Kaldor's ‘Keynesian’ theory

We start with Nicky Kaldor's ‘Keynesian’ macro theory of distribution (Kaldor 1955–6), not because it was the first – that honour belongs to Kalecki in the late 1930s and even earlier, as Kaldor argued, to Keynes in 1930 – but because it is the most well known. It is, moreover, a good reference point because it has some idiosyncratic features, not least that it is a long-period, full-employment model, seemingly a most strange work to come from the pen of such an eminent Keynesian economist as Kaldor. This even led Paul Samuelson to dub him ‘Jean Baptiste Kaldor’ (Samuelson 1964, 345). The model itself comes at the end of a long article which reviews theories of distribution from Ricardo on, and which finds most of them either out of date or severely wanting. The starting point of Ricardo is significant because Ricardo's theory emphasised the distribution of the surplus of production after the necessaries of production – the (subsistence) wages of the wage-earners and the replacement of the means of production – had been taken into account. Ricardo's theory reflects the early years of the British industrial revolution when real wages were still very low (in Ricardo's model due to the workings of the Malthusian theory of population and the classical theory of rent) and relatively constant, at least in the long-term sense, so that as technical advances, mechanisation and industrialisation occurred, the surplus to be distributed grew both absolutely and relatively.