Nicholas Kaldor was among the prominent followers of John Maynard Keynes at Cambridge University. He and Joan Robinson were both very skeptical that capital could be usefully measured as an aggregate or that the marginal productivities calculated from such a production function could be used to explain wages and profit rates and the relative shares in NNP of labor and property. However, these two economists were not in total agreement of what should replace the aggregative analysis.
Kaldor developed a theory on full-employment that was very different from the Keynesian theory on full-employment. According to his theory, within wide limits, any change in investment will induce just enough shift of the share of income accruing to thri fty profit receivers to produce a full-employment intersection of SS and II always. Kaldorians propound a theory of full employment that results from a shift of relative shares to readily spent wages and away from profits.
Kaldor also worked extensively on economic development, emphasizing the shortages of government revenue in less developed countries (LDC's). In regard to this issue, Kaldor wrote the following:
"Irrespective of the prevailing ideology or the political color of particular governments, the economic and cultural development of a country requires the efficient and steadily expanding provision of a whole host of non-revenue-yielding serv ices--education, health, communications systems, and so on, commonly known as "infrastructure"--which require to be financed out of government revenue. Besides meeting these needs, taxes, or other compulsory levies provide the most approriate instrument for increasing savings for capital formation out of domestic sources. By reducing the volume of spending by consumers, they make it possible for the resources of the country to be devoted to building up capital assets...The only feature that is common to them [LDC's] isthat they all suffer from a shortage of revenue. This is partly because they have low "taxation potential" -- which may be defined as the maximum proportion of the national income that can be diverted for public purposes by means of taxa tion. But more important is the fact that the taxation potential in such countries is rarely exploited."
Works by Nicholas Kaldor:
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