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Credit, Debt and Distribution in the Monetary Theories of Augusto Graziani And Michal Kalecki

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  • Jan Toporowski

    (University of London)

Abstract

The Monetary Production Theory of Augusto Graziani provides a rich analysis of the use of credit in capitalist production, showing the endogeneity of such credit and giving new insights into the use of credit as money. The theory suggests a credit system, inflated by loans for production and investment and deflated by loan repayments, with incomes in the form of profits and wages recorded as credit transfers. In Graziani, a key part is played by workers’ saving, and this results in a problem of interest monetisation. The paper shows that this difficulty disappears once it is recognised that capitalists own financial assets and bank deposits, as Kalecki argued. With this modification, Graziani’s principles of monetary circulation are then used to examine Neo-Kaleckian theories of financialisation. The wage rate and workers’ saving, rather than the workers’ borrowing, are a more significant influence on the distribution of income between those classes, and the circulation of money among capitalists, rather than between capitalists and workers, is a more critical determinant of production and profits.

Suggested Citation

  • Jan Toporowski, 2020. "Credit, Debt and Distribution in the Monetary Theories of Augusto Graziani And Michal Kalecki," Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, Fondazione Luigi Einaudi, Torino (Italy), vol. 54(2), pages 311-326, December.
  • Handle: RePEc:fle:journl:v:54:y:2020:i:2:p:311-326
    DOI: 10.26331/1128
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    References listed on IDEAS

    as
    1. Jan Toporowski, 2008. "Excess Capital and Liquidity Management," Economics Working Paper Archive wp_549, Levy Economics Institute.
    2. Costas Lapavitsas, 2013. "The financialization of capitalism: 'Profiting without producing'," City, Taylor & Francis Journals, vol. 17(6), pages 792-805, December.
    3. Messori, Marcello, 1991. "Financing in Kalecki's Theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 15(3), pages 301-313, September.
    4. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    5. Riccardo Bellofiore, 2005. "Monetary Economics after Wicksell: Alternative Perspectives within the Theory of the Monetary Circuit," Palgrave Macmillan Books, in: Giuseppe Fontana & Riccardo Realfonzo (ed.), The Monetary Theory of Production, chapter 2, pages 39-51, Palgrave Macmillan.
    6. Jan Toporowski & Jo Michell (ed.), 2012. "Handbook of Critical Issues in Finance," Books, Edward Elgar Publishing, number 14083.
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    More about this item

    Keywords

    Financialisation; Michal Kalecki; Augusto Graziani; Interest; Debt;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General

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