KALECKIS

THEORY OF
DISTRIBUTION

STATES THAT
PROFIT SHARE OUT OF NATIONAL
INCOME IS A DIRECT FUNCTION OF
DEGREE OF MONOPOLY POWER.
PROFIT SHARE OUT OF NATIONAL
INCOME IS A DIRECT FUNCTION OF
THE RATIO OF RAW MATERIAL COST
TO WAGE COST

BACKGROUND
THE TEMPO CREATED BY SRAFFA,
JOAN ROBINSON, CHAMPRELIN ETC.
ALMOST IN A MARXIAN STYLE

ASSUMPTIONS
INDUSTRIES WORK WITH EXESS
CAPACITY
LERNERS DEGREE OF MONOPOLY
POWER HOLDS GOOD
MC INCLUDES ONLY LABOUR COST AND
RAW MATERIAL COST
LABOUR COST INCLUDES ONLY WAGES
OF LABOUR
SALARIES ARE INCLUDED IN THE
INCOME OF CAPITALISTS. Cntd------

Cntd--------

THUS, p-m INDICATES PROFITS AND

INCLUDES ENTREPRENEURRIAL
PROFITS[INCLUDING DIVIDEND] AND
OVERHEAD OSTS
[INTEREST,DEPRECIATION AND
SALARIES]
THE FIRMS HAVE THE SMC EQUAL TO
SAC [ LAB AND RM COST] OVER A
RANGE CALLED THE RANGE OF
PRACTICAL CAPACITY.

KALECKI FIRST
FORMULATED HIS MODEL IN
1939 AND, IN RESPONSE TO
CRITICISM, HE REVISED THE
MODEL IN 1959.

THE FIRST VERSION WAS

BASED ON LERNERS
DEGREE OF MONOPOLY
POWER:

FIRST VERSION
LENERS MEASURE OF DEGREE OF
MONOPOLY IS

AS THE ASSUMPTION
MC [m] =AC [a]
WE CAN RESTATE THE EQUATION AS:

NOW [p-a] REPRESENTS THE

GROSS INCOME OF
CAPITALISTS PER UNIT OF
OUTPUT. THE GROSS
INCOME OF CAPITALISTS
FOR THE TOTAL QTY OF
GOOD IS :

THE GROSS PROFIT INCOME

FOR ALL THE FIRMS OR THE
ECONOMY AS A WHOLE IS:

HERE THE TOTAL VOLUME

OF THE OUTPUT OF ALL THE
GOODS PRODUCED AND
SOLD IN THE ECONOMY IS:

THIS IS CALLED THE

AGGREGATE TURNOVER[T].
T IS MADE UP OF THE VALUE
OF GROSS NATIONAL
PRODUCT PLUS THE VALUE
OF THE RAW MATERIALS.
THUS, ..

WHAT HAPPENS TO THE

SHARE OF WAGE AND PROFIT
WHEN THE DEGREE OF
MONOPOLY POWER
CHANGES?

THE SHARE OF WAGES, P & W

CONCLUSION
SHARE OF WAGE [W/Y] IS A
DECREASING FUNCTION OF DEGREE
OF MONOPOLY POWER AND THE
RATIO OF RAW MATERIAL COSTS TO
WAGE COSTS

PREDICTION
AS CAPITALISM DEVELOPS ALONG
WITH INCREASING STRENGTH OF
MONOPOLIES, LABOUR SHARE
DECLINES.