Kalecki’s and Keynes’s Perspectives on Achieving and Sustaining Full Employment in a Global Economy

By Eckhard Hein, Hagen M. Krämer

PKES Working Paper 2404

March 2024

This paper examines the challenges of achieving and sustaining full employment in a global economy, as discussed by Michał Kalecki and John Maynard Keynes. Its aim is to analyse the common perspectives and differences between Kalecki and Keynes on this issue. The paper first examines the basic views of Kalecki and Keynes on long-term employment issues. This contains comparing their respective considerations of political economy constraints to full employment. Then Kalecki’s and Keynes’s views on the constraints in open economies and the economic policy strategies they proposed are assessed. The paper points out Kalecki’s advocacy for public deficit spending and income redistribution for achieving full employment, which slightly differs from Keynes's emphasis on stimulating investment, including partial socialisation. Regarding power relations, Kalecki focussed on the conflict between capital and labour, calling for ‘crucial reforms’ like nationalisation of key industries, while Keynes highlighted the conflict between financial and industrial capital. Both shared a nuanced view of globalisation, but differences emerge when discussing the Keynes Plan. Keynes aimed to prevent deflation in the international monetary system, while Kalecki stressed long-term international lending for sustaining full employment. Both economists underscored the importance of international conditions for achieving full employment, emphasizing the need for a balance of payments equilibrium over strictly balanced current accounts.

Keywords: Full employment, global economy, John Maynard Keynes, Michał Kalecki

JEL classification: E11 E12 E61 F41