Summary of Nicholas Kaldor's Life, Influences, Contributions, and Legacy
Life (1908–1986)
Nicholas Kaldor was born on May 12, 1908, in Budapest, Hungary. He studied economics at the London School of Economics (LSE) and became a prominent figure in the field of economics. Kaldor held academic positions at the LSE and the University of Cambridge, where he was a key member of the Cambridge School of economics. He also served as an advisor to several governments, including the UK, India, and Mexico, and was a member of the House of Lords. Kaldor was known for his work on economic growth, distribution, and policy. He died on September 30, 1986, in Papworth Everard, England.
Works and Thinkers That Inspired Kaldor
Kaldor's ideas were shaped by a combination of intellectual, economic, and political influences:
- John Maynard Keynes: Kaldor was deeply influenced by Keynes's General Theory of Employment, Interest, and Money and became a leading advocate of Keynesian economics.
- Allyn Young: Young's work on increasing returns and economic growth influenced Kaldor's theories of cumulative causation.
- Joseph Schumpeter: Schumpeter's ideas about innovation and economic development informed Kaldor's thinking on technological progress and growth.
- Michal Kalecki: Kalecki's work on business cycles and income distribution influenced Kaldor's analysis of economic dynamics.
- Gunnar Myrdal: Myrdal's concept of cumulative causation and his work on development economics inspired Kaldor's approach to economic growth and regional disparities.
Kaldor's Most Seminal Contributions
Nicholas Kaldor made significant contributions to economic theory, particularly in the areas of economic growth, distribution, and policy. His most influential contributions include:
- Kaldor's Growth Laws:
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Kaldor proposed several empirical laws of economic growth, including the relationship between manufacturing output and overall economic growth. He argued that manufacturing is the engine of growth due to increasing returns to scale.
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Cumulative Causation:
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Kaldor developed the concept of cumulative causation, which explains how economic growth can lead to self-reinforcing cycles of development or decline. This idea has been influential in regional economics and development studies.
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Kaldor-Hicks Efficiency:
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Kaldor, along with John Hicks, developed the concept of Kaldor-Hicks efficiency, which states that an economic change is efficient if those who benefit could theoretically compensate those who lose and still be better off.
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Technical Progress Function:
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Kaldor introduced the technical progress function, which links the rate of technological progress to the rate of investment. This concept has been influential in the study of economic growth and innovation.
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Tax Policy and Public Finance:
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Kaldor was a strong advocate for progressive taxation and developed innovative tax policies, including the expenditure tax, to address income inequality and promote economic stability.
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Verdoorn's Law:
- Kaldor popularized Verdoorn's Law, which posits a positive relationship between productivity growth and output growth, particularly in the manufacturing sector.
Key Works
- A Model of Economic Growth (1957): Presents Kaldor's growth model and the technical progress function.
- Causes of the Slow Rate of Economic Growth of the United Kingdom (1966): Analyzes the factors behind the UK's economic stagnation and proposes policy solutions.
- The Scourge of Monetarism (1982): Critiques monetarist policies and advocates for Keynesian economic management.
- Essays on Economic Stability and Growth (1960): A collection of essays on economic dynamics, growth, and policy.
Prominent Thinkers Influenced by Kaldor
Kaldor's ideas have had a profound impact on economics, particularly in the areas of growth theory, development economics, and economic policy. Key thinkers influenced by his work include:
- Joan Robinson: Robinson collaborated with Kaldor on post-Keynesian economics and growth theory.
- Luigi Pasinetti: Pasinetti built on Kaldor's work on income distribution and growth to develop the Cambridge theory of distribution.
- Hyman Minsky: Minsky's financial instability hypothesis was influenced by Kaldor's analysis of economic dynamics.
- Anthony Thirlwall: Thirlwall's work on balance-of-payments-constrained growth drew on Kaldor's ideas about cumulative causation.
- Amartya Sen: Sen's work on development and welfare economics was shaped by Kaldor's insights into growth and distribution.
- Paul Krugman: Krugman's work on economic geography and trade theory engaged with Kaldor's ideas about increasing returns and regional disparities.
Legacy
Nicholas Kaldor is widely regarded as one of the most influential economists of the 20th century. His work has transformed our understanding of economic growth, distribution, and policy, providing foundational tools and frameworks for economic analysis. Kaldor's concepts of cumulative causation, Kaldor's growth laws, and the technical progress function remain central to the study of economics. His contributions to tax policy and public finance continue to inspire research and policy-making. Kaldor's legacy as a pioneering economist and a rigorous thinker ensures his place as a central figure in the history of economic thought.