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What is wrong with heterodox economics? Kalecki’s profit theory as an example

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  • Kakarot-Handtke, Egmont

Abstract

Kalecki’s profit theory has always been popular among heterodox economist as an alternative approach to solve the paradox of monetary profits. In the present paper his formula ‘The workers spend what they get, the capitalists get what they spend’ is scrutinized for its logical and factual implications. The analysis shows that Kalecki’s alternative approach points in the right direction but unfortunately shares a crucial conceptual error with standard economics.

Suggested Citation

  • Kakarot-Handtke, Egmont, 2011. "What is wrong with heterodox economics? Kalecki’s profit theory as an example," MPRA Paper 31177, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:31177
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    References listed on IDEAS

    as
    1. Graziani,Augusto, 2003. "The Monetary Theory of Production," Cambridge Books, Cambridge University Press, number 9780521812115, March.
    2. Tony Lawson, 2006. "The nature of heterodox economics," Cambridge Journal of Economics, Oxford University Press, vol. 30(4), pages 483-505, July.
    3. Bruun, Charlotte & Heyn-Johnsen, Carsten, 2009. "The paradox of monetary profits: an obstacle to understanding financial and economic Crisis?," Economics Discussion Papers 2009-52, Kiel Institute for the World Economy (IfW).
    4. Keen, Steve, 2010. "Solving the paradox of monetary profits," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-32.
    5. Kakarot-Handtke, Egmont, 2011. "Keynes’s missing axioms," MPRA Paper 32742, University Library of Munich, Germany, revised 11 Aug 2011.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    National income accounting; Zero profit economy; Distributed profit; Income definition; Master equation;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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