Interest and Capital: The Monetary Economics of Michal Kalecki

Interest and Capital is a book by Michał Kalecki that explores his distinctive approach to money and its circulation in the capitalist economy. It critiques the international monetary arrangements proposed by Keynes and White at Bretton Woods and highlights the importance of debt management in developing countries and governments. Kalecki's theory suggests that money has both an industrial and a financial circulation, with corporate finance at the center of monetary considerations. This has implications for the rate of interest, which is not related to the rate of profit or portfolio adjustments but to the kind of financing that may prevail in any given phase of the business cycle.

Format: Hardback
Length: 208 pages
Publication date: 27 January 2022
Publisher: Oxford University Press

Interest and Capital is a comprehensive collection of published fragments by Michał Kalecki, delving into his unique perspective on money and its circulation within the capitalist economy. Author Jan Toporowski provides a detailed analysis of Kalecki's critique of the international monetary arrangements proposed by Keynes and White at Bretton Woods, shedding light on the subsequent international monetary imbalances that have disrupted the global economy. Kalecki's monetary analysis emphasizes the significance of debt management, making it particularly relevant to developing countries and governments grappling with high levels of debt in the aftermath of recent global crises.

In Kalecki's theoretical framework, money encompasses both industrial and financial circulations. Corporate finance takes center stage in monetary considerations as it represents the money of capitalists, which autonomously determines expenditure within the economy. This theory holds significant implications for the interest rate, which is not solely influenced by the rate of profit or the need for portfolio adjustments to maintain equilibrium. Instead, it revolves around the type of financing that prevails at different stages of the business cycle.

Kalecki's insights into the role of corporate finance in determining economic behavior offer valuable perspectives on interest rates and the business cycle. By examining the relationship between capitalists' expenditure decisions and the availability of finance, he challenges traditional economic theories that link interest rates to profit margins or portfolio adjustments. Instead, he suggests that interest rates are influenced by the broader economic context, including the level of investment and the structure of financial markets.

Interest and Capital is a valuable resource for scholars, policymakers, and anyone interested in understanding the complex dynamics of money and finance in the modern economy. Through Kalecki's insightful analysis and Toporowski's comprehensive presentation, readers gain a deeper understanding of the factors that shape economic outcomes and the challenges faced by developing countries and governments in managing their financial affairs.

Weight: 400g
Dimension: 164 x 240 x 23 (mm)
ISBN-13: 9780198816232