ABSTRACT
This chapter demonstrates the origins of a theory of the firm and draws on the three versions of Kalecki’s microanalysis to show that there is an embedded view of the firm. Modularity, the absence of free competition, that prices have distributional effects between the firms themselves, that the system has internal tension even when stationary, and the significance of a given state of market imperfection are features of the firm throughout the different versions of Kalecki’s pricing. This becomes explicit once it is acknowledged that the issue is not aggregation in Kalecki’s approach. It is rather that methodologically Kalecki uses averages at the level of the firm, which obscure the differentials that drive the system. Imperfect competition is a relational concept relating high- and low-cost producers rather than a simple relationship with size. Specifically, the firm cannot be considered aside from its environment.
