Kalecki multiplier

In a more sophisticated model of the determination of profits, Kalecki develops his own multiplier framework. The advantage of this approach is that capitalist consumption is divided into an autonomous part and a part dependent on profits. This Kalecki multiplier can be easily reconciled with... 

This final equation represents a multiplier relationship between total profits and the total exogenous expenditure by capitalists (B0 + I), the multiplier being defined as 1/1-A. With this Kalecki multiplier relationship, profits are determined using exogenous investment and capitalist consumption. 

The Keynesian multiplier has as its constituent elements the Marxian term representing the share of surplus value e and the Kalecki multiplier 1/1 A. 

Applying the Kalecki principle and these empirical assumptions to the Grossmann table, a new simulation of expanded reproduction is presented in Table 7.2. As shown in Chapter 3, the Kalecki multiplier relationship (see equation 3.8) can be derived by substituting (7.3) into (7.1) ... 

Following the analysis carried out in Chapter 3, the Keynesian multiplier can also be synthesized with the Kalecki multiplier. By again redefining the share of surplus value as e, the expression (3.9) can be re-written as8... 

In this Kalecki modified model the rate of surplus value s, is now an endogenously determined variable, with a time subscript / indicating that it varies from period to period subject to the impact of the Kalecki multiplier 1/1 — A conjoined with the investment and personal consumption expenditures of the capitalist class. 

The book is thus a series of steps, from the multiplier and its role in the reproduction schema in Chapter 2 to the Kalecki principle in Chapter 3 and a detailed consideration of the circuit of money in Chapter 4. Having built up a macro monetary model of the reproduction schema, in which both money and aggregate demand are featured, Chapter 5 derives the Domar growth model from these analytical foundations. The relevance of this growth model to Marxian theories of crisis is explored and further developed in Chapter 6. 

As part of this assessment, the structure of the scalar multiplier framework is further developed, together with the relationship between the Kalecki principle and Marx s value categories. 

What is more, these equally valid ways of defining value are consistent with a macroeconomic interpretation of the autonomous role of money. Since under the Kalecki principle capitalists earn what they spend, the social validation of the market, led by capitalist investment and consumption, is the starting point for economic activity. Commodities are only produced, labour is only employed, if capitalists cast into circulation the money required for sales to be realized - for labour embodied in commodities to become socially necessary. Since money, with its specific role in a capitalist economy, is so central to the Kalecki principle, a possible synthesis can be suggested with the value-form approach without, that is, compromising the use of a Leontief/Keynesian multiplier framework together with embodied labour categories. 

It is clear from this example that the Kalecki principle holds, with the capitalist class earning what it spends. But this is only part of the story the capitalists may earn the money cast into circulation as their own income, but there is much more income to be generated from this initial injection. Using Table 4.3 c, a multiplier process can be examined in which the level of income is expanded in a series of circuits. 

This multiplier further establishes the consistency between the Kalecki principle, that capitalists earn what they spend, and Marx s theory of surplus value. Since in (8.11)/= u + /, it follows that... 

Trigg, A.B. (2002) Surplus value and the Kalecki principle in Marx s reproduction schema , History of Economics Review, 35 104-14. Trigg, A.B. (2002) Surplus value and the Keynesian multiplier , Review of Radical Political Economics, 34(1) 55-65. 

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