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date: 25 November 2020

Abstract and Keywords

Kaleckian economics may be broadly defined as the economic theories enunciated by Michał Kalecki (1899–1970) and the extensions of those theories by economists who were influenced by him. In 1933, Kalecki published his first analysis of the business cycle under capitalism, arguing that it was due to the instability of investment, which in turn was caused by fluctuations in capitalists’ profits. During the 1950s, Kalecki was influential in the monopoly capitalism school of Marxists, through the work of Paul Sweezy and Josef Steindl. Post-Keynesian economics spliced Kalecki’s price and business cycle theory onto more orthodox Keynesian concerns about aggregate demand and full employment. This chapter explains the key features of Kalecki’s analysis of a capitalist economy with reference, where appropriate, to the standard two-sector model. It then looks at Hyman Minsky’s extension of Kalecki’s ideas and examines Kalecki’s macroeconomics in the short run. It also discusses what it is about a capitalist economy that makes it prone to crises and persistent involuntary unemployment. The chapter also assesses the political aspects of full employment.

Keywords: Kaleckian economics, Michał Kalecki, business cycle, capitalism, investment, profits, Paul Sweezy, Josef Steindl, post-Keynesian economics, unemployment

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