2 
I may try to interpret this in more concrete terms: 
What Kaldor really wants to show is that a flexible 
margin on the one hand will prevent the system from 
running into excess demand and inflation when the rate of 
accumulation increases ( subject to certain limits: 
The real wage can not be compressed beyond a certain limit ), 
and on the ether hand it will prevent the system from 
running into lower and lower utilisation leading to 
perpetual decline in the case of an initial fall in the 
rate of accumulation. 
The whole argument is tremendously abstract, but it is 
clear that the essential question to which the theory is 
directed is the possible consequence of a change irythe rate 
of accumulation that is what I should call an 
essentially dynamic problem. The assumption of full 
employment does not seem to be relevant to the question. 
If Prof.Kurz would have turned to my own version of 
the theory, recently re-stated in Political Economy Nr 1, 
he would not have met the features which have disturbed him. 
When he stresses, in opposition to the smooth growth 
at full employment, the instability of capitalism, referring 
himself to Keynes, I could not agree more - though in 
fairness to Kaldor it ought to be^kdded that he did not 
deny the instability but wanted to attribute it to other 
reasons ( see the text quoted by Heinz Kurz ). 
On the other hand Prof Kurz is undoubtedly a victim 
of misunderstanding when he talks of circular reasoning: 
In the text quoted Kaldor is perfectly aware that the 
ratio of investment to national income is actually 
the proprtion of saving in national income which in the 
equation he uses there plays the passive role of adjusting 
itself to