Capitalist instability and effective demand (Kalecki’s reason)

Abstract

As regards the controversy surrounding effective demand and the work of
Michal Kalecki, it must be understood that he not only formulated an adequate theory of
economic cycles but, by revealing the limits of this theory, dealt with a more complex set of
problems which are specific to the movement of capitalism: the question of the simultaneous
determination of cycles and trends. To develop this theory entails reformulating the above
concepts to grasp the antinomy of the trend in capitalism and its interactions with fluctuations
and changing circumstances. This in turn requires a critique of the concept of economic
time, or more precisely a clarification of capitalist temporality. It is also necessary to re-assess the theoretical status of the principle of effective demand, concerning a theory of capital
and capitalist calculation, within a theory of instability; the temporalization of this principle,
as effected in macroeconomic models is not sufficient for the comprehension of capitalist
dynamics as a whole.

JEL Classification: O40; E32; B51.