ABSTRACT
Few have done more to remind us of the continuing relevance of the ideas of Kalecki and Keynes than Geoff Harcourt. In the context of the present chapter it is especially important to note Geoff s role in exploring and formalizing the link between theories of pricing and aggregate profits on the one hand and theories of income and employment determination on the other. This is seen most clearly in his outstanding Economic Record (1965) paper1 in which he showed how the traditional short-period Keynesian model could be adapted to incorporate decisions on price setting and choice of technique, with the result that the distribution of income as well as the level of employment can be determined by the model, and also in Chapter 3 of the Cambridge Controversies (1972) where it is shown, inter alia, that the relationship between the real wage and the marginal product of labour (and thus the level of unemployment) depends upon the balance between aggregate investment and aggregate saving. At the centre of both works lies the idea that profitability and the functional distribution of income are, in some essential way, macroeconomic phenomena.
