Nicholas Kaldor

Kaldor’s Early Life and Education

Nicholas Kaldor (1908–1986) was born Káldor Miklós in Budapest, Hungary, into an affluent, middle-class, Jewish family. He received his primary and secondary schooling in Budapest.

In 1925, Kaldor entered the University of Berlin, where he studied economics for a couple of years. He later said he chose to study economics on account of the hyperinflation then raging in many of the German-speaking lands.

In 1927, Kaldor transferred to the London School of Economics (LSE), in the UK. He obtained his bachelor’s degree from the LSE in 1930.

Kaldor then began working on a doctorate under the supervision of Lionel Robbins, but the dissertation he wrote was never officially submitted.

Kaldor’s Career

In 1930, while pursuing his abortive graduate studies, Kaldor worked as an assistant (adjunct) lecturer at LSE. By 1938, he had been promoted to full-time Reader status.

Over the course of the 1930s, Kaldor published a series of ground-breaking papers, which quickly caused him to rise to a standing among the top rank of British economists.

During World War II, between 1943 and 1945, Kaldor worked for the National Institute of Economic and Social Research, while on loan from the LSE.

In 1947, Kaldor resigned from the LSE and became Director of Research and Planning with the new United Nations Economic Commission for Europe (UNECE).

In 1949, Kaldor received a lectureship in economics at the University of Cambridge, where he was also elected a Fellow of King’s College.

In 1952, Kaldor became a Reader in economics at Cambridge. In 1966 he was promoted to the rank of full Professor.

In the 1950s, Kaldor was tapped as an economic adviser by the Congress Party of Jawaharlal Nehru in India, where he helped devise the new nation’s tax system.

Between 1965 and 1970, Kaldor worked as an adviser to the British Labour Party government of Harold Wilson.

Kaldor’s Ideas

Kaldor had a reputation for brilliance both as a formal analyst and as a practical-minded, applied economist—two qualities that are not usually found together in the same individual.

Moreover, the personal impression Kaldor made seems to have been as powerful as his published work. During the 1930s, though a foreigner still in his 20s, he made an indelible mark on the economists gathered around Lionel Robbins at the LSE with his precocious brilliance.

After World War II, Kaldor cut an equally imposing figure at Cambridge as a worldly, mitteleuropäisch polyglot. John Maynard Keynes is known to have valued him highly, considering him among the most attractive personalities in a glittering firmament of intellectual stars.

Kaldor made substantial contributions to a wide variety of fields in economics, including the theory of the firm, capital theory, trade cycle theory, welfare economics, taxation, and Keynesian economic theory. He is perhaps best known for his work on refining and extending Keynesian theory in various ways, which is why he is considered one of the fathers of “post-Keynesian economics.”

In a nutshell, Kaldor challenged the neo-Classical theory consensus of the early twentieth century by extending the Keynesian theoretical structure to growth and distribution. He developed new models of mature capitalist economies based on the primacy of investment decisions and technological progress.

Kaldor’s work in this area generated an immense secondary literature, which emphasized the importance of the manufacturing sector as the chief source of growth.

Kaldor was also highly critical of neo-Classical value theory, which he referred to as “equilibrium theory,” in which a steady state—i.e., no growth—is built in as an assumption.

Kaldor believe that real-world growth had to be understood through a more complex theory, including at least two factors, one for diminishing returns (the agricultural sector) and the other for increasing returns (the manufacturing sector).

John Hicks, referring to Kaldor’s 1939 paper, “Speculation and Economic Stability,” once told Kaldor:

I think that your paper was the culmination of the Keynesian revolution in theory. You ought to have had more honour for it.

In 1987, one investigator commented that the full implications of Kaldor’s innovations in the theory of growth and distribution have yet to be worked out.

In his last years, Kaldor turned his attention to criticizing the monetarist revolution emanating from Milton Friedman and his colleagues as the University of Chicago, among others.

Selected Works Authored or Co-authored by Kaldor

“The Case Against Technical Progress?,” Economica, 36: 180196 (1932).

“A Classificatory Note on the Determinateness of Equilibrium,” Review of Economic Studies, 1: 122–136 (1934).

“The Equilibrium of the Firm,” Economic Journal, 44: 60–76 (1934).

“Market Imperfection and Excess Capacity,” Economica, n.s., 2: 33–50 (1935).

“Prof. Pigou on Money Wages in Relation to Unemployment,” with John Maynard Keynes, Economic Journal, 47: 743–753 (1937).

Welfare Propositions of Economics and Interpersonal Comparisons of Utility,” Economic Journal, 49: 549–552 (1939).

“Speculation and Economic Stability,” Review of Economic Studies, 7: 127 (1939).

“Capital Intensity and the Trade Cycle,”Economica, n.s., 6: 40–66 (1939).

“A Model of the Trade Cycle,” Economic Journal, 50: 78–92 (1940).

“Professor Hayek and the Concertina-Effect,” Economica, n.s., 9: 359382 (1942).

“The Relation of Economic Growth and Cyclical Fluctuations,” Economic Journal, 64: 5371 (1954).

An Expenditure Tax (1955).

Alternative Theories of Distribution,” Review of Economic Studies, 23: 83–100 (1956).

“A Model of Economic Growth,” Economic Journal, 67: 591624 (1957).

“Economic Growth and the Problem of Inflation,” Economica, n.s., 26: 212226 (1959).

Essays on Value and Distribution (1960).

Essays on Economic Stability and Growth (1960).

Capital Accumulation and Economic Growth,” in D.C. Hague, ed., The Theory of Capital: Proceedings of a Conference held by the International Economic Association. London: Palgrave Macmillan; pp. 177–222 (1961).

“A New Model of Economic Growth,” with James A. Mirrlees, Review of Economic Studies, 29: 174–192 (1962).

Essays on Economic Policy (two volumes) (1964).

Causes of the Slow Rate of Economic Growth in the UK (pamphlet) (out of print) (1966).

The New Monetarism,” Lloyds Bank Review, 97: 118 (1970).

“The Irrelevance of Equilibrium Economics,” Economic Journal, 82: 1237–1255 (1972).

“What is Wrong with Economic Theory,” Quarterly Journal of Economics, 89: 347–357 (1975).

“Inflation and Recession in the World Economy,” Economic Journal, 86: 703714 (1976).

“Capitalism and Industrial Development: Some Lessons from Britain’s Experience,” Cambridge Journal of Economics, 1: 193–204 (1977).

Further Essays on Economic Theory (1978).

Further Essays on Applied Economics (1978).

 “Equilibrium Theory and Growth Theory,” in Michael J. Boskin, ed., Economics and Human Welfare: Essays in Honor of Tibor Scitovsky. Cambridge, MA: Academic Press; pp. 273–291 (1979).

Reports on Taxation (two volumes) (1980).

The Scourge of Monetarism (1982).

The Economic Consequences of Mrs. Thatcher: Speeches in the House of Lords, 1979–1982 (1983).

“Keynesian Economics After Fifty Years,” in David Worswick and James Trevithick, eds., Keynes and the Modern World. London: Palgrave Macmillan; pp. 1–28 (1983).

 “How Monetarism Failed,” Challenge, 28(2): 413 (1985).

Economics Without Equilibrium (1985).

Further Essays on Economic Theory and Policy (1989).

The Essential Kaldor, edited by Ferdinando Targetti and Anthony P. Thirlwall (1989).

Causes of Growth and Stagnation in the World Economy (1996).

Selected Works About Kaldor

Berger, Sebastian, ed., The Foundations of Non-Equilibrium Economics: The Principle of Circular and Cumulative Causation (2009).

Cohen, Avi J., “The Kaldor/Knight Controversy: Is Capital a Distinct and Quantifiable Factor of Production?,” European Journal of the History of Economic Thought, 13: 141–161 (2006).

Desai, Meghnad, “The Scourge of the Monetarists: Kaldor on Monetarism and on Money,” Cambridge Journal of Economics, 13: 171182 (1989).

Harcourt, Geoffrey C., “The Kaldor Legacy,” in Geoffrey C. Harcourt, 50 Years a Keynesian and Other Essays. London: Palgrave Macmillan; pp. 238–259 (2001).

Iyoda, Mitsuhiko, Profits, Wages and Productivity in the Business Cycle: A Kaldorian Analysis (1997).

King, John E., ed., Economic Growth in Theory and Practice: A Kaldorian Perspective (1994).

King, John E., “Nicholas Kaldor After Thirty Years,” PSL Quarterly Review, 69: 107133 (2006).

Lawson, Tony, J. Gabriel Palma, and John Sender, eds., Kaldor’s Political Economy (1989).

Nell, Edward J. and Willi Semmler, eds., Nicholas Kaldor and Mainstream Economics: Confrontation or Convergence? (1991).

Sawyer, Malcolm, ed., Post-Keynesian Economics (1989).

Targetti, Ferdinando, Nicholas Kaldor: The Economics and Politics of Capitalism as a Dynamic System (1992).

Thirlwall, Anthony P., “A Plain Man’s Guide to Kaldor’s Growth Laws,” Journal of Post Keynesian Economics, 5: 341–58 (1983).

Thirlwall, Anthony P., Nicholas Kaldor (1987).

Thirlwall, Anthony P., ed., Essays on Keynesian and Kaldorian Economics (2015).

Turner, Marjorie Shepherd, Nicholas Kaldor and the Real World (1993).