Abstract
The paper reinterprets Schumpeter’s views on the dynamic effects of taxation, as originally expressed in Crisis of the Tax State, from a Kaleckian perspective. In light of Schumpeter’s rejection of Keynesian and Marshallian approaches to taxation, the paper argues that a recently developed Kaleckian approach provides an appropriate basis from which to analyse the effects on the business cycle of balanced changes in the structure of taxation. It is shown that, under certain shifting assumptions, increases in the taxation of wages or profits will stimulate investment and attenuate the amplitude of the business cycle. Ultimately, the shifting of taxes reduces to a conflict over income shares. The changing distribution of income in the United Kingdom in recent years suggests that investment is likely to remain sluggish unless there is a significant reversal of income shares. This may give rise to increasing economic and political tensions into the 21st century.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Arestis P, Sawyer M (1998) The macroeconomics of New Labour. Mimeo, University of Leeds
Gomulka S, Ostaszewski A, Davies R (1990) The innovation rate and Kalecki’s theory of the trend, business cycle and unemployment. Economica 57: 525–540
Hayek FA (1944) The road to serfdom. University of Chicago Press, Chicago Treasury HM (1998) Code for fiscal stability
Kalecki M (1937) A theory of commodity, income and capital taxation. Economic Journal 47: 444–450
Kalecki M (1943) Political aspects of full employment. Political Quarterly 14: 322–331 Kalecki M ( 1954 ) Theory of economic dynamics. Allen and Unwin, London
Kalecki M (1968) Trend and business cycle. Reprinted in: Kalecki M ( 1971 ) Selected essays in the dynamics of the capitalist economy. Cambridge University Press, Cambridge
Keynes JM (1936) The general theory of employment, interest and money. Macmillan, London
Kriesler PM (1996) Microfoundations: a Kaleckian perspective. In: King JE (ed) An alternative macroeconomic theory: the Kaleckian model and post-keynesian economics. Kluwer, Boston
Laramie AJ (1991) Taxation and Kalecki’s distribution factors. Journal of Post Keynesian Economics 4: 583–594
Laramie AJ, Mair D (1996) Taxation and Kalecki’s theory of the business cycle. Cambridge Journal of Economics 20: 451–464
Laramie AJ, Mair D (1997) A Kaleckian theory of taxation. International Papers in Political Economy 4: 1–43
Laramie Ai, Mair D (1998) The micro-macro dichotomy of public finance. a Kaleckian solution to the problem of growth and taxation. Mimeo, Heriot-Watt University
Laramie AJ, Mair D, Toporowski J (1999) Weintraub’s consumption coefficient: some economic implications and evidence for the UK. Cambridge Journal of Economics (forthcoming)
Laramie AJ, Mair D, Miller AG, Stratopoulos T (1997) The impact of taxation on gross private non-residential fixed investment in a Kaleckian model. Journal of Post Keynesian Economics 19: 243–256
Moggridge D (1983) The collected writings of John Maynard Keynes, Vol XII. Economic articles and correspondence. Macmillan, London
Musgrave RA (1992) Schumpeter’s crisis of the tax state: an essay in fiscal sociology. Journal of Evolutionary Economics 2: 89–114
Musgrave RA (1997) Micro and macro aspects of fiscal policy. In: Blejer MI, Ter-Minassian T (eds) Macroeconomic dimensions of public finance. Routledge, London
Muth JF (1961) Rational expectations and the theory of price movements. Econometrica 29: 315–335
Reynolds PJ (1983) Kalecki’s degree of monopoly. Journal of Post Keynesian Economics 5: 493–503
Reynolds PJ (1996) Kalecki’s theory of prices and distribution. In King JE (ed) An alternative macroeconomic theory: the Kaleckian model and post-keynesian economics. Kluwer, Boston
Rothschild KW (1961) Some recent contributions to a macroeconomic theory of income distribution. Scottish Journal of Political Economy 2: 173–199
Schumpeter JA (1918) Crisis of the tax state. Leuschner and Lubensky, Graz Leipzig
Schumpeter JA (1943) Capitalism, socialism and democracy. Unwin University Books, London
Schumpeter JA (1939) Business cycles, Vols I and I I. McGraw-Hill, New York
Schumpeter JA (1954) History of economic analysis. Allen and Unwin, London
Stern N (1992) From the static to the dynamic: some problems in the theory of taxation. Journal of Public Economics 47: 273–297
Weintraub S (1979) Generalising Kalecki and simplifying macroeconomics. Journal of Post Keynesian Economics 1: 101–106
Weintraub S (1981) An eclectic theory of income shares. Journal of Post Keynesian Economics 4: 10–24
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2001 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Mair, D., Laramie, A.J. (2001). Capitalism and democracy in the 21st century: a Kaleckian interpretation of a Schumpeterian problem. In: Mueller, D.C., Cantner, U. (eds) Capitalism and Democracy in the 21st Century. Physica, Heidelberg. https://doi.org/10.1007/978-3-662-11287-8_3
Download citation
DOI: https://doi.org/10.1007/978-3-662-11287-8_3
Publisher Name: Physica, Heidelberg
Print ISBN: 978-3-7908-2480-3
Online ISBN: 978-3-662-11287-8
eBook Packages: Springer Book Archive