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Rethinking Kalecki on the Trend and Cycle

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  • Graham White

Abstract

This paper examines Kalecki's explanation of investment in his 1968 paper 'Trend and business cycles reconsidered' and his idea on the relationship between the long-run trend and the business cycle. An important aspect of that explanation is a comparison between actual and the so-called 'standard' rate of profit. However, when the influence of the cycle on entrepreneurs' views of normal capacity utilization is allowed for, the role of divergences between actual and standard profit rates in the investment process becomes less clear. Exogenous influences on fixed capital investment, particularly innovation, may then become more important, especially in triggering those movements in investment that are at the centre of Kalecki's explanation of the cycle. This suggests a much closer link, via innovation, between the cycle and the long-run trend.

Suggested Citation

  • Graham White, 1999. "Rethinking Kalecki on the Trend and Cycle," Review of Political Economy, Taylor & Francis Journals, vol. 11(3), pages 341-353.
    • Handle: RePEc:taf:revpoe:v:11:y:1999:i:3:p:341-353
    DOI: 10.1080/095382599107066
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    References listed on IDEAS

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    1. White, G., 1997. "Macroeconomics and the Choice of Technique: Long-Period Coherence and the "Keynes Effect"," Working Papers 9712e, University of Ottawa, Department of Economics.
    2. Trezzini, Attilio, 1995. "Capacity Utilisation in the Long Run and the Autonomous Components of Aggregate Demand," Contributions to Political Economy, Oxford University Press, vol. 14(0), pages 33-66.
    3. James A. Clifton, 1983. "Administered Prices In The Context Of Capitalist Development," Contributions to Political Economy, Oxford University Press, vol. 2(1), pages 23-38.
    4. Ferdinando Vianello, 1989. "Effective Demand and the Rate of Profits: Some Thoughts on Marx, Kalecki and Sraffa," Palgrave Macmillan Books, in: Mario Sebastiani (ed.), Kalecki’s Relevance Today, chapter 10, pages 164-190, Palgrave Macmillan.
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    Cited by:

    1. Courvisanos, Jerry, 2009. "Political aspects of innovation," Research Policy, Elsevier, vol. 38(7), pages 1117-1124, September.
    2. Galanis, Giorgos & Veneziani, Roberto & Yoshihara, Naoki, 2016. "Growth, Exploitation and Class Inequalities," Discussion Paper Series 636, Institute of Economic Research, Hitotsubashi University.
    3. Jerry Courvisanos, 2012. "Political Economy of Innovation and Sustainable Development," Chapters, in: Blandine Laperche & Nadine Levratto & Dimitri Uzunidis (ed.), Crisis, Innovation and Sustainable Development, chapter 8, Edward Elgar Publishing.

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