Polish Marxism: Kalecki

The 15 years spanning from the end of the nineteenth century till the outbreak of the First World War formed, perhaps, the richest period in the history of Marxian economics. The main development between the time of Marx's writing and that of the German-Russian debates was the change in the competitive nature of the capitalist system. In the early stages of capitalism, the forces of competition created an imperative for capitalist firms to invest all their profits, or lose out in the competitive struggle to other firms which did. However, as large firms and oligopolistic structures emerged, the nature of competition changed, with price competition no longer the only form, leading to an erosion of this imperative, and an increase in capitalist consumption. Kalecki showed that, in this case, total profits were determined by capitalist's consumption and investment expenditures. The result, according to Kalecki, was a chronic tendency towards stagnation in capitalist economies. The long boom could be explained as ‘exports’ to a market external to the private sector, namely armaments and military expenditures.