A critical evaluation of some Kaleckian proposals to deal with the issue of convergence towards normal capacity utilization

Abstract

It is a well-established result of Kaleckian models in which output growth is led by investment expenditures that capacity utilization is endogenous and positively related to the growth rate of output, and that attempts by capitalists to adjust productive capacity to demand might trigger Harrodian instability. This motivated several theoretical proposals by some Kaleckian authors in order to deal with the issue of convergence to normal utilization. Our purpose in this article is to rescue the concepts of competition, the determinants of normal capacity utilization, and the relation between normal prices, normal utilization, and normal profits, according to the classical surplus approach – and more specifically the ideas presented by Ciccone (1986; 1987; 2011) – in order to discuss critically the proposals developed by the Kaleckians in the light of this theoretical background. Our main point is that most of these proposals seem to have ignored some of these concepts from the classical surplus approach, adopting (explicitly or implicitly) some hypotheses that are in contradiction to the concepts of competition and to the determinants of normal utilization presented here – and in some cases have even modified the concept of normal utilization itself.