Kalecki and the reproduction schema

A first step in the analysis is to show explicitly how the elements of surplus value are allocated. Marx s numerical example of expanded reproduction (Table 2.2) can be explored in more detail by distinguishing, for each sector i, between capitalist consumption (uj, incremental changes in constant capital (cfQ and changes in variable capital (eft)). Numerical values for these terms are displayed in Table 3.1. In Department 1, for example, one half of the extracted surplus value of 1,000 is invested in the expansion of capital, with 400 directed to new constant capital and 100 to new variable capital. The remaining 500 units of surplus value are consumed by Department 1 capitalists. 

Following Kalecki (199Id 460), adding P + P to both sides of equation (3.1) yields 

This is an ex post identity between total profits (P ) and the economy s output of capital goods (W ) and capitalists consumption goods (W2). Kalecki poses the key question as to how we should interpret this identity. Are expenditures upon capital goods and capitalists consumption goods determined by profits, or are profits determined by these expenditures He argues that capitalists can decide how much they will invest and consume next year, but they cannot decide how much they shall sell and profit (ibid. 461). It is the money expenditures by capitalists upon consumption and investment that generate the resultant volume of profits. 

Cartelier (1996 217) has linked this so-called Kalecki principle, that capitalists earn what they spend, to the circulation of money. As a result of their ability to initiate circulation entrepreneurs, as a whole, more or less have the power to determine their income. Moreover, he argues, the Kalecki principle does not contradict the Classical view which makes profit equal to the value of surplus.  

Key passages in Marx s writings that demonstrate the role of the Kalecki principle in relation to the circulation of money are in chapter 17 of Capital, volume 2 (see Sardoni 1989 211). Starting with the case of simple reproduction, Marx considers the circulation of money using the example of an individual capitalist. During the first year he advances a money capital of 5,000, let us say, in payment for means of production ( 4,000) and for 

---