Abstract
Having co-discovered the principle of effective demand, Kalecki did not follow the Keynesian economists in calling for government macro-economic policy, particularly fiscal policy, as a panacea to the problem of unemployment. He was particularly wary of monetary policy, believing that its main role was to keep investment at its trend level.1 His views on the limitations of fiscal policy as a means of ensuring full employment were much more complex. As well as the economic limitations, there are fundamental political ones which ensure that, unless the fundamental institutions of capitalism are changed, full employment cannot be maintained. In other words, Kalecki drew an important distinction between achieving full employment, which was possible with the aid of government fiscal policy increasing effective demand, and the maintenance of that employment.
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© 2016 Joseph Halevi, G. C. Harcourt, Peter Kriesler and J. W. Nevile
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Halevi, J., Kriesler, P. (2016). On the Limitations of Fiscal Policy: A Radical Kaleckian View. In: Post-Keynesian Essays from Down Under Volume I: Essays on Keynes, Harrod and Kalecki. Palgrave Macmillan, London. https://doi.org/10.1057/9781137475381_17
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DOI: https://doi.org/10.1057/9781137475381_17
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