Surplus Value and the Kalecki Principle in Marx's Reproduction Schema

A well-known interpretation of Marx's reproduction schema identifies the role played by the 'Kalecki principle', or Widow's Curse, that capitalists earn what they spend. As Marx writes in Capital Volume II: 'In point of fact, paradoxical as it may seem at the first glance, the capitalist class itself casts into circulation the money that serves towards the realization of the surplusvalue contained in its commodities' (Marx, 1978, p. 409). In their particularly extensive analyses of the reproduction schema both Reuten (1998, 200) and Sardoni (1989, 212) argue that for Marx profits are determined by capitalist expenditure outlays. There are two main ways in which this interpretation of the reproduction schema is underdeveloped. First, although Kalecki (1968, 459) claims that his model is 'fully in the Marxian spirit' he did not examine the direct relationship between his approach and Marx's original text. Sardoni (1989) has provided perhaps the most concerted effort to make this connection but does not engage directly with Marx's numerical examples. Second, coming from the other extreme, Reuten (1998) provides a most systematic and detailed exploration of Marx's original tables, giving special mention to the Kalecki principle, but without providing a direct connection to Kalecki's analytical model of the reproduction schema. The contribution of this paper is to provide a detailed analysis of the role of the Kalecki principle in Marx's reproduction schema. Using Marx's original tables, in the first part of the paper a number of steps are followed to make the transition to Kalecki's model. This model is shown to provide a particular ex post interpretation of Marx's tables. A key problem with this interpretation is that it obscures the classical role of surplus value in the reproduction schema. This has led, perhaps unfairly, to Kalecki being described in some circles as 'non-Marxist' (Freeman and Carchedi 1996, xii ). In the second part of the paper a different interpretation of the reproduction schema is offered using the Leontief input-output framework. On this interpretation, both the Kalecki principle and the role of surplus value can be succinctly modelled in the context of Marx's original reproduction schema.