HARRODIAN INSTABILITY AND THE ‘NORMAL RATE’ OF CAPACITY UTILIZATION IN KALECKIAN MODELS OF DISTRIBUTION AND GROWTH—A SURVEY

Abstract

ABSTRACTStarting from potential Harrodian instability in the Kaleckian distribution and growth model we survey Kaleckian reactions put forward to avoid or to cope with this instability. We show that, contrary to the position taken by the critics of the Kaleckian model, this model is capable of maintaining an endogenous rate of capacity utilization, the paradox of thrift and the paradox of costs in the long run, even if the problem of Harrodian instability arises. We conclude that Kaleckian models are more flexible than their Harrodian and Marxian critics suppose when attacking the simple textbook version.