Credit, Debt and Distribution in the Monetary Theories of Augusto Graziani And Michal Kalecki

Jan Toporowski ()
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Jan Toporowski: University of London

Annals of the Fondazione Luigi Einaudi. An Interdisciplinary Journal of Economics, History and Political Science, 2020, vol. 54, issue 2, 311-326

Abstract: The Monetary Production Theory of Augusto Graziani provides a rich analysis of the use of credit in capitalist production, showing the endogeneity of such credit and giving new insights into the use of credit as money. The theory suggests a credit system, inflated by loans for production and investment and deflated by loan repayments, with incomes in the form of profits and wages recorded as credit transfers. In Graziani, a key part is played by workers’ saving, and this results in a problem of interest monetisation. The paper shows that this difficulty disappears once it is recognised that capitalists own financial assets and bank deposits, as Kalecki argued. With this modification, Graziani’s principles of monetary circulation are then used to examine Neo-Kaleckian theories of financialisation. The wage rate and workers’ saving, rather than the workers’ borrowing, are a more significant influence on the distribution of income between those classes, and the circulation of money among capitalists, rather than between capitalists and workers, is a more critical determinant of production and profits.

Keywords: Financialisation; Michal Kalecki; Augusto Graziani; Interest; Debt (search for similar items in EconPapers)
JEL-codes: D33 E11 E40 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:fle:journl:v:54:y:2020:i:2:p:311-326

DOI: 10.26331/1128

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