Collected Works of Michal Kalecki, 2 vols. - book reviews

Monthly Review, June, 1992 by Joseph Halevi

The publication in English of the first two volumes of the collected works of Michal Kalecki (1899-1970) is a tribute to the intellectual importance of his contributions to the analysis of twentieth-century capitalism. The whole project will involve seven volumes, the first two of which deal with the capitalist economy. Most of the material contained in them is already well known to the community of nonconformist economists. The first volume assembles, for instance, the 1935 Econometrica article on the business cycle, which made Kalecki famous among mathematical economists, the booklet Essays in the Theory of Economic Fluctuations (1939), and his celebrated paper on the political aspects of business cycles (1943). We find also the complete version of his first Polish book Essay on the Business Cycle Theory (1933), a part of which appeared in Kalecki's selection of essays published in 1971 by Cambridge University Press. Likewise, the second volume features Kalecki's contributions to the question of full employment, written while in Oxford during and immediately after the Second World War (after a period spent at the United Nations, he returned to Poland in 1954). The centerpieces of Volume II are his classic book Theory of Economic Dynamics, which in the United States has been reprinted by Monthly Review Press,(*1) along with the very important Economic Journal articles "Observations on the Theory of Growth" (1962)--a critique of the Keynesian approach to growth under capitalism--and "Trends and the Business Cycle" (1968)--a profoundly argued statement about the strength of stagnationist tendencies.

Alongside the writing which projected Kalecki into the world of academic and mathematical economics, both volumes include papers hitherto unavailable in English high-lighting the strong interaction between political and economic analysis which permeated his thought over four decades. In this context, it is regrettable that the editor chose not to include, in either volume, Kalecki's work on the war economy, published in the Bulletin of the Oxford Institute of Statistics during the war itself. Kalecki's thinking always evolved with history. In the 1930s, he was interested in stressing the persistence of business fluctuations in a trendless economy, that is, in an economy showing no growth at all, as was the case in that period. In the postwar years, when new products were changing the structure of production and consumption, he concentrated on the impact of trend-like factors (such as innovations) in a monopolistic framework. In studying the economics of war financing, Kalecki pointed out the solid and quite inflexible grip of the capitalist classes on the distribution of national income, even under emergency conditions. Consequently, he favored rationing and direct intervention in physical production. The seeds of his subsequent skepticism about the actual implementation of full-employment and social-welfare oriented policies in peacetime can be traced back to the analyses conducted during the war. In other words, the writings of the war economy are part and parcel of Kalecki's ideas about the working of capitalism in historical time.

On the whole, despite some limitations on the selection of the papers, these volumes show beyond any shadow of doubt Kalecki's Marxist conception of history and economics. Indeed, Kalecki's culture and outlook emanated almost entirely from the Marxian milieu of Central Europe, which stretched beyond the social democratic movements. By the turn of the century, in the German-speaking and Russian-dominated areas of Europe, Marx's work was seen by large segments of the intellectual strata as a genuine scientific contribution to political economy, an attitude which today can be found in India and Japan more than anywhere else.

To put Kalecki's works into perspective, we need to keep in mind the two major historical changes which deeply influenced Marxian thought prior to the First World War. The first of these changes is the emergence of the large corporation in Germany and in the United States. This meant that accumulation could no longer be portrayed as being based on the competitive tendency toward a uniform rate of profit. The cartelization of the German economy, centered as it was on a tight integration between banks and industrial groups, led to the formulation by Austria's Rudolf Hilferding of the theory of finance capital, which, in turn, influenced the development of Lenin's ideas about the connections between monopoly capital and imperialism. The second phenomenon, this time correctly anticipated by Marx, was the growth and specialization of the capital goods sector as a distinctly separate branch of production. This was a direct result of the rise of large corporation. Big industrial complexes, in order to attain the required economies of scale, had to build up their productive capacity well above the current level of demand. The production of machinery and equipment could no longer be confined to workshops within the firms of the consumption goods sector. This sectoral feature of accumulation, occurring especially in Germany and the United States, but later also in Japan, led Central European Marxists as well as non-socialist intellectuals (Tugan Baranovsky, for example), to debate whether the tendency toward an ever increasing predominance of the capital goods sector could be maintained indefinitely, or whether it would lead to an endemic problem of realization (Tugan Baranovsky, Rosa Luxembourg). Looking with modern eyes at that debate, one can say that the participants were in fact grappling with the question of capacity utilization in modern capitalism without, however, making it into an explicit issue.