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Two Versions of the Principle of Effective Demand: Kalecki and Keynes

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  • Julio Lopez G.

Abstract

In this paper the differences between the principle of effective demand of Keynes and Kalecki are analyzed, focusing on Kalecki’ s less well known version. The paper considers, in the first place, the theory of prices and the theory of distribution. Then it deals with the theory of investment, and finally it studies money and finance in the principle of effective demand. The author concludes that it would be difficult to disregard the importance of Kalecki’s theory of the profit share based on the pricing policy offirms, and of the profit level based on capitalist expenditure. A host of empirical research showing that investment is determined by past profits and is conditionally stable has also, in the authors’ opinion, vindicated Kalecki’s theory of investment. But, on the other hand, the study of the financial aspects of capitalism is an area where Kalecki’s theory needs to be completed and updated.

Suggested Citation

  • Julio Lopez G., 2002. "Two Versions of the Principle of Effective Demand: Kalecki and Keynes," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(4), pages 609-621, July.
    • Handle: RePEc:mes:postke:v:24:y:2002:i:4:p:609-621
    DOI: 10.1080/01603477.2002.11490346
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    Cited by:

    1. Lino Sau, 2006. "Non- Stabilizing Flexibility: from the Contributions by Keynes and Kalecki towards a Post-Keynesian Approach," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2006(88), pages 79-92.
    2. Hein, Eckhard, 2015. "The principle of effective demand: Marx, Kalecki, Keynes and beyond," IPE Working Papers 60/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Robert Dixon, 2007. "Investment, Profits and Employment in Kalecki & Keynes," Department of Economics - Working Papers Series 990, The University of Melbourne.

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