Kalecki Versus Keynes on the Determinants of Investment

This paper explores the differences between the investment theories of Michal Kalecki and John Maynard Keynes. We argue that Kalecki's ideas (and empirical support for them) are necessary for Keynes's arguments regarding the determination of the level of effective demand. Kalecki's theory of the role of finance in investment also provides a fuller understanding of the importance of liquidity concerns for Keynesian theory and connects the theory of effective demand to the logic of capitalism.