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Investment, Profits and Employment in Kalecki & Keynes

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  • Robert Dixon

Abstract

This paper sets out my response to the articles by Paul Davidson in the Journal of Post Keynesian Economics in 2000 and 2002 dealing with the (supposed) superiority of Keynes’s explanation of the “ultimate cause” of unemployment over that of Kalecki. I show that there are a number of serious errors in Davidson’s explanation of Kalecki’s theories. I also argue that we would have less of this sort of nonsense if ‘post keynesians’ like Davidson were to recognize that, for Keynes as for Kalecki, aggregate demand shocks are profit shocks. In the final section of the paper I explain why it is that I none-the-less agree most emphatically with Davidson when he says that Kalecki and Keynes had quite different ideas on the ‘causes’ or ‘origins’ of (involuntary) unemployment in a capitalist economy.

Suggested Citation

  • Robert Dixon, 2007. "Investment, Profits and Employment in Kalecki & Keynes," Department of Economics - Working Papers Series 990, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:990
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    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0010/802792/990.pdf
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    References listed on IDEAS

    as
    1. Julio López G., 2002. "Two Versions of the Principle of Effective Demand: Kalecki and Keynes," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(4), pages 609-622, July.
    2. 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.
    3. Paul Davidson, 2007. "There Are Major Differences between Kalecki’s Theory of Employment and Keynes’s General Theory of Employment, Interest, and Money," Palgrave Macmillan Books, in: Interpreting Keynes for the 21st Century, chapter 16, pages 169-189, Palgrave Macmillan.
    4. John King, 1993. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Working Papers 1993.16, School of Economics, La Trobe University.
    5. Luigi L. Pasinetti, 2001. "The Principle of Effective Demand and Its Relevance in the Long Run," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(3), pages 383-390, March.
    6. J. E. King, 1994. "Aggregate Supply and Demand Analysis Since Keynes: A Partial History," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(1), pages 3-31, September.
    7. F. H. Hahn, 1977. "Keynesian Economics and General Equilibrium Theory: Reflections on Some Current Debates," International Economic Association Series, in: G. C. Harcourt (ed.), The Microeconomic Foundations of Macroeconomics, chapter 1, pages 25-40, Palgrave Macmillan.
    8. Joan Robinson, 1933. "The Theory of Money and the Analysis of Output," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(1), pages 22-26.
    9. Mario Sebastiani, 1994. "Kalecki and Unemployment Equilibrium," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37372-3, October.
    10. S Jay Levy, 2001. "Profits: The Views of Jerome Levy and Michal Kalecki," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(1), pages 17-30, September.
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