ABSTRACT
Free cash studies have inevitably discussed inherent limits on new capital expenditures relative to cash generated. At a macro level, however, free cash explanations surrounding specific industrial and historical considerations appear unduly narrow, particularly in light of the ubiquitous spread of oligopoly formations across the economy and across time. In grappling with understanding the Great Depression of the 1930s, Michal Kalecki was the first to express this insight in reference to government deficits. He noted that "A budget deficit has an effect similar to that of an export surplus". The free cash model is a stripped-down model also in that it neglects the impact of productivity advance–particularly the advance carried forth by new investment. The Kaleckian analysis is an extended and class-based version of the Keynesian propositions that investment is self-funding and that government deficits help stabilize an unstable economy. The circumstances of the Great Depression gave birth to this new understanding.
