 Thank you very much Professor Sawyer, Professor Webley. Thank you very much for your very warm introduction. I hope not to disappoint you tonight, although I dare not put forward an achievement as great as your son's achievement in passing his driving test, an achievement that still escapes me. I would also want to express my happiness at being here, seeing here not only friends and colleagues from SOAS, but among them as well from outside the school, former teachers, former students and friends who have come from abroad, including professors Kazimierz Waski, Ricardo Belfiore, Gary Dimmski, Alberto Kilosi, Arturo Conal and others. Among you is a small group of individuals who accompanied me on my first faltering steps into academic research, and I have to say when I see the way in which my students here at SOAS get into research that you really do it far more single-mindedly than I ever did. Most prominent among those who accompanied me on those first faltering steps is Professor Anita Pratomowska, along with Miriam Pratomowska-Toperowska. This lecture owes a huge amount to them and their generous support through the most difficult years of a career which is by no means being straightforward. Among more recent friends are my research students, their infectious enthusiasm, their absolute conviction that they will revolutionise in every sense after all this is SOAS, this conviction that they will revolutionise economics. Their dedicated assistance with my own research, seminars and projects gives them a very special place in the genesis of my recent work and of this lecture in particular. I should mention here in particular two friends who cannot be here. Professor Victoria Chick, whose friendship and scholarship were an important influence on the maturing of my ideas on monetary and financial economics. Professor Tadewch Kowalik, whose selfless dedication to the ideals of Oskar Lange and Michael Kalecki have been an inspiration in my work and also a great comfort in some of my difficulties in the past. Before I get onto the substance of my lecture, I want to confess to feeling a certain sadness and even embarrassment at delivering this inaugural lecture. I guess when I look around at the professors at SOAS, it seems to me in my case it's at a rather advanced age. It seems to me that delivering this lecture at my age by and large means that the sadness arises because we're deprived of the company of a number of individuals whose encouragement to the university has meant an awful lot to me in the earliest years of my intellectual development. My father, for example, who instilled in me a love of books, Francis Gunn, Stefan Temerson, from whom I learned that modernism is the only consistent position for a serious intellectual. Tamara Deutsche, whose friend Marion Milliband, is with us today, from whom I learned that the true intellectual is also the engaged intellectual. My embarrassment bordering on inadequacy in delivering this inaugural lecture at my age is also because at my age it usually indicates either delayed intellectual maturity or a lifetime of professional indiscretion. I would like to think that it's the latter. Nevertheless, what tries to make the best of this predicament and seeing its certain advantages, for example, by now I've attended a number of inaugural lectures. The older you are when you get to it, the more inaugural lectures you will have attended. I've learned from them that I should not use PowerPoint, not because it necessarily trivialises the points in this lecture that I would like you to remember, but because I cannot confidently deliver it without technical difficulties or trivialising, so you'll just have to listen to me. As was mentioned before, this lecture has come in various versions. The original lecture was going to be about probably my main contribution, which I've mostly contributed on, which is the topics of money and finance. The subject of most of my books and articles, and I did start sketching something out. At that time I thought, well, of course the ideal person then to comment on this is Professor Arturo O'Connell from the Central Bank of Argentina. But he wasn't sure at that time whether he could make it. As I reflected on it, I thought, well, no, I have my doubts as to the significance of my contribution to financial economics and monetary economics. But I've absolutely no doubts about the contributions of Michael Kalecki and Oscar Lange. I have no doubts about their contributions. And also this lecture gives me the opportunity to give at least a partial answer to the question which those of you that have known me for a long time, Malcolm in particular, have asked on more than one occasion, what has Toporowski been doing these last two decades with his research on Kalecki? Well, this is the starting point of an answer. So let me move on to the substance of my lecture. Oscar Lange and Michael Kalecki, as is well known, were the most distinguished of 20th century Polish economists. However, I want to emphasise that I'm talking about them today, not because they were Polish. There is, I think, no such thing as a national school in economics. The ideas of professional economists in Poland in the 1930s, when Kalecki and Lange were coming to maturity in their ideas. The ideas that were in currency then in Poland and now, like the ideas of most economists in most countries of the world, were and are largely derivative. That is, they are a pale reflection or application of the ideas of what Keynes called defunct economists from the past or from some other country. Yet Lange and Kalecki were anything but derivative. So they were unusual. If I come back to this issue of national schools, what we call national schools of thought in economics, the Austrian school, the Swedish schools, really can just as easily derive from the ideas of particular creative individuals around whom those national schools developed. Carl Menga, Ludwig von Mises, Friedrich von Hayek in the case of the Austrian school, Knut Ficksel, Bertil Olin and Gunnar Myrdal in the case of the Swedish school. And this idea of a national school is false, because if you look, for example, at more recent Austrian economists, the most recent Austrian economists do not even mean central Europeans. Murray Rothbart, Israel Keatsner, famous Austrian, so-called Austrian economists are actually Americans. If we go back into the 19th century, the political economist and editor of the Economist's Walter Badgett, what he referred to as English political economy, was in fact founded by the Scott Adam Smith in Glasgow and not in England. And as an aside, I cannot resist quoting from Badgett. Badgett commenced his essay on the postulates of English political economy published in 1876. He began this essay with the words, Adam Smith completed the wealth of nations in 1776 and our English political economy is therefore just a hundred years old. I think in most cases it is more correct to refer not to national schools, but to the main centres where the ideas of the founders of those schools, where those ideas were promulgated. There's not a Swiss school of thought in economics, but there is a Lausanne school around the ideas of Leon Varras and Vilfredo Pareto. The Swedish school is more correctly called the Stockholm school following the founding of the Stockholm school. In Britain, following the founding of English political economy in Glasgow, the distinctive English contribution to modern economics in the work of John Maynard Keynes, Joan Robinson, Richard Kahn, was more correctly called by Harry Johnson and my first economics teacher, Terence Hutchison, the Cambridge school. And this developed around the ideas of Alfred Marshall, whose methodological principles underlie the so-called Keynesian revolution. But even here there are ambiguities. Harry Johnson for those that are not of a certain age, Harry Johnson was a great monetarist economist who dueled with the Keynesians in the 1970s. Harry Johnson's major accusation against the post-war Cambridge school was that its central ideas were really cooked up outside Cambridge by the poll Michael Kalecki. So Oscar Lang and Michael Kalecki were great economists precisely because they transcended their national background. They were concerned to apply economic theories to economic problems and development issues of their native country. But their starting point was their effort to understand the economics of capitalism in general. That is capitalism as it existed in their time in Western Europe and North America and as it was emerging in the developing countries. It is this understanding of international capitalism that gives contemporary significance to the ideas of Langa and Kalecki. Likewise it is the failure of many lesser theoreticians to transcend the commonplace observations of their home countries that condemns their ideas to a lesser significance. One is reminded of Schumpeter's comment on Marshall, a highly polished surface in which everything is reduced to the commonplace. What a condemnation. Typically Schumpeterian condemnation. I'm therefore bringing these two economists to your attention, not because they are Polish, but because their Polishness has, I believe, obscured the central message of their economics for the 21st century. We may examine their key English language texts and they will have meaning for connoisseurs of inevitably dated socialist planning debates or postcainting economics, the context in which they are mentioned today. To find meaning in their work for the 21st century, it is necessary to dig deeper into their writings in Polish and their debates with other economists. Let me start with the younger of the two men, Oscar Langa. He was born in 1904 to a textile factory owner in Tomaszów near the Polish industrial city of Łódź, then part of the Russian Empire. His family was originally from Germany, but had become assimilated into Polish society, although his parents remained Protestant. In his adulthood he became a Marxist, sorry, in his adulthood after he became a Marxist, a myth grew up that Langa was Jewish since according to Polish anti-Semites communism is merely a part of a much greater Jewish conspiracy. I'm reminded of Keynes' remark for which he was widely disliked in Poland. Keynes' remark that Poland is an economic impossibility whose only industry is jubating. Langa's Jewish connection was much stranger than this. A file on him that was built up by an anti-communist organisation during the war reveals that Langa's father had a Jewish bookkeeper who kept the firm's accounts in Yiddish. An obscure German dialect that's written in the Hebrew alphabet. Langa's father was not comfortable with having his firm's books in a language and with symbols that he could not understand. So he set his linguistically gifted son to learn Yiddish, one of many languages which he was to master. So this is the origin of why Langa was considered Jewish. Tuberculosis of the bone marrow left Oscar a sickly child who took refuge in books and was eventually sent to a sanatorium near Graz in Austria for treatment. He returned to complete his school education in wartime Poland under German occupation, I mean the First World War. By the time Poland achieved independence in 1918 the young Langa was reading the Marxist classics and active in socialist circles. After studying Poznanian Kraków he proceeded to doctoral studies in Kraków in statistics and economics. Thereafter he lectured and was active in a small socialist group that considered itself more radical than the much larger national Polish socialist party. But although they were much more left wing than the Polish socialist party, the organization, Langa's organization was also very critical of the strategy and the organization of the Polish communists. In 1936 Langa left Poland to travel to the United States on a Rockefeller Fellowship, ending up as an associate professor of economics at the University of Chicago where his best known students were Hyman P. Minsky and Richard Milhouse Nixon. Yes, an odd pair. He became an American citizen and threw himself into American politics in particular supporting the war against Nazi Germany. In 1944 after the Polish government in exile broke off relations with the Soviet Union following the discovery of mass graves of Polish army officers killed by the NKVD at Cutting in Belarus, Langa unexpectedly flew to Washington where he met President Roosevelt and then flew on to Moscow for talks with Joseph Stalin. At the end of the war he was nominated as the first ambassador of communist Poland to the United States and was obliged eventually to resign his American citizenship. After two years he became head of the Polish delegation to the United Nations. In 1948 at the last Congress of the Polish Socialist Party he renounced his earlier views on socialism and urged affiliation with the Communist Polish Workers Party. He spent the Stalinist years in Warsaw lecturing at the Party School of Social Sciences before emerging into public life again with destalinisation in 1956. He participated cautiously in discussion on economic and political reform, ending up as the Chairman of the Council of State equivalent to President of the Republic. His health was never good and he died undergoing treatment in Rome in 1965. In his economic analysis Langa was the archetype of the mainstream economist but with a radical twist. There were few aspects or notions of the orthodox economic theory of his time that he could not turn to proving the necessity for socialism. This perhaps explains why he fitted in so well at Chicago. He and Henry Simons and Frank Knight and Aaron Direct are the other main luminaries of Chicago economics. All of them believed that free market competition could bring about the holy grail of neoclassical economics, a full employment general equilibrium. Langa only dissented from his fellow professors because he believed that the processes of concentration and centralisation of capital which Marx had argued would limit the self expansion of capital, these processes were eliminating the kind of flexibility of prices and wages that was necessary to secure full employment. Langa today is best known for the model of the socialist economy that he put forward in his well known controversy with Hayek. Hayek had argued that socialism is impossible because the central planning authority in a socialist economy could not solve the complex equations needed to obtain the prices that would bring supply equality. Langa argued that it was not necessary to solve these equations. All that the central planner had to do was to follow a simple rule according to which they raised prices if shortages emerged and lowered them if there was excess supply. Indirectly a Langa Darg, even if he didn't lay, the foundations of today's information theoretic economics because it was in response to Langa that Hayek wrote his famous essay on the use of knowledge in society in 1945 where he argued that information is not equally available to everyone. The information comes from a process of discovery by entrepreneurs rather than the state. However it is worth recalling Langa's earlier model of the socialist economy which he co-authored with a monetary economist Marek Breit who had fallen into the Langa Kalecki circle in Warsaw in the early 1930s. There article published in 1935 had a number of notable features. First of all in it Langa and Breit annunciate their view that the reason why the capitalist economies of the 1930s would not naturally spring back to full employment was because cartels and monopolies were preventing the adjustment of prices and wages that would make all markets clear at full employment. Secondly they criticised the Soviet system of planning through central ministries which according to Langa and Breit allowed certain groups of workers to exploit monopoly power and secure higher wages for themselves at the expense of other groups of workers. This was a feature reached in European communist economies where certain workers such as miners and workers in heavy industry enjoyed significantly higher earnings than workers in other industries. Actually this criticism of the Stalinist model was one that Langa in later years went to great trouble to try to hide in successive editions of this essay. As an alternative Langa and Breit urged the organisation of industry into autonomous trusts that were not quite syndicalist because their ruling boards would contain representatives of all social groups. But their activity would be coordinated by the market and in a striking anticipation of 21st century political economy the coordination would come in two ways through the market and through the central bank. As with the 21st century new consensus on monetary policy the central bank would regulate the level of investment and aggregate economic activity by varying the rate of interest. One wonders today whether central bank socialism would work any better than central bank capitalism although it was I believe there was talk of it in Hungary in the dying years of the Hungarian communist at the Kadar regime in Hungary. I will pass over to other aspects of Langa's work that may interest the historian of economic thought both of them emerging in response to the ideas of John Maynard Keynes. There is first of all Langa's interpretation of Keynes's general theory in price flexibility and employment. This was a booklet that he published in 1943 and this became one of the founding documents of the neoclassical synthesis that came to be ritually denounced in later years by Joan Robinson and the post Keynesians. At the time Kalecki rejected the Langa view as an incorrect interpretation of Keynes. Langa also earlier intervened in the Keynes-Tinburgan dispute about the scope and significance of econometrics. These are less appropriate for discussing before the general audience that we have today. But since we are at Sawas let me conclude on Langa with a few words on his development economics. Langa came to development economics rather later in life. After he and Poland emerged from Stalinist isolation in 1956, Langa travelled widely to Latin America and then he followed Nicholas Caldor to India and Sri Lanka then Ceylon. In India and Ceylon he warmly endorsed Caldor's taxation reforms to raise government revenues and close the fiscal deficit. However in his development economics Langa stayed close to the orthodoxy that he had embraced in the 1940s for Poland. Namely that economic development depended in large countries upon the amount of resources devoted to investment in general and heavy industry in particular. However smaller countries were in his view more constrained by their foreign trade position and would require import restrictions in order to develop. An intriguing aspect of Langa's development economics were the discussions that he had towards the end of his life with Italian economists on the issues of regional economic development in the Italian Mezzogiorno. So let me move now on to Kalecki. Michael Kalecki and Oskar Langa had more in common than their intellectual roots in the discussions of the Zviozek Niesalofne, Mojirfe Socialistithne, the Union of Independent Socialist Youth at the beginning of the 1930s where they met for the first time. Well actually Kalecki was never a member of the organisation but he hung around in those circles. Actually they had far more in common than this. Kalecki's father Abram II was a factory owner but the Kalecki factory was in the middle of the Polish industrial city of Łódź which was also the second city after Moscow to be affected by the 1905 revolution. Abram Kalecki's business never recovered and in 1911 he shut down the factory. Unlike Langa Michael Kalecki lived in financial insecurity up to 1929 when he secured employment at the Institute for the Study of Business Cycles and Prices. A rare oasis of economics research in Poland at a time when university professors devoted themselves to teaching and sustaining the higher culture that they believed themselves to represent. I didn't produce but you just sustain the culture. In 1936 this was what the research assessment exercises put a firm stop to. In 1936 Kalecki left Poland along with Langa to go abroad on a Rockefeller Fellowship. While Langa headed for the United States Kalecki went to Stockholm to study the credit cycle theories of the Swedish followers of Knut Fiksall. While there Kalecki received news of the publication of Keynes's general theory. Among the founding myths of post Keynesian economics is the story put out by George Shackle and Joan Robinson that Kalecki was so shocked to see Keynes's theory was so shocked to see that Keynes's theory had beaten his own to the publisher that Kalecki took to his bed for a week. The book did shake Kalecki but more with the realisation that the key discussions on macroeconomics were now no longer in Stockholm but were in London and Cambridge. So Kalecki left Stockholm and came to London lodging just on the other side of Russell Square in Guilford Street. In fact in late towards the end of her life Kalecki's widow told me that they arrived at Guilford Street, put their bags down and being who they were, put their bags down headed straight for Trafalgar Square for a demonstration support. So they knew which side to be on. He wrote to Joan Robinson after reading her analysis of hidden unemployment and she was so impressed by his understanding of Keynesian ideas that she introduced him to Keynes. Keynes and Mrs Keynes invited Michael and Adela Kalecki for tea at the rather ugly house in Harvey Road, Cambridge, owned by Keynes' parents, a house that John Maynard Keynes occasionally used when he was in Cambridge. Joan Robinson anxious to know what impression her protege had made on the great man for her. Keynes was always a great man even when after Keynes died she concluded that Kalecki had the better intellect. Joan Robinson asked Kalecki how was the tea with Keynes and what impression had he of the great man. Kalecki replied that the tea was fine, that Keynes was like a prima ballerina and Mrs Keynes was like a Cambridge dom. Keynes supported Kalecki after the expiry of his Rockefeller Fellowship while confessing to being confused by some of Kalecki's ideas. In this context I cannot resist quoting this remark from a letter of Keynes to Khan dated 30 April 1938 referring to what Keynes called Kalecki's appalling method of exposition. Keynes wrote, his mathematics seems to be largely devoted to covering up the premises and making it extremely difficult to bring one's intuition to bear. If only he would state his premises in the most illuminating possible manner and be perfunctory over his mathematics instead of the other way round one would have a better idea of what he is driving at. Of course in Keynes's writings it was the other way round, very much so. Keynes secured for Kalecki a stipend from the National Institute for Economic and Social Research to do research at Cambridge and subsequently after the outbreak of the Second World War in Oxford. At the end of the war Kalecki moved to Canada to work with the International Labour Organization and then to New York where he worked for the United Nations. As the Cold War chilled the atmosphere of multilateral organizations such as UN, Kalecki became subject to political pressure over the IMF and World Bank policy and reports that he wrote on member countries. He was spied upon and the Secretary General, Dag Hammersholt refused a request by the Mexican government for Kalecki to visit Mexico as an expert advisor. In 1955 he resigned and returned to Warsaw to take up a key role advising the government there on economic planning. For a while with destilinisation things went well but in the 1960s when the economy started to experience difficulties Kalecki's criticisms of excessive investment proved less tolerable. In 1968 many of his associates were subjected to an anti-Semitic purge, lost their jobs, in many cases were given passports valid for only one journey out of Poland, effectively deprived of their nationality. Among them Kazimierz Waski, who is with us here today. Kalecki resigned from his official positions, made one last journey to England and died in Poland in 1970. Although he had little scholarship about himself, Kalecki was a much more original thinker than Lange, although Lange had the encyclopedic knowledge of economic theory. Kalecki's perhaps best known for having anticipated in some way Cain's general theory. The anticipation was hailed after Cain's death by Joan Robinson and was claimed in private by Kalecki himself. The real story is a complex one that reveals much about the respective personalities of the two men, but actually very little about their ideas. Part of the complexity arises from the very ambiguity of Cain's ideas. Even his most ardent followers admit that there are different interpretations of Cain's, so that denouncing incorrect interpretations of Cain's is today as common among Cain's followers as denunciations of deviant interpretations of Marx are widespread among Marx's followers. It is however possible to identify in the general theory and in Kalecki's work key ideas that they had in common. The first is that in a capitalist economy output and employment are determined by business investment, so that unless investment is high enough the economy is unlikely to be at full employment. Secondly that investment determines saving rather than the other way around. Both men denounce the doctrine of the social value of thrift that so comforted the complacent Victorian bourgeoisie and that it has made such a comeback today. Finally contrary to the neoclassical and the Ricardian Marxist view, both men argued that wage rises would increase employment rather than decreasing it. Underline this commonality of view on how the capitalist economy works was a fundamental principle of economic method that Kalecki explicitly employed to great effect and Cain's in a somewhat more haphazard way, the principle of the circular flow of income. This is the idea that incomes are determined by expenditure decisions rather than being decided in complex games of exchanging resources, capital or labour. The principle goes back to the work of the French physiocrat François Canay but has been lost to political economy by the 19th century with the ascendancy of the idea that prices integrate individual exchange decisions. It's all you need are the correct prices. Nevertheless, a hundred years ago the great Joseph Schumpeter recognised the importance of the circular flow of income. The principle he declared showed how each economic period becomes the basis for the subsequent one, not only in a technical sense but also in the sense that it produces exactly such results as will induce and enable the members of the economic community to repeat the same process in the same form in the next economic period. How economic production comes about as a social process. As long as economic periods were viewed merely as a technical phenomenon and the fact of the economic cycle through which they move had not been recognised, the connecting link of economic causality and the insight into the inner necessity and the general character of economics was missing. It was possible to consider the individual act of exchange, the phenomenon of money, the question of protective tariffs as economic problems, but it was impossible to view with clarity the total process which unfolds itself in a particular economic period, the Schumpeter writing in 1912. Sadly, that principle has been lost again with the new classical economics, new Keynesians, the new neoclassical synthesis and others. All of them returning to the classical position in which for better or for worse, but largely worse prices rather than the circular flow of income are held to integrate economic decisions. However, the similarities between Keynes and Keynes should not blind us to the differences in their respective approaches. Keynes, the moderate conservative, was ever enthusiastic about the possibilities of policies that would allow capitalism to flourish as it needs to if it is to provide full employment. Kalecki was more skeptical. He accepted that fiscal and monetary policies could provide some stimulus to business investment, but he did not regard this as a sustainable position in the long run. More importantly, he doubted the willingness of business to support a regime of full employment. He also criticised Keynes' weak understanding of industrial investment processes and corporate finance beyond stock market operations. Unlike Keynes, Kalecki did engage with the problems of developing countries. Kalecki also distinguished himself from Langa in emphasising that the central problem of economic development is a financial one, but not the saving constraint that has exercised development economists from the time of Gustaf Castle onwards. For Kalecki, the financial constraint appeared in the first instance as a foreign exchange boundary on the amount of investment and consumption goods that may be imported. In the second place, the financial constraint emerged out of the social structure of the economy. Growth in employment at low levels of income would put pressure on food supplied by the agricultural sector. The resulting food price inflation would redistribute income towards farmers and through higher ends to landowners. The higher food prices would therefore fail to stimulate food supplies. This made land reform and the taxation of landowners and the middle classes a prerequisite for successful industrialisation. Kalecki was also sceptical of the benefits of foreign direct investment in fostering the modernisation of the economy. Let me come to my conclusion. In a lecture in 1951, I think it was JK Galbraith who said the words, let me come to a conclusion, words which are spoken by the lecturer in a bid to give his audience hope. In a lecture in 1951, Lange described Kalecki as a left Keynesian. This was the term employed at the time by communists to describe those followers of Keynes, like Joan Robinson, who was sympathetic to Marxism but recognised the possibilities of Keynesian management of capitalism. Lange's own use of the term was not ironic but maybe viewed as such. This was a neoclassical Marxist who helped establish the neoclassical synthesis, pigeonholing a much more radical and original critic of capitalism, which all goes to show we may use labels of convenience but they're rarely illuminating. More generally, the incident and the comparison between the two scholars shows that while it's helpful for the development of ideas and analysis for economists to do battle over theory and concepts, it's not helpful to take that battle and such name calling into the domain of public discussion. In the domain of politics, battles over economic policy must be conducted rhetorically with an appeal to the ideas and currency among the political audience rather than with an appeal to theoretical consistency. Economists have to be aware that in entering public debates they need to use rhetoric rather than analysis, but in using rhetoric and appealing to the often uninformed sentiments of their audiences, economists need to avoid two traps. One trap lies in becoming what Keynes called agitators or mere economic journalists, pervading the warmed up ideas of others and encouraging an uninformed sentiment. The other trap lies in dogmatism or in insistence on the acceptance of certain doctrines whose rationale and application cannot be explained. Kalecki anlanga may be usefully read today as examples of economists whose writings avoid those traps. Although both wrote complex and difficult studies in economics, their arguments are radical in the sense that they do not require prior acceptance of initial premises or doctrines. This has become all too rare in a profession divided into schools of thought in which particular schools are identified by the doctrines which they do not question. The mainstream defined in scope by market clearing prices, Austrians defined by doctrines of entrepreneurship, post Caneans defined by doctrines concerning uncertainty, expectations, endogenous money, one could go on. A very positive side of Lange's work deserves to be recovered today. This is in his engagement with all economics. He did not disengage with the mainstream economics of his time but challenged it and even employed it to draw much more radical conclusions than his mainstream colleagues would allow. A particular need in the 21st century is the urgent need to recover Kalecki's vision and the integrating principle of the circular flow of income. Without it, economists have regressed to those Victorian values that celebrate the alleged thrift of the rich. When a self-professed New Caneansian like the chairman of the Federal Reserve, Ben Bernanke, attributes the macroeconomic imbalances, the so-called macroeconomic imbalances, the US economy and even the financial crisis since 2008 to the so-called Chinese savings glut, it's apparent that the economics profession needs followers of Kalecki to point out that the Chinese people were never so wealthy nor earned on a sufficient scale to distort the American economy in the way alleged by Bernanke. In our development economics of the 21st century, we need to return to Lange and Kalecki's vision of economic development in traditional society as a social process, a vision that emphasized economic development as changing social structures rather than merely adding to the endowments of individuals. I have a particular and personal agenda in pursuing my research on Kalecki. This agenda is to recover for the 21st century the monetary theory of Kalecki, rooted in Vixellian business cycle theory rather than in the functionalist approach to money that has been predominated in British and North American economics. Central to the Vixellian business cycle approach is the idea that the most important money which determines the scale of investment, employment and economic dynamics is put into circulation by business and not by governments or central banks. Again, if I can quote Schumpeter, I guess I should apologize for quoting Schumpeter more than I've quoted Kalecki, but he was in the same class really, they're all in the same class. A Schumpeter put it, it may be more useful to look upon capitalist finance as a clearing system that cancels claims and debts and carries forward the differences, in other words, practically and analytically a credit theory of money. This is perhaps the key theoretical distinction between Kalecki and Keynes. Behind Kalecki's analysis was a vision of credit as a clearing system of capitalist finance, whereas his preoccupation with policy and his own financial investments restricted Keynes' monetary vision to the clearing of payments between commercial banks and the central bank. Thus, in the 21st century, as our economic ills are blamed even by the leading theoreticians of the economics profession on the past so many of the Chinese, the extravagance of Greeks, Spaniards, Portuguese and Italians, the prodigalty of governments, the greed of workers, excessive regulation and limited foresight, we should read Langa and Kalecki to remind ourselves that the economy is the most important thing in the world. That economics has to start with the functioning of capitalism in its leading countries and emergent capitalism in developing ones. Only from this foundation can we build theories of economic and monetary relations. On a final note, let me just conclude with the following thought. Research can only be as good as the people with whom the researcher associates. I may have delivered this lecture, but the good things in it I owe to Kalecki and Langa to all those who have encouraged my interest in Kalecki, most notably Malcolm Sawyer and Jeff Harcourt. Also, Julio Lopez, Nomi Levy, John King, Tracy Mott, my brilliant research students, Jago Penrose, Luigi Ventimiglia, Eva Kavoski, Joe Mitchell, Mimosa Shabani and Ilara Marti, who have served with great patience and forbearance as a captive and very active audience for the discussion of my ideas. Finally, last but not least, I owe those ideas to the person who will come off to me, Professor Kazimierz Waski. Thank you very much. It is a great honour to me for me to have been invited here to this ceremony. I understand that this privilege is linked to the fact that I had the occasion to personally both of this economist and to work for about dozens of years with Professor Kalecki. Let me start with some personal information which may be interesting for you and then I will make two comments more in theoretical sense. It is true that Lange was the Deputy Chairman of the State Council in Poland, but this was a position politically without practically any weight, mostly representative. Father, he was not Jewish, but his link with Jews went beyond the George's anecdote about the bookkeeper of his father, as told by Professor Toporowski. Oscar Lange's first wife, Irena, was Jewish. She went together with him to the United States, but after the war she did not return together with him back to Poland. She and their son remained in the United States. His second wife, Felicia, was not Jewish. Now a few anecdotes about Kalecki. After his lectures there were questions and sometimes if questions have been asked, Kalecki answered exactly with the same words as in the lecture. He was a very bad teacher in the sense that he could not understand that people don't understand his reasoning. So he repeated what he said but louder. The second anecdote is when I learned that his work in the planning commission goes to the end because he didn't want, they treated him as a showman to show, look what a great economist we have as an advisor. But this was not Kalecki to play such a role. So he stopped and at that moment the idea came to me to win him for the university. Kalecki was never a university teacher, never. Outside this period when he was in the main school of planning statistics between about 57, 56 and 60 and 70 when he retired. Well, so I had a great difficulty to convince him that he lectures to students and in the end I got his consent but after a few days he found to me what we made up was two hours a week, one semester. Capitalism, one semester. Socialism because academic year in Poland has two semesters. After a few days he found to me and he says I cannot agree. So what happened? He says I don't have enough material to teach two hours a week. So you see a normal professor teach six hours but then tells everything about the topic but Kalecki was able not only to speak about himself, about what he discovered himself. So I had the idea and said Professor Kalecki please you will teach one hour and the other hour you will answer questions. So as questions were not always asked he asked himself some questions and answered them. By the way I see here in the audience somebody who can say who can who was at that time in Poland Professor Kielosi. Another anecdote. During this time were great discussions in Poland after 56 and before the system changed to the worse about workers about giving money. I think about increasing the role of workers in administration of firms and Kalecki Lange was the chief of the so-called economic council and the two people who were vice president were Professor Bruce and Professor Kalecki. Bruce was very enthusiastic about introducing market economy elements into the socialist planning system. Kalecki was not so. Kalecki understood that if reforms would be indeed deep making the markets influence the behavior of enterprises we will have unemployment. And after quite a time I understand that he was to some degree right. Let us continue. Professor Toporowski is right that schools and economics are linked more with people than with places of institutions. In the years 56, 55, 68 there existed in Warsaw an economic school of thought linked with Kalecki. After he resigned from this position in this school in a sign of protest against anti-Semitic campaign of 1968. This school of thought disintegrated. I am convinced that no inaugural lecture in Poland over the last 20 years has been devoted or could have been devoted either to Lange or to Kalecki. In the course of those years economics has become in Poland has become merely a rather provincial reflection of mainstream economic thinking. Lange is best known for his participation in the debate on economic calculation under socialism. Also he wrote a lot of things in the other direction he can be treated also as one of the co-founders of the no classical synthesis. But I will concentrate my remarks on this topic on the so-called economic calculation under socialism. In this discussion Lange sided with Valeras against the Austrian school and proved that within the assumption of Valerasian model, Mises proposition about the impossibility of efficient allocation of resources under socialism was wrong. Theoretically the central planning board by the trial and error method could substitute for Tottenham or the Auctioneer functions. However, is general equilibrium approach a correct representation of the market mechanism and of the capitalist economy? And if this is not the case, as many are convinced, would not Lange's solution cause greater losses as a piece of normative economy as opposed to a piece of positive theory only? In a capitalist economy the most important functions of the entrepreneur are related to information he has and to motivation which drives his behavior. Within the Valerasian analytical framework entrepreneurs behave like robots that solve system of equation and in this role official of the central planning board especially when equipped with modern computers can surely replace the entrepreneurs. But can they also solve the problem of risk of uncertainty and responsibility for decisions made under these conditions? These are questions which Lange did not even ask because they are beyond the realm of general equilibrium theory. In this sense I believe that Lange's victory in the discussion was a purest one. In 1986 the Financial Times published an article of President Toporowski. Why the word economy needs a financial crush? That article as its author admitted some time ago has had for quite a time a devastating effect on his career and shattered his belief on the role of economics ideas as a vehicle for progress of reason in economics and politics. Kalecki did not need such a lesson. He was not only a great thinker but also a very much dumb to earth person. He had no illusions concerning the evolution, sorry the evaluation of economic ideas on their merits alone. As President Toporowski reminded us in his today lecture already 1943 much more than half a century ago. Kalecki stressed that knowledge of how to achieve and to continuously maintain full employment might not be sufficient on its own to make the industrial leaders achieve that goal. They would dislike government interference in employment problems such as such. Moreover they would dislike the directions of government spending especially if the spending was to subsidize consumption. Last but not least they would dislike the social and political consequences of continued maintenance of full employment. Kalecki was convinced that opposition to the policy of full employment would prevail even in absence business would incur losses. According to him discipline in factories and political stability would be more appreciated by industrial leaders than profit alone. By the way I forgot to mention that Kalecki was very very critical on Marxism. He was never member of any political party perhaps in the pre-war period I don't know of this movement of young people. I remember another anecdote when Kalecki said look if somebody studied Marxism I was a dogma a Marxist his head is lost. He is lost so I say I was too a Marxist so he says perhaps you are different. Not different perhaps. From this point of right now let us come back to my lecture as prepared. I spoke about his article about full employment and if we look at this paper today our present experience of the financial crisis that started about five years ago is very different. No significant changes especially regarding the separation between commercial and investment banking have yet been introduced. No conclusions regarding indispensable regulation of the financial industry have been drawn. What we see instead is a render petition of the crisis. It seems the only subject which is relevant is state debt by the way in the year 2047 the debt GDP relation in the United States was 500%. Of this less than 100% much less than 100% was state debt 400% was outside the state. The financial sector alone had a debt of 125%. Well the similar situation you have in Europe Spain and Ireland had a very low relation of state debt. The Baltic countries almost nothing and still the consequences were very strong and are for instance in Spain very important. What we see is the reinterpretation of the crisis which was not the crisis of state debt into a fiscal problem and this is needed in order to revive the doctrine of sound finance. However in a period of debt-deliveraging of firms and private households in developed economies budget expenditures is the only source from which the required additional demand may come from and yet as we see especially in Europe instead of deficit spending budget discipline is requested. Well somebody may say well if the crisis is related somehow to debt how can more debt solve the crisis. Well this is their point. The point is that this is a little bit paradoxical but the system is paradoxical not the answer. If we speak about income effect of investment what does it mean? It means that what is important is not that they create places capacity it is important that they create jobs when by the way once Galecki said and this will be the end remark. The problem with investments is they are productive. If they were not productive then we could continue but they are productive and this creates a problem. Thank you very much.