Kaleckian Traverse, Socialist Planning and Hayekian Objections

This chapter will discuss the relations between Kalecki’s macrodynamics and the method of the Traverse. It will be argued that outside the case of a deep depression all short- and long-term macroeconomic adjustments should be thought of in a Kalecki-Kaldor-Lowe type Traverse context. Indeed it was Nicholas Kaldor who developed in 1938 a fully fledged Traverse approach well before the coinage of the term by John Hicks in 1965 (Kaldor, 1938). We will argue that the only meaningful institutional, hence policy, framework of the Traverse approach is socialist planning as conceived by Kalecki himself (Kalecki, 1962, 1986). Hayek’s views are similar to the conclusions that we draw from the traverse analysis. However, Hayek rejects the proposals for economic planning and instead insists on the ability of the market mechanism to achieve the necessary structural adjustment in order to achieve sectoral balance. The essay will discuss the Hayekian objections to socialist planning and will conclude that some form of socialist planning remains the only viable option.