Answers (and questions) for Sraffians (and Kaleckians)

Steedman's Questions for Kaleckians' is rightly critical of the lack of attention paid by Kaleckian economists to the input-output nature of production. However, his conclusions about Kaleckian mark-up pricing and the irrelevance of dynamics are incorrect, for three reasons. First, his rendition of a Kaleckian model with constant mark-ups is only conditionally stable. Secondly, there is ample evidence that Kaleckian mark-ups should vary inversely with sectoral profitability. Thirdly, given variable mark-ups, and the other factors which must be considered in a general multisectoral dynamical analysis of capitalism, it is almost inevitable that the fixed points of such a system will be unstable. Long-run conditions are therefore not equilibrium ones, and limitations on mark-ups, etc., derived from equilibrium analysis are not applicable. The Kaleckian focus upon the process of price setting is therefore justified in both the short and long term, although this analysis should, as Steedman asserts, be carried out in the context of explicitly multisectoral models.