Investment, Employment and Income Distribution

This book provides an analysis of the theories developed by Keynes, Kalecki and Joan Robinson. The author criticizes their work in certain respects, and attempts to build upon their ideas in addressing a range of problems concerning investment, employment and income distribution. The book develops a theory of income distribution which is based on Kalecki's theory of pricing and his explanation of the determination of the total level of profits. This theory is used to consider the incidence of taxation, and it is shown that there can be significant differences between the legal and economic incidence of taxation under certain circumstances. The macroeconomic determinants of profits in an open economy are then used to examine the changes in profits in the United States economy in the post-war period. Keynes's theory of effective demand is restated to eliminate an error in his initial definition of the aggregate demand function. The book argues that the short-period setting of Keynes's theory, and his emphasis on the importance of uncertainty and changing conditions over time, leave no room in his approach for serious consideration of long-term equilibrium conditions. This approach is contrasted with that of Sraffa in "Production of Commodities by Means of Commodities". The author examines Joan Robinson's main contributions to economic theory, paying particualar attention to her attempt to generalize Keynes's theory to the long period. This highlights the importance of Kalecki's formulation of the theory of effective demand in her work.