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Biographies Of Nicholas Kaldor

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There’s a new short biography of Nicholas Kaldor titled Nicholas Kaldor’s Economics: A Review by Luis Gomes. The author reminds of Kaldor’s proposals for the world as a whole, something which is highly needed today more than ever (and something I regularly refer to):

In 1984 Nicholas Kaldor gave a series of lectures in Italy, which become a posthumous book in 1996. These lectures [“Causes of Growth and Stagnation in the World Economy” … ] presented an integrated set of policies with which to tackle economic problems. In this series of lectures, Nicholas Kaldor commented on the four basic principles for good macroeconomic administration: (i) it is needed a coordinated fiscal action which include a set of targets for a balanced balance of payments and a full employment budget; (ii) the interest rate should be the lowest possible: (iii) it is important to prevent the volatility of international commodity prices (via stocks and via an international currency) (iv) it is necessary to overcome chronic inflation trends under full employment, due to the system of adjusting wages via sectoral collective agreement …

There are many biographies (from short articles to full papers) and I thought I should list them:

  1. A short article titled Portrait: Nicholas Kaldor by Luigi Pasinetti, published in 1981 published in Challenge.
  2. Luigi Pasinetti’s Nicholas Kaldor: A Few Personal Notes, published in 1983.
  3. Anthony Thirlwall’s 1987 book titled Nicholas Kaldor,
  4. Anthony Thirlwall’s 1987 article Nicholas Kaldor 1908–1986. Republished 1991 in the book Nicholas Kaldor And Mainstream Economics Confrontation Or Convergence? and again in 2015 in the book Essays On Keynesian And Kaldorian Economics.
  5. Geoffrey Harcourt’s article Nicholas Kaldor, 12 May 1908–30 September 1986 published in 1988 in Economica and republished in the book Post-Keynesian Essays In Biography by Harcourt himself.
  6. Ferdinando Targetti’s 1992 book Nicholas Kaldor: The Economics And Politics Of Capitalism As A Dynamic System.
  7. Marjorie Shepherd Turner’s book Nicholas Kaldor And The Real World published in 1993.
  8. Anthony Thirwall’s section Nicholas Kaldor, A Biography in Nicholas Kaldor’s book Causes Of Growth And Stagnation In The World Economy published posthumously in 1996.
  9. Adrian Wood‘s entry Kaldor, Nicholas (1908–1986) in The New Palgrave Dictionary Of Economics published in 2008.
  10. John E. King’s book Nicholas Kaldor published in 2008.
  11. Luigi Pasinetti’s chapter Nicholas Kaldor (1908–1986): Growth, Income Distribution, Technical Progress in his book Keynes And The Cambridge Keynesians: A ‘Revolution in Economics’ To Be Accomplished, published in 2009.
  12. John E. King’s chapter Nicholas Kaldor (1908–1986) in the book Handbook On The History Of Economic Analysis Volume I published in 2016.
  13. John E. King’s chapter Nicholas Kaldor (1908–1986) in The Palgrave Companion To Cambridge Economics published in 2017. (h/t Marc Lavoie).

Apart from the above, following are useful to know about Nicholas Kaldor, although can’t be described as biography:

  • Introduction by Ferdinand Targetti and Anthony Thirlwall to the book The Essential Kaldor, a collection of papers of Kaldor, published in 1989.

Have I missed any?

Nicholas Kaldor’s View That Exports Is The Only Exogenous Source Of Demand

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From a Twitter discussion on balance-of-payments, I was reminded of a section of John E. King’s 2009 biography of Nicholas, titled by the name.

From pages 193‒195 (+ endnote + references in Bibliography):

Kaldor’s willingness to take extreme positions was very well illustrated by his post-1966 emphasis on exports as the only exogenous source of effective demand, which I criticised in Chapter 4, Section 7. The closely related balance-of-payments-constrained growth models seem, at first glance, to be more relevant to a (long-departed) world of fixed exchange rates than to the world we live in, with floating currencies and huge payments deficits (and surpluses) that can apparently be sustained indefinitely. Kaldor would probably have responded to this with four counter arguments. First, he would have claimed that it was true only of rich countries with currencies that were sufficiently attractive for foreigners to hold to make continuing large deficits sustainable (for example the United States, the Euro bloc, Britain and Australia). The balance of payments constraint remained binding for small, poor countries with unattractive currencies (Bolivia, Zambia, Thailand). Such countries also continued to be dependent on the IMF and the World Bank, which dictated deflationary responses to their payments deficits, including (but not confined to) devaluation. In any case, Kaldor would have insisted, the external constraint continued to operate at the regional or sub-national level: poor, relatively backward regions cannot depreciate against richer, more productive regions within their own country (this was why he had advocated the Regional Employment Premium).

Second, Kaldor would have invoked his habitual ‘elasticity pessimism’ to deny that (at least for countries with initially serious problems of international competitiveness like the United Kingdom) currency depreciation would have the stimulating effect on exports, and the dampening effect on imports, that mainstream theory dictated. In this he would have been vindicated by evidence concerning the ‘Kaldor paradox’: countries that devalued in the 1950s, 1960s and 1970s tended to lose market share in world trade, while those countries whose currencies appreciated gained in market share (McCombie and Thirlwall 1994, pp. 289–99). Third, he might well have accepted Paul Davidson’s argument that a floating exchange rate regime introduced an unwelcome element of uncertainty into the world economy, discouraging investment and slowing growth across the board, so that a return to fixed exchange rates was both possible and desirable (Davidson 2006). 13

Fourth, and decisively, Kaldor would have argued that there were two channels through which the balance of payments constraint operated, not one. In addition to the policy channel (‘stop-go’, or demand deflation in response to payments deficits), there is an automatic process through which poor export performance leads to sluggish aggregate demand and thence to low business investment and slower output and productivity growth, in the absence of any policy response whatsoever. This fourth defence hinges on the controversial proposition that, for any individual country or region, exports are the only exogenous source of demand, with investment (and consumption) being entirely endogenously determined. This is a very strong assumption, but if it is accepted, the external constraint on growth becomes binding in all circumstances, and cannot be written off as historically or geographically specific, or confined to the Bretton Woods epoch (see also McCombie and Thirlwall 1994).

…

Notes

…

  1. Note, however, his stated belief that a return to Bretton Woods in the late 1970s would have made things worse (Kaldor 1978c, p. xxi). Not all Post Keynesians agree with Davidson on this important point, Wray (2006) for example arguing that flexible exchange rates are a necessary condition for national economic sovereignty.

…

Bibliography

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Davidson, P. 2006. ‘Liberalization or regulating international capital flows?’, in L.-P. Rochon and S. Rossi (eds), Monetary and Exchange Rate Systems: A Global View of Financial Crises, Cheltenham: Elgar, pp. 167–90.
…

McCombie, J. S. L. and Thirlwall, A. P. 1994. Economic Growth and the Balance-of-payments Constraint. Basingstoke: Macmillan.

…

Wray, L. Randall. 2006. ‘To fix or float: theoretical and pragmatic considerations’, in L.-P. Rochon and S. Rossi (eds), Monetary and Exchange Rate Systems: A Global View of Financial Crises, Cheltenham: Elgar, pp. 210–31.

Now, I do believe in this (for the present rules of the game), as it otherwise stock-flow ratios rise without limits, fixed exchange rates or floating, something King seems to be fine with!

Also, King is extremising Kaldor’s views, which are extreme nontheless—not extreme in a negative way. What’s exogenous and endogenous also changes with the time-period we’re looking at. Something which is exogenous in the short-run can be consistently thought of as endogenous in the long-run.

New Book: Advances In Endogenous Money Analysis

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There’s a nice new book titled, Advances In Endogenous Money Analysis, edited by Louis-Philippe Rochon and Sergio Rossi.

There’s a great chapter on Nicholas Kaldor’s views on money over the years by John E. King and another by Marc Lavoie titled, Assessing Some Structuralist Claims Through A Coherent
Stock–Flow Framework. John E. King also discusses the importance of fiscal policy in Kaldor’s work:

Kaldor continued to insist on the importance of fiscal policy. The first point in his ‘constructive programme of recovery’ from the world stagflationary crisis of the early 1980s was international agreement on ‘coordinated fiscal action including a set of consistent balance of payments targets and “full employment” budgets’ (Kaldor, 1996, pp. 86, 87). Existing budget deficits, he maintained, were

largely the consequence of the low level of activity. On a ‘full employment’ basis they would show a highly restrictive picture – they would show surpluses and not deficits. Contrary to appearances, the requirement of stability is for expansionary budgets – with lower taxes and higher expenditure, and not further fiscal restriction (as is advocated, for example, by M. de Larosiere of the International Monetary Fund). (Ibid., p. 87)

International coordination was critical to the success of this strategy. Trade liberalization was not consistent with full employment: ‘under conditions of unrestricted free trade the actual volume of production and trade may in fact be considerably less than under some system of regulated trade’ (ibid., italics in the original).

Kaldor’s Footnote And Kaldor On Sraffa

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The world is more Kaldorian than Keynesian. After the crisis, Keynes became popular again but his Cambridge descendent Nicholas Kaldor is hardly remembered by the economics community. Even his biographers have some memory loss of him.

😉

Anthony Thirlwall and John E. King are biographers of Nicholas Kaldor. Superb books.

There’s a chapter Talking About Kaldor: An Interview With John King in Anthony Thirlwall’s book Essays on Keynesian and Kaldorian Economics. There’s an interesting discussion on money endogeneity (Google Books link):

J.E.K.  … I wonder if Kaldor would have gone as far as Moore in arguing that the money supply curve is horizontal.

Anthony Thirlwall replies saying he would have argued that the supply of money is elastic with respect to demand, instead of quoting him. Here’s Nicholas Kaldor stating explicitly in a footnote in Keynesian Economics After Fifty Years, in the book, Keynes And The Modern World, ed. George David Norman Worswick and James Anthony Trevithick, Cambridge University Press, 1983, on page 36:

Diagrammatically, the difference in the presentation of the supply and demand for money, is that in the original version, (with M exogenous) the supply of money is represented by a vertical line, in the new version by a horizontal line, or a set of horizontal lines, representing different stances of monetary policy. 

[italics: mine]

Anthony Thirlwall is one of the commenter in the book chapter. The book is proceedings of a conference on Keynes.

But that’s not enough. Turn to page 363 of the book.

A.P.T.  He had a very high regard for Sraffa but he never wrote on this topic.

J.E.K.  Not something that would really have concerned him very much? Too abstract and too removed from reality?

A.P.T.  Probably, yes. It is quite interesting that Sraffa was his closest friend, both personal and intellectual, and they used to meet very regularly – almost every day when Sraffa was alive. But there’s no evidence that they ever discussed Production of Commodities by Means of Commodities.

J.E.K.  That’s amazing. There’s certainly no evidence that he ever wrote anything on those questions.

A.P.T. There’s no evidence that he wrote anything, or that indeed he really understood Sraffa. Well, he had the broad thrust, but I don’t know that he ever read it carefully, or understood the implications.

In Volume 9, of Kaldor’s Collected Works, there are two memoirs. One of Piero Sraffa and the other on John von Neumann.

Kaldor-On-Sraffa

Nicholas Kaldor on Piero Sraffa

Interestingly the editors and F. Targetti (another biographer) and A.P. Thirlwall!

I guess if you know a person so closely – like the biographers do, of Kaldor- you tend to forget a few things about them.