2020 Volume 32 Issue 1 Pages 20-39
The aim of the present paper is to demonstrate the establishment of the Kalecki Revolution (die Kaleckianische Wende), or Kalecki's Copernican Revolution in Kalecki (1933b), which shows that investments determine savings. This is an about face from his first theoretical study, Kalecki (1929b), which illustrates that investments are determined by savings. In the Kalecki Revolution, savings are equalized by investments in relation to income. This argument is perfectly different from that of the 'Classical' economics, in which Say's law functions and investments are equalized by savings in relation to interest rates. In this sense, the Kalecki Revolution in Kalecki (1933b), apart from Kalecki (1929b), provides the foundation for the principle of effective demand for the birth of macroeconomics, which is significant for the history of economic theory.
