Kalecki’s Theory of Prices and Distribution

Abstract

This paper assesses the role of the ‘degree of monopoly’ in Kalecki’s theory of pricing and income distribution. We begin by examining Kalecki’s theory of prices, focusing on the meaning and role of the ‘degree of monopoly’. We then discuss Kalecki’s degree of monopoly theory of distribution and consider some alternative interpretations of the degree of monopoly, prior to considering the importance of this concept for Kalecki’s macroeconomics. This leads us to consider three main areas where post Keynesian economists, despite declaring superficial sympathies with Kalecki’s work, have either misunderstood, misrepresented or inadequately developed Kalecki’s analysis. We consider the extent to which real wages are determined in the product rather than the labour market; relate Kalecki’s theory of distribution to the ‘neo-Keynesian’ theories, as expressed in the Kaldor - Pasinetti equations; and discuss alternative interpretations of the role of the degree of monopoly in the long run.