STEEDMAN^ VERSUS KALECKI
In nis interesting paper Steedmanft^ gives some advice - albeit in
the form of strictures - to the followers of Kalecki: They should
make use of the input-output techniques in connection with the
theory of pricing and distribution. In this way they would realise
that outputs are at the same time inputs, prices are costs, and
the feedback from prices to cost, neglected by Kalecki, would
become obvious to them. In a general system of pricing the prices
obtained by marking up direct cost would again directly influence
the cost of the material inputs and therefore the results of the
marking up of other industries and ultimately also that of the
industry from which we started.
Let me now jump immediately to an algebraic equation of Kalecki
which is criticised and corrected by Steedmanij. It relates the
share of wages in the product w to the ratio of proceeds to prime
cost ( the mark up plus unity ) k , given j the ratio of the cost
of materials to the wage bill.
2 + (k-1) (j-l)
Steedmanix derives this equation ab ovo as it were from the price
equations of the various industries,using the input output matrix
so that he gets a feedback from the prices to the cost of
materials and this leads him to correct the above formula by aE
term which accounts for these feedbacks. It will be noted that we
can do such a construction only in our imagination because we have
no direct data for the mark upl Now the above formula is applied
by Kalecki directly to the data of the Census of Manufactures in
Ha 0^ '