Michał Kalecki: An Intellectual Biography

Volume I Rendezvous in Cambridge 1899-1939

J. Toporowski

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137315397
• Topic: Economics
• Subtopic: Macroeconomics
• Index: Economics

This volume of intellectual biography takes the Polish economist Micha Kalecki (1899-1970) from the shattering of his prosperous childhood, in Tsarist?ód?in the 1905 Revolution, to Cambridge and the failure of his co-operative research with John Maynard Keynes's supporters in Cambridge.

1

Early Years

Michał Kalecki was born in the Polish manufacturing city of Łódź on the 22 June 1899, to Abram Kalecki, the owner of a wool-spinning mill, and his wife Klara (née Segałła).¹ Łódź at that time was a city of nearly a quarter of a million inhabitants. It had grown rapidly through the nineteenth century from a mere hamlet, with a population of 26,000 in 1860, to the second largest city in the Kingdom of Poland, as Russian Poland was called at the time, and the largest manufacturing centre of the Russian empire. The reason for its rapid growth was its strategic proximity to the main railway line from Berlin to Moscow that passed through the Polish capital, Warsaw. The opening of that railway line in the 1850s enabled the Łódź textile manufacturers to import cotton through the German port of Hamburg. The abolition of tariffs between the Polish Kingdom and the Russian Empire, following the 1830 revolution that ended the Kingdom’s autonomy, had already given Polish manufacturers access to the rapidly growing markets of the Russian Empire. The abolition of serfdom in the Polish Kingdom, after the failed national uprising of 1863, ‘liberated’ thousands of peasants from the land, making the manufacturing centres of the Kingdom a first resort for migrant labour.

The Kalecki family had originally come as just such migrant labour from the village of Kalety, from which they took their name, in the Suwałki province in the north-east of the Kingdom, between German East Prussia and Lithuania. The Kaleckis were Jews, a traditionally urban or small-town population in Poland. Their migration to the west of the Kingdom was not just to find work and business opportunities. The tsarist authorities in the latter half of the nineteenth century followed a policy of resettling the Jewish population of the empire in Ukraine and Poland. The pressure of these migrants (distinguished by their use of the Russian language) on the limited housing and employment possibilities in eastern Poland caused Yiddish-speaking Jews, settled in Poland for generations, to move further west, many eventually to western Europe and North America.

The Russian Empire was a confessional empire, one whose subjects were registered by religion in the first instance and by home language in the second. A separate registrar of non-Christian faiths registered the births, marriages and deaths of subjects who were not Catholic, Protestant or Orthodox. Birth certificates in the empire, even in independent Poland after 1918, before hospital births were widespread, were formal narratives reporting on community events rather than impersonal records of names and dates:

The official of the Registry at the town Hall certifies that in the books of the Registry of non-Christian religions there is the following registration of birth No. 818/1899:

It happened in Łódź on the seventeenth/twenty ninth of June [in the one] thousand eight hundred [and] ninety ninth year at 11 a.m. there arrived Abram Kalecki, thirty eight years old merchant, permanent inhabitant of the town of Łódź, accompanied by the vice rabbi Gabriel Segal and synagogical officials Moshek Kaliński thirty two years old and Vigdor Rabinowitz thirty four years old, and presented us a baby boy declaring that he was born in Łódź on the tenth/twenty second of June this year at three a.m. of his wife Shifra, née Segałła twenty six years old. To the boy was given at circumcision the name Michał. Thereafter this document was made and signed by th[os]e concerned . . . ²

This official Jewishness was, however, not indicative of any observance or self-identification. With migration came assimilation. The Kalecki family did not practise any religion. Later, in a 1979 conversation with Tadeusz Kowalik and Jerzy Osiatyński, Michał Kalecki’s widow, Adela Kalecka, recalled that the only remnant of their religious origins was a very good Friday dinner prepared by their excellent cook.³ His mother, Klara, had gone further and been christened. This was the only way in which persons of Jewish origin could avoid being classified as Jews for official purposes. Adela, who was perhaps more politically militant than her husband, considered conversion as an act of ‘opportunism’. Kalecki never regarded himself as Jewish but, in the 1930s, as anti-Semitism became more common in Poland, would insist on his Jewish ‘nationality’ in response to anti-Semitic remarks.⁴ Kalecki’s military service record in 1921 has him as being of ‘Jewish faith’ and having ‘Yiddish’ for his mother-tongue. But his linguistic range included then only Polish, Russian and German.⁵ At home only Polish was spoken.⁶

In any case, in the bourgeois milieu of Łódź into which Kalecki had been born, national and religious differences were largely left behind in the business of making money. Łódź was a cosmopolitan centre which attracted entrepreneurs from all parts of Europe and which bred them from the representatives of the many nationalities that made up the Russian empire, who flocked to the city in search of work or business opportunities. While many languages were spoken in the city, the lingua franca was Polish, as the official language was Russian. The main industry was textiles, supplying the Russian market, which was growing apace at the turn of the century due to rising wage employment in Russia and the expansion of the Russian railway system that distributed goods from the western, industrialising, part of the empire. On the cost side, the key indicator was the German tariff on cotton, which had to be imported from Egypt and the United States principally through the port of Hamburg. Wages were kept low by the pressure of unemployment following the abolition of serfdom, which released surplus labour from Poland’s rural economy. However, from the 1870s onwards, the Russian government had abandoned its previous liberal trade policies and established tariffs on industrial imports. Later these tariffs had to be paid in gold, effectively devaluing the Russian rouble, providing a protected market at home and favourable conditions for the export of Polish textiles.⁷

In this busy industrial centre, Abram Kalecki had prospered but not in any major way. At the time when his business collapsed he had a mere 45 people on his payroll.⁸ The majority of the factories in Łódź were little more than workshops employing fewer than a hundred workers. But a process of mergers and takeovers and mechanisation had, by 1900, increased the number of factories which employed more than 500 workers to 24 from just 1 in 1869. By 1900 these large factories, predominantly controlled by German industrialists or descendents of German immigrants,⁹ accounted for the bulk of industrial employment in Łódź. Already by 1879 the average-sized textile mill in the city employed 49 workers. By 1900 the average number of employees in such a mill had risen to 164. The largest textile firms, such as the Poznańscy, employed hundreds, even more than a thousand when business was good. In the woollen industry average employment in unincorporated businesses (i.e., businesses not registered as companies with limited liability) was just over 100. Nevertheless, Abram Kalecki made sufficient money from his business to have a house in the centre of Łódź, close to its main thoroughfare Ulica Piotrkowska. Just north of their house was the Jewish ghetto, the area to which Jews who wished to wear traditional clothes were confined. The house was also close to an area of small workshops and businesses, where the Kalecki factory was located. At the centre of that house was his ever-elegant wife, Klara. In that house Michał acquired his taste for living in large rooms.

In her 1979 interview with Tadeusz Kowalik, Adela Kalecka described her mother-in-law as ‘a beautiful woman . . . a woman with fantasy . . . serious, but flirtatious’.¹⁰ Adela Kalecki did not hide her disapproval of the woman who was to abandon Michał and her husband when Michał was still a young boy. This disapproval even extended to Klara’s ‘unmaternal’ way of dressing. Klara came from eastern Galicia, near Lwów, in Austrian Poland. She was by Adela’s account very intelligent and possessed of a flirtatious charm. She was also linguistically gifted: She spoke French, and in later years she gave English lessons to support herself.¹¹ Even as a young wife and mother, her priority was to cut a dash in society. There were trips to Vienna, where Michał later showed Adela the hotel where he had stayed with his mother and where she had parked him to party in the most lively capital city east of Paris.¹² At other times, Michał served as a fashion accessory for his mother, who took him to shops where she had her dresses made up. As an adult, he brought to his marriage with Adela an unlikely talent as a connoisseur of ladies’ clothes.¹³ Michał was even taken as a little boy to cabaret bars, where the moneyed elite of Łódź enjoyed themselves. He was spoilt by his parents, who knew that they had a lively and intelligent son. More menial care was left to nursemaids, whom the boy treated cruelly.¹⁴

By contrast, Kalecki’s father was, by Adela’s account, a ‘very private man’,¹⁵ who was able to support his wife’s social aspirations and their son. Adela described him as a very handsome man, very elegant, delicate and courteous to ladies. He was also a thinking individual who read widely. His social circle consisted of the educated professional men, many assimilated Jews like himself, with whom he would play bridge, a popular pastime in Polish middle-class circles.¹⁶ Michał was brought up by governesses, who were evidently left in no doubt as to his parents’ and his grandfather’s (Abram’s father also lived in Łódź) admiration of the young boy’s precocity. Michał later admitted to his wife that he had ‘terrorised’ his poor governesses.¹⁷ His earliest reading concerned natural history, with picture books of animals predominating. His earliest ambition was to be a zookeeper.

The childhood idyll was soon to end.

2

In the Crucible of the Revolution

The prosperity of Kalecki’s childhood was illusory. Workers and their families had been badly affected by the protectionist trade policies of the government in Moscow and by technological progress that deskilled their work. Poverty and unemployment was endemic in Łódź. In a foretaste of what was to come, strikes and civil disturbances had broken out in 1892, culminating in anti-Semitic attacks on the Jewish population in central Łódź. Business conditions for Abram Kalecki’s textile factory deteriorated in the early years of the twentieth century, soon after his son’s birth. Demand for Polish products in the Russian empire stagnated. In the empire’s Polish territories, the situation was exacerbated in 1903 and 1904 by poor harvests, which drove up food prices. Few in the rural economy benefited from those higher prices because a large proportion of the rural labour force was landless. Out of a total population of 11 million in the Kingdom of Poland in 1905, around 10 per cent were landless labourers and their families.¹ Another significant proportion had only small landholdings.

The result of these agricultural difficulties was an accelerated migration of labour from the villages. In towns and cities, unemployment kept wages stable in money terms but only for those in employment where working hours were not reduced. Even for those who took the same amount of money home, the rise in the price of food meant that real wages were falling. The embers of discontent among the workers were eagerly fanned by trade unions and the various left-wing political parties. The largest of the unions was the Bund, established in 1897. This organised Jewish workers but also had aims going beyond mere regulation of wages and working conditions. It had an explicitly socialist agenda. At the turn of the century Jews constituted only some 15 per cent of the population of the Kingdom of Poland. But in Łódź the proportion was nearly double that, because of migration from the poverty-stricken Jewish townships, the shtetls further east.

The left-wing political parties were fractious, vocal and divided among themselves, and frequently within themselves, over tactics, strategy and, above all, ‘the national question’. Even before the 1905 revolution, the Polish Socialist Party (PPS) was in the process of splitting along generational and political lines. An ‘older’ faction, led by Józef Piłsudski, sought the overthrow of Russian domination by means of a Polish national uprising. A ‘younger’ faction, in which a leading figure was a Łódź teacher, Maria Koszutska, was more inclined to work with other nationalities to promote socialism in Poland. A nationalist agenda was inevitably provocative in the mixed Polish, Russian, German, Christian Orthodox, Catholic, Protestant and Jewish population of Łódź. In 1901 another socialist party, calling itself PPS-‘Proletariat’ and led by Ludwik Kulczycki, was established in the industrial parts of Warsaw and Łódź.² Much more explicitly within a Marxist tradition was the grandly named Social Democracy of the Kingdom of Poland and Lithuania, whose best-known leader was Rosa Luxemburg. SDKPiL regarded the struggle against tsarist autocracy and for a democratic republic for the whole Russian empire as its main priority. However, it was preoccupied with building a disciplined party with a subordinate trade union network.³ The total membership of these parties was tiny, less than 10,000 in all the Polish territories of the empire in 1903–4. Significantly, they were dwarfed by the Jewish trade union, the Bund, whose membership at that time was 15,000. But parties were given a disproportionate significance by their concentration in the industrial districts of Warsaw and Łódź.⁴

The outbreak of the Russo-Japanese War in February 1904 exacerbated the economic difficulties. Higher taxes, rents and raw material costs were combined with financial restrictions. To transfer their capital abroad, private investors withdrew 30 million marks from banks in Warsaw. Similarly, foreign banks withdrew their reserves from banks in Russia.⁵ This affected especially harshly the industrialised part of the Russian empire in the Polish Kingdom, where credit was most widely used. Although the state banks raised their interest rates only by 1 per cent, the rate of interest in private banks rose by 10 per cent. In the summer of 1904, industrial production in the Kingdom fell by around a third.⁶ In Łódź there was a widespread feeling that orders for uniforms and equipment were not being placed with factories in Poland but were going to factories in Russia proper. At the same time, the conscription of young men to fight in eastern Russi...

Table of contents

• Cover
• Title
• 1  Early Years
• 2  In the Crucible of the Revolution
• 3  Economic Journalism
• 4  To Warsaw
• 5  At the Institute
• 6  The Socialist Discussions
• 7  The Enigma of the Business Cycle
• 8  Sweden
• 9  London
• 10  From London to Cambridge
• 11  Seeking Work Again
• 12  The First Synthesis of Theory
• 13  Kalecki and His Myrmidons
• 14  Shared Ideas amid Mutual Incomprehension
• Notes
• Bibliography
• Index