ABSTRACT
Nicholas Kaldor's RES paper is the starting point of two traditions in the modern theory of growth and distribution. One is the Keynesian theory - subsequently christened as Post-Keynesian - which makes use of the multiplier principle to determine "the relation between prices and wages, if the level of output and employment is taken as given". The other is the Ricardian theory which determines the distribution of income among landlords and capitalists by means of the marginal and surplus principles, respectively. This chapter offers a generalization of the graphical analysis of the agricultural side of the Ricardian theory of distribution introduced by Kaldor in his famous 1955–1956 RES paper. The chapter focuses on the case of a small open economy facing given international commodity prices. It analyses the world economy model in which international trade takes place among several small open economies and international commodity prices that are endogenously determined.
