Kalecki scored a breakthrough by introducing the ‘degree of monopoly’ into his macrodynamic model. He offered a theory of distribution that was independent of the neo-classical tradition. He introduced a promising alternative theory of distribution, even if it lacked a comprehensively formulated theory of market behaviour and was in some respects deficient in dealing with the question of investment decisions. To build a realistic theory of distribution, Kalecki offered an explanation of how prices in fact are formed by mark-ups on prime costs. This use of mark-ups to cover overheads is very important. Though it entails monopoly power it is not synonymous with it.
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Earlier drafts of this paper were read by and discussed with M. H. Dobb, F. H. Hahn, R. Goodwin, J. A. Kregel, Joan Robinson, K. W. Rothschild, P. Sraffa, P. M. Sweezy. The final revision benefited from the comments of the Editors of this Journal. In expressing my appreciation to all those mentioned, I should like to make the usual disclaimer.
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Feiwel, G.R. On Kalecki's theory of income distribution. De Economist 122, 309–325 (1974). https://doi.org/10.1007/BF01680113
- International Economic
- Public Finance
- Income Distribution
- Investment Decision
- Alternative Theory