Post Keynesian Price Theory

Modern Cambridge Economics

by Frederic S. Lee

Frederic Lee sets out the foundations of a post-Keynesian price theory through developing an empirically grounded production schema. The administered, normal cost and mark-up price doctrines are explained in parts I-III of the book, as many of their theoretical arguments are important for developing the foundations. This involves discussing the work of Gardiner Means, Philip Andrews, and Michal Kalecki as well as the developers of the doctrines, such as Edwin Nourse, Paolo Sylos Labini, Harry Edwards, Josef Steindl and Alfred Eisner. Drawing upon the arguments and formal modelling offered by the doctrines, in conjunction with empirical evidence from one hundred studies on pricing and production, Dr Lee develops an empirically grounded pricing model and production schema. He argues that the model and the schema together constitute the foundations for post-Keynesian price theory.

Genres: Economics

292 pages, Kindle Edition

First published January 31, 1995

About the author

Frederic S. Lee (1859- )

Reviews

[Cameron Wilson · Rating 5 out of 5]

Lee gives a deep survey tracing the development of the doctrines of administered prices, normal cost prices, and mark up prices. There's also an interesting chapter on Kalecki and Steindl's theory of capitalist stagnation. But critically, Lee sets out an empirically grounded price scheme based on the insight of 100 empirical studies. The book demolishes the idea that a price mechanism allocates resources in the capitalist economy. There is no marginal productivity of labor calculated by business, nor do businesses know their own demand curve or price elasticity of demand for some specific good. Real capitalist economies are a circular flow of money and intermediate goods, with markets constantly clogged with transactions and businesses wholly fixing prices based on goodwill and customs. Thus Lee argues the entire notion of equilibrium and market clearing is probably worthless. Lee even implicates past Post-Keynesian and Sraffian price studies as methodologically and empirically irrelevant.
For some follow up reading check out Lee's review of Alan Blinder's Asking About Prices: "Post Keynesian Price Theory Reconfirmed?". As of 2017 Lee has also released a new book "Microeconomic Theory: A Heterodox Approach" which takes the arguments in PK Price Theory in an even more ambitious and modern direction.

[Alex · Rating 5 out of 5]

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