Educator, Economist, Journalist, Engineer (1899-1970)
Michal Kalecki was a Polish economist who developed many of the same ideas found in Keynes’ General Theory but before Keynes. For instance, Kalecki wrote about effective demand before Keynes but his work lay undiscovered for many years because it was written in Polish and, also, because the US government restricted the public’s access to his work on the basis of political ideologies at the time.
As economist Jan Toporowski asserts, Kalecki’s theory of the business cycle is “the most serious challenge to general equilibrium macroeconomics”. Kalecki, like Keynes, contended that production and employment in a capitalist economy are predominantly determined by the magnitude of business investment, not by price and wage flexibility. Also, investment determines savings, not the other way around. Ultimately, investment would lead to a “tragedy” whereby it creates over-capacity in the economy and a future fall in business investment; booms would inherently sow the seeds for an inevitable recession. Kalecki’s writings heavily influenced the post-Keynesian tradition and Neo-Marxian school of thought.
During his distinguished career, Kalecki worked and researched at leading institutions including the University of Cambridge, the University of Oxford and the London School of Economics. He also served as an economic advisor to the Polish, Cuban, Mexican, Israeli and Indian governments as well as the deputy director of New York City’s United Nations Economics Department. Michal Kalecki was nominated for the Nobel Prize in Economics in 1970 but, unfortunately, he died before the winner was decided.
“The tragedy of investment is that it causes crisis because it is useful. Doubtless many people will consider this paradoxical. But it is not the theory which is paradoxical, but its subject – the capitalist economy.”
– Michal Kalecki