Harrodians and Kaleckians: A Suggested Reconciliation and Synthesis

Abstract

The Kaleckian and Harrodian approaches to growth frequently arrive at antagonistic
positions with respect to key issues in heterodox macrodynamics, including the treatment
of the rate of capacity utilization and the very nature of the long-run growth
process. Nevertheless, this paper is devoted to exploring the possibilities for reconciling
and even synthesizing these traditions. It does so by directly addressing three key
areas of dispute: the Keynesian stability condition; Harrodian instability; and the question
as to whether long-run growth is best conceived in terms of a stable steady state
or `corridor instability'. It is shown that reconciliation and even synthesis is possible
- the latter producing a `corridor within a corridor' conception of the growth process
in which the economy switches between Kaleckian and Harrodian dynamics depending
on the extent to which the rate of capacity utilization departs from its normal rate.