Jan Toporowski is professor of economics and finance at the School of Oriental and African Studies, University of London. He is writing an intellectual biography of Michał Kalecki and worked with Tadeusz Kowalik on a book on the Polish Marxist Oskar Lange.

Tadeusz Kowalik, the doyen of Polish political economists, died at his home in Warsaw on July 30, 2012. Kowalik is best known as the last surviving coauthor of the great Polish economist, Michał Kalecki (1899–1970), as an advisor to the Polish trade union movement Solidarity when it played a key part in bringing down the Communist government in the 1980s, and subsequently as a fierce critic of the capitalism that was put in its place. He challenged both the commonly accepted view of the Keynesian Revolution and the inability of Polish Communists to come to terms with their revolutionary past and find a place for themselves in the modern world. Central to his perspective on the Keynesian Revolution was Kowalik’s understanding of Rosa Luxemburg’s analysis in her Accumulation of Capital.

Kowalik was born November 19, 1926, in the village of Kajetanówka outside the city of Lublin in eastern Poland, which is traditionally the poorer, more backward part of the country. In 1951, he completed undergraduate studies in law at Warsaw University with outstanding results and went on to study for a doctorate in economics under Oskar Lange. Kowalik completed his doctoral studies in 1958. By then he was already editor of the weekly newspaper Życie Gospodarcze, where he promoted reform of the over-centralized state economic system. He lasted only two years in this position before being removed when the ruling party started to close down the discussion on reform. However, under the patronage of his supervisor, he kept his position as lecturer in political economy at the social science university run for party activists and commenced research for the habilitacja, the second research degree that Polish academics must obtain.

During his first visit to the United Kingdom in the early 1960s, Kowalik defended a version of the then-fashionable Convergence Thesis—that the communist and the capitalist worlds were both gradually becoming welfare technocracies tempered by democracy. The democratic West was becoming more socialist in the development of the welfare state with Keynesian economic policies, underpinned by state control of key sectors of the economy, which secured high rates of employment and greater equality. The Communist bloc already had full employment and social equality, and its technological capability was demonstrated in 1957 by the Soviet Sputnik spaceship. Kowalik argued that, despite the suppression of the Hungarian Uprising in 1956, the political reforms put in place in the Communist bloc after Khrushchev’s speech to the Twentieth Congress of the Communist Party of the Soviet Union in that same year were evidence of slow and inevitable democratization. In London, Kowalik met Isaac Deutscher, the distinguished Marxist historian and member of the pre-war Communist Party of Poland (KPP). The KPP had been disbanded in 1938 and its leadership executed by Stalin.

At the time of Lange’s death in October 1965, Kowalik was already working with Kalecki in criticizing the economic policy failures of the government, but also with the philosopher Leszek Kolakowski and the economist Wlodzimierz Brus, who were using their Party positions to protect dissidents within and outside the ruling party. With the failure of the government’s economic strategy, shortages of consumer goods culminated in another “meat crisis” at the end of 1967. The Party authorities responded with a crackdown on Jews and “revisionists,” and Kowalik was expelled. His meeting with Deutscher was put forward as evidence of the ideological laxity that needed to be purged, despite the formal rehabilitation of the KPP in 1956. But Kowalik retained his position at the Polish Academy of Sciences. Much of his output for the next two decades appeared under the name of friendly associates who were not subject to the ban on publication, most notably Edward Lipiński, the oldest and most distinguished Polish economist, who had given Kalecki his first job in 1929. After Kalecki’s death in 1970, Kowalik took on the additional responsibility of supervising Jerzy Osiatyński’s editing of Kalecki’s Collected Works.

After 1968, Kowalik was active in unofficial, dissident university discussions. The resumption of strikes after the imposition of wage austerity in the late 1970s culminated in the establishment of the Solidarity trade union. In 1980 Kowalik travelled to Gdańsk to assist the workers in their negotiations with the Polish government. The result was the set of principles that now adorn a wall in the European Trade Union Confederation in Brussels, enshrining full employment, freedom of organization, the right to strike, equal pay, social welfare, and participation in management as rights for all workers.

Following the suppression of Solidarity at the end of 1982, Kowalik wrote and edited prolifically in the underground press in support of the union and its principles of democratic syndicalism. Here Kowalik drew on the political programs and critiques of Soviet industrial organization put forward in Poland in the 1920s and ‘30s by non-Communist Marxists, among them his mentor Lange. These were also the themes of reformed socialism that Kowalik had been advocating since the 1950s.

Revising Keynesian Political Economy

Kowalik’s political economy was inspired by his political activism. He had been radicalized both by the poverty he experienced in his youth and the struggle against the Nazi occupation of Poland, and these brought him to join the KPP in 1948. His economic ideas were formed initially by Lange, who encouraged him to read Marx and take seriously all schools of thought in economics. Kowalik thus inherited something of Lange’s characteristic approach to Marxism, according to which all schools of thought, including neoclassical economics, could be recruited, in some way, for the socialist cause. For Lange, “bourgeois” economics only differed in being a partial account of objective “laws” of economics and therefore in not being conscious of the socialist potential of those laws. Kowalik shared with Lange an open and non-dogmatic approach to economic analysis that enabled them to engage with and be respected by economists of all persuasions.

But whereas Lange formed the style of Kowalik’s political-economic ideas, the originality of those ideas came from Kowalik’s collaboration with Kalecki, as well as his research on Luxemburg. The Luxemburg research in particular gave Kowalik a radical new approach to Kalecki’s theory that caused Kalecki to review his own work.

After the death of Keynes in 1946, Joan Robinson taught three generations of Cambridge University economists that not only had Keynes been anticipated by Kalecki’s 1933 business cycle analysis and studies of wages and employment, but also that the latter was the “more consistent” Keynesian. This motivated Marxists (with certain notable exceptions, such as Maurice Dobb in Cambridge and Paul Sweezy in the United States) and the post-Keynesian school of economic thought that emerged from the 1970s to regard Kalecki as a left-Keynesian—someone who used essentially Keynesian ideas regarding the importance of fiscal policy in maintaining a level of aggregate demand appropriate to full employment in order to argue for socialism. Kowalik was a key figure in challenging the framing of Kalecki as a left-Keynesian.

In the early 1960s, Kowalik was asked to contribute a biographical chapter to the festschrift that was to celebrate Kalecki’s sixty-fifth birthday in 1964. As part of his preparation for this, Kowalik undertook a series of interviews with Kalecki about his work and his ideas. These interviews record Kalecki’s key publications, as well as his discussions both with Keynes, following the publication of General Theory of Employment, Interest and Money in 1936, and with his Cambridge followers like Robinson. But more importantly, what Kowalik also did was take Kalecki back to the debates among radical socialists in Poland during the 1920s and early ‘30s that centered around the instability of capitalism, mass unemployment, and economic depression. The central, even if absentee, figures in these debates were the Austrian Rudolf Hilferding, Rosa Luxemburg, and the Russian Mikhail Tugan-Baranovsky. Kalecki had participated in these debates largely as an observer, drawing from them what he needed for his own theoretical development, rather than engaging in more systematic comprehension and criticism of the Marxists.

Following his interviews with Kowalik, Kalecki returned to these authors and went on to publish a paper recording his understanding that Luxemburg and Tugan-Baranovsky had both addressed the key issue of aggregate demand in capitalism. However, aggregate demand was not important just in the Keynesian sense that it determined directly the levels of employment. The key function of demand in a capitalist economy is that it is necessary to allow capitalists to realize profits. It is in this context that the problem of aggregate demand is found in Tugan-Baranovsky and Luxemburg. According to Kalecki, both were right in identifying the difficulty of realizing profit as the central problem of capitalism. But they were wrong in regarding this difficulty as being overcome in practice, either by external markets (Luxemburg) or shifts towards more capital-intensive production (Tugan-Baranovsky).

Kowalik and Kalecki returned to these ideas after 1968, both of them now “disgraced” following the anti-Semitic, anti-revisionist purges of that year. The outcome was their joint paper “Observations on the ‘Crucial Reform,’” which was an attempt to make sense of the Keynesian Revolution in economic policy within the framework of those early Marxist discussions about whether free-market capitalism could maintain full employment without resorting to fascism or war. The paper was published in Italy as the Polish Communist authorities succumbed to workers’ strikes, which forced a change of government—but did not rehabilitate those purged in 1968. By the time the paper came out Kalecki was dead and Kowalik was forbidden to publish under his own name. He nevertheless retained his position in the Polish Academy of Sciences as editor of Lange’s Collected Works. The Academy had an autonomous position among those Polish institutions dominated by the Communist authorities, and the Lange project was considered of national and international importance.

The Political Economy of Rosa Luxemburg

A rare exception to the ban on publishing under his own name was made in 1971, when Kowalik’s book Róża Luksemburg Teoria Akumulacji i Imperializmu [Rosa Luxemburg’s Theory of Accumulation and Imperialism] was published. This book was Kowalik’s masterwork. In it he tried to reconstruct the political economy of the first half of the twentieth century, a task that Karl Marx set out to achieve for mid-nineteenth-century political economy and never completed.

To understand the true significance of Kowalik’s achievement, it is necessary to understand the circumstances under which the book arose and (as in Marx) the political economy of his time. There is, of course, an intellectual background to the book that reaches back to Marx. But the political conditions that gave significance to Kowalik’s political economy start in 1938, with the dissolution of the KPP by the Communist International on grounds that the Party had fallen too much under the influence of Luxemburg and Leon Trotsky. Afterwards those KPP leaders who were either in Moscow, or who had followed the Comintern’s instructions to go there, were purged and executed. The brutality of the suppression of the Polish Communists is poignantly described in Natalia Gąsiorowska’s biography of Maria Koszutska, one of the KPP leaders executed in 1939.

In 1956, following Khrushchev’s famous speech to the Twentieth Congress in which Stalin’s crimes were denounced, the KPP and its leadership were posthumously rehabilitated. As criticism of authoritarian rule became more common, it spread into open discussion of alternative ideas not only about socialism, but also about capitalism. That same year the first Polish edition of Keynes’s General Theory, partly translated by Kalecki, was published. This was quickly followed by Polish translations of other key works, including treatises by the neoclassical economist Paul Samuelson; leftist political economists such as Dobb and Robinson; and, in 1957, the book that set the agenda for Kowalik’s challenge to Marxist debates on capital accumulation, Sweezy’s The Theory of Capitalist Development.

In 1963, the first post-war Polish edition of Luxemburg’s The Accumulation of Capital appeared. In that same year, Kowalik completed the habilitacja thesis that was to become Róża Luksemburg Teoria Akumulacji i Imperializmu. This was a guide to Luxemburg’s great work, as well placing it against the background of the debates about the future possibilities of capitalism in Russia between Narodniks and the Legal Marxists, of whom the most important was Tugan-Baranovsky. In the course of writing the book Kowalik analyzed the key figures of early to mid-twentieth-century political economy in a strikingly original way. Not only did the structure of that political economy become clearer, but it was also integrated around the central questions in Luxemburg’s analysis of capitalist accumulation.

The starting point for Kowalik’s analysis was the Russian Narodniks’ explanations of why, in their view, capitalism could not develop in Russia because of the limited markets that the country offered at the end of the nineteenth century. This led to Tugan-Baranovsky’s response: his famous rejection of the underconsumptionist argument on the grounds that capitalism can continue producing machines for the sake of production irrespective of the state of consumer demand. Key to Tugan-Baranovsky’s analysis was his observation that capitalism can stabilize itself, overcoming limitations of consumption, by producing more means of production.

Inspired by these debates, Kowalik’s great work on Rosa Luxemburg traced the roots of twentieth-century political economy in the discussions of Marx’s schemes of capitalist reproduction in volume two of Capital. A clear implication of Marx’s critique of Say’s Law is that capitalist reproduction or growth cannot take place in a way that is stable or crisis-free. The question of external markets then opens the door for Keynesian/Kaleckian political economy, constructed around the demand deficiency and the state as an external market.

Sweezy’s Reading of Luxemburg

In his attempt to rescue Luxemburg’s broad methodological approach from the criticisms that were levied against it, Kowalik argued that she had been widely misinterpreted. Sweezy is listed along with Nikolai Bukharin, Fritz Sternberg, Henryk Grossmann, and Paul Frőlich as giving diverse interpretations of Luxemburg’s theory. Kowalik said, “If we were to compare the interpretations of the Accumulation of Capital that we find in the publications of these authors we would have to conclude that no other work in the economics literature has been interpreted in such different ways, not in details, not in emphases, but in reading its author’s fundamental idea.”

In his book, and in his earlier biographical essay on Kalecki, Kowalik adheres to the interpretation of Luxemburg that Kalecki had put forward in his Essays in the Theory of Economic Fluctuations, published on the eve of the Second World War. There Kalecki had remarked that Luxemburg’s “theory cannot be accepted as a whole, but the necessity of covering the ‘gap of saving’ by home investment or exports was outlined by her perhaps more clearly than anywhere else before the publication of Mr. Keynes’s General Theory.”

Kowalik contrasted Kalecki’s interpretation with the view of a number of writers who argued that Luxemburg’s theory belonged to a broad family of “underconsumptionist” theories—a view that capitalist development is constrained in part by insufficient consumption in the economy, caused by the inability of the capitalist system to increase workers consumption sufficiently to maintain full employment and full utilization of productive capital. An extreme underconsumptionist interpretation of Luxemburg had been put forward by Lange in 1938, who said that “Few underconsumptionist theorists ever maintain that any saving discourages investment. The most prominent among those who did so was Rosa Luxemburg.” A more reasoned interpretation along these lines had been put forward by Sweezy in The Theory of Capitalist Development, where he called Luxemburg “the queen of underconsumptionists”—presented as a compliment. Sweezy argued that this was because of her rejection of Tugan-Baranovsky’s argument that capitalism could expand without any demand constraint as long as capitalists kept investing a growing share of national income. As Luxemburg said, “The view that production of means of production is independent of consumption is naturally a vulgar economic fantasy of Tugan-Baranowsky.”

Kowalik argued that Lange’s interpretation of Luxemburg as an extreme underconsumptionist required Luxemburg’s analysis to be restricted to a state of “simple reproduction”—a capitalist economy in which there is no change in the capital stock and all investment is replacement investment, so that there is no growth. Only under such a condition does “any” saving lead to a crisis of deficient demand. This mistaken interpretation of Luxemburg was related to false accusations against her by both Sweezy and Bukharin (whom Sweezy cited), namely that her analysis required that consumption be held constant—that it assumed, in other words, conditions of simple reproduction. Sweezy pointed out that additional spending by workers under conditions of accumulation/growth could help to realize surplus value, viewing this as a criticism of Luxemburg.

In contrast, Kowalik argued that Luxemburg had sought to lay out a theory of capitalist development, or “expanded reproduction,” so that criticisms of her work as limited to simple reproduction were mistaken. Nevertheless, Kowalik later commended Sweezy’s correct reading of Luxemburg as showing that the final economic breakdown of capitalist development would never be reached because class struggles and international wars would bring about a revolution before that final breakdown occurred. Sweezy here cited Luxemburg’s clarification of her views in The Accumulation of Capital: An Anti-Critique, which was her response to critics.

Working with Michał Kalecki

In the end, almost without anyone apart from himself knowing about it, Kowalik’s view was vindicated. The English-speaking world was not to know of this because, apart from Italian and Spanish editions of his book, his great work on Luxemburg was not translated into any foreign language. He himself, the most modest of great thinkers, did not remind us of his scholarly defense of Luxemburg’s analysis in his introductions to recent editions of her book both in English (in the Routledge Classics series) and Polish.

Sweezy himself was to change. His approach to crisis evolved into what he was to call “overaccumulation theory” first in response to criticisms of his original argument by Evsey Domar, and then under the direct and indirect influence of Kalecki. The Theory of Capitalist Development was Sweezy’s first attempt at a systematic account of the political economy of mid-twentieth-century capitalism. Kalecki was well-known in the United States in the early 1940s when Sweezy wrote his book. But The Theory of Capitalist Development contains no mention of Kalecki, although Keynes makes an appearance in the conclusion. Sweezy crossed paths with Kalecki when, at the end of 1946, the latter settled in New York and began working for the United Nations, and they met regularly for discussions right up to his 1955 return to Poland. Paul Baran also was in direct contact with Kalecki and based much of his analysis in The Political Economy of Growth (1957) on Kalecki’s theory of accumulation.

Sweezy wrote a review of Josef Steindl’s pioneering Kaleckian analysis Maturity and Stagnation in American Capitalism soon after it came out in 1952. Steindl put forward an analysis of U.S. capitalism in which the corporations that are responsible for the bulk of capital accumulation do not reduce prices when demand in the economy is low. Such a reduction in prices would help to keep real wages stable. Instead corporations keep their prices high, relative to wages, and operate at less than full productive capacity. Their unused capacity discourages further investment, with the result that profits fall, discouraging investment still further. Steindl therefore clearly put forward underinvestment as being the cause of difficulties in realizing surplus value, rather than insufficient consumption in the economy. In his chapter “Karl Marx and the Accumulation of Capital,” Steindl quotes from Marx to indicate clearly that low consumption out of wages in the capitalist economy is the result of low investment rather than the cause, as is suggested by the underconsumption theory in the narrow sense. Marx, in his explanation in volume one of Capital of what determines the level of real wages, explicitly stated that, “To put the matter in mathematical terminology, the magnitude of accumulation is the independent variable, and the magnitude of wages is the dependent one, not conversely.” In Steindl’s conclusion to his chapter, he conceded that Marx may have “literally formulated the underconsumption approach,” but that Sweezy’s explanation was “illogical” and his focus on this approach as the central problem of capitalism was incomplete.

Sweezy’s reconsidered view appeared in what is perhaps his best-known book, Monopoly Capital, written with Paul Baran. Despite having a similar aim to that of Sweezy’s previous book, of providing a Marxist account of contemporary capitalism, there is neither mention of underconsumption, nor of Luxemburg. In fact, in Monopoly Capital, the only Accumulation of Capital mentioned is Joan Robinson’s 1956 book of the same name! Instead of workers’ consumption affecting the realization of surplus value, Sweezy adopted Kalecki’s theory of profits where realized profits are equal to capitalists’ consumption plus their expenditure on productive investment, in a closed economy with a balanced government fiscal position. The problem of how surplus is to be realized remains an intractable problem in capitalism. But, in his work with Paul Baran, this problem now appeared not as underconsumption but as insufficient investment or capital accumulation. Kowalik’s book on Luxemburg had been written before Monopoly Capital was published in Polish around 1966. But by the time his defense of Luxemburg was published, Kowalik would have been aware that Sweezy had shifted his position.

The discussions that Kalecki had with Kowalik were to influence Kalecki’s 1967 paper on Luxemburg and Tugan-Baranovsky. As noted, the two worked together on Kalecki’s last paper on the Crucial Reform of capitalism, which places the Keynesian Revolution in the context of those debates around capitalist reproduction. This interpreted the “revolution” in policy as the more effective use of government expenditure as a means of assisting in the realization of capitalists’ surplus.

Kalecki’s pioneering work in twentieth-century macroeconomics was therefore a recurrent theme in Kowalik’s ideas, and an unconscious link between them and the mature outlook of Sweezy. Like Sweezy, Kowalik considered the business-cycle theory of Kalecki as the medium through which Keynesian ideas are linked to those late-nineteenth-century debates on capitalist reproduction. This theme recurs from the Kalecki biographical essay through to Kowalik’s last essays on Luxemburg. Early on, therefore, Kowalik rejected the idea that Kalecki was a “precursor” of Keynes. Rather, Keynes saw in an imperfect way what Kalecki realized much more clearly on the basis of the Marxist discussions around the work of Luxemburg.

Unfinished Work

The eighth and final volume of Lange’s Collected Works was published in 1986. In 1990, two additional volumes were published which contained selected papers that had been previously edited for political reasons. The Lange Works, along with his collaboration with Kalecki and his studies of Luxemburg, remain Kowalik’s most monumental achievement. In 1989 the Polish Communist authorities agreed to more democratic elections and transferred their financial dependence from Moscow to Washington. The Polish side of the bargain was delivered by the Finance Minister in the first non-Communist government, Leszek Balcerowicz, who introduced “shock therapy” by closing down loss-making state enterprises and offering cheap business opportunities to local and foreign enterprises. The results were a catastrophic rise in unemployment and inflation. The fall of communism brought disillusionment to Kowalik, not just on account of the political shift towards free market capitalism, but also because of the associated neglect of his heroes Luxemburg, Kalecki, and Lange. As the political wing of Solidarity degenerated into a nationalist reaction to foreign control over the Polish economy, Kowalik argued that capitalism did not have to come in the brutal form of markets regulated by mass unemployment. In particular, constitutional commitments to full employment had to be respected. After engaging with a series of short-lived left-wing parties he settled down to the role of the conscience of leftist economists, debating and writing in support of socialist alternatives. His last book, From Solidarity to Sellout: The Restoration of Capitalism in Poland, was published by Monthly Review Press only days before he died. His most important book Róża Luksemburg Teoria Akumulacji i Imperializmu will shortly be republished in Polish, but still awaits translation into English.

Notes