Academic, Economist (1908-1986)
Nicholas Kaldor was a Cambridge economist who made many long-lasting contributions to economics including Kaldor’s growth laws, the Kaldor-Hicks efficiency for welfare comparisons and the cobweb model. Kaldor also worked alongside fellow economist Gunnar Myrdal to posit the concept of ‘circular cumulative causation’.
After Keynes published the ‘General Theory’, many economists attempted, but failed, to build business cycle models. For instance, Neo-Keynesian models were criticised as being unstable because they could not describe how an economy could cycle through growth and recession in a stable manner. Economists then turned to Kaldor, who, in 1940, had invented a realistic and stable account of business cycles. Kaldor intertwined Roy Harrod’s non-linear dynamics and John Hicks’ multiplier-accelerator model to construct his theory of the cycle. Kaldor’s model was more in keeping with Keynes’ ‘General Theory’, however, because, unlike other economists, he introduced the capital stock as an important determinant of the business cycle.
“Owing to increasing returns in processing activities (in manufactures) success breeds further success and failure begets more failure.”
– Nicholas Kaldor