Table 2. Relative Share of Manual Labour in the National Income of the USA,
1909-1935 We subtract the first equation from the second and obtain:
1909 1928 1929 1930 1931 1932 1933 1934 1935
P - m =Ca+ (da - dm) + (sa - sm) + (wa - wm) + (ra - rm) (1)
In net national
income (King) 33.7 32.4 Following Mr Lerner, 7 we shall call the degree of monopoly of the
In gross income enterprise µ, the ratio of the difference between price and marginal
of manufactur cost to price, or:
ing, mining,
0
construction, µ = (p - m)/p
and transport
(Kuznets) 40.0 42.2 42.0 41.0 37.8 39.5 39.5 If marginal cost is equal to marginal revenue, µ is equal to the
inverse of the elasticity of demand for the product of the enterprise.
Substituting pµ for p - m in equation (1), and multiplying both sides
4 Survey of Current Business, May 1936.
5 Pp. 11 and 12. Depreciation and maintenance is estimated here for the whole
economy (dwelling houses excluded), but as a matter of fact it can be almost totally
attributed to manufacturing, mining, construction, and transport. Mr Kuznets has 6 We mean here by p the 'net price', i.e. the revenue per unit of product after
afterwards corrected these figures, and we introduce these corrections as given in deduction of advertising costs, etc.
Mr Keynes's note, Economic Journal, Sept. 1936. For 1934 and 1935 we were obliged 7 'The Concept of Monopoly and the Measurement of Monopoly Power', Review
to make our own rough estimates by means of interpolation. of Economic Studies, 1, June 1934, pp. 157-75.