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Kalecki and the Declining Rate of Profit

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  • Jan Toporowski

Abstract

In Kalecki's business cycle theory a fall in the rate of profit plays a key role in the onset of recession, causing a fall in investment. This paper shows how the falling rate of profit is an eventual corollary of the steady rate of capital accumulation, which Keynes saw as the key to securing full employment. The decline in the rate of profit may be avoided by a shift to increasingly capital-intensive techniques of production, or greater government indebtedness or foreign trade imbalances. It is suggested that these disequilibrating factors lie behind the success of rapidly growing capitalist economies in the second half of the 20th century.

Suggested Citation

  • Jan Toporowski, 1999. "Kalecki and the Declining Rate of Profit," Review of Political Economy, Taylor & Francis Journals, vol. 11(3), pages 355-371.
    • Handle: RePEc:taf:revpoe:v:11:y:1999:i:3:p:355-371
    DOI: 10.1080/095382599107075
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    References listed on IDEAS

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    1. Kriesler, P. & Halevi, J., 1995. "Asia, Japan and the Internationalization of Effective Demand," Papers 95/44, New South Wales - School of Economics.
    2. Joan Robinson, 1962. "Essays in the Theory of Economic Growth," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-00626-7, March.
    3. J. M. Keynes, 1937. "The General Theory of Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 51(2), pages 209-223.
    4. John B. Davis (ed.), 1992. "The Economic Surplus In Advanced Economies," Books, Edward Elgar Publishing, number 126.
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    Cited by:

    1. Freeman, Alan, 2015. "Social Structures of disaccumulation: a 101 on the rate of profit and the cause of crisis," MPRA Paper 69649, University Library of Munich, Germany, revised 21 Feb 2016.
    2. Trofimov, Ivan D., 2020. "Public capital and productive economy profits: evidence from OECD economies," MPRA Paper 106848, University Library of Munich, Germany.
    3. David M. Brennan, 2018. "Regimes of Realization: Using Marx and Kalecki to Understand the US Economy, including the Great Recession and the “Recoveryâ€," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(4), pages 757-772, December.
    4. Alexiou, Constantinos, 2022. "Evaluating the falling rate of profit in the context of the UK economy," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 84-94.
    5. Trofimov, Ivan D., 2022. "Determinants of the profit rates in the OECD economies: A panel data analysis of the Kalecki's profit equation," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 380-397.
    6. Trofimov, Ivan D., 2018. "The secular decline in profit rates: time series analysis of a classical hypothesis," MPRA Paper 88248, University Library of Munich, Germany.

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