A Kaleckian Theory of Income Distribution
Michal Kalecki's writings contain a theory of distribution that combines microeconomic and macroeconomic aspects of the economy. Kalecki's approach to the pricing of manufactured goods is an important element in the Kaleckian theory of distribution developed, but his particular formulations of the price equation are discarded. Whatever the judgement reached on Kalecki's use of the term 'degree of monopoly', a Kaleckian theory of distribution can be developed on the assumption that it acts to protect the rate of profits of established firms in the industry. The key elements in the struggle over income shares in a Kaleckian theory of distribution, given the propensities to save, are thus the mark-ups and capitalists' expenditures in real terms. Kalecki distinguished between two types of short-term price changes, 'cost-determined' and 'demand-determined'. The production of finished goods is elastic as a result of existing reserves of productive capacity.