Post Keynesian Price Theory

Modern Cambridge Economics

by Frederic S. Lee

This book sets out the foundations of Post Keynesian price theory. Frederic Lee examines the administered, normal cost and mark up price doctrines associated with Post Keynesian economics; he then draws upon those doctrines and previous empirical studies to develop the pricing and production foundations of the theory. This is the only book that is solely concerned with Post Keynesian price theory and its foundations, and represents a major contributon to the literature of post-Keynesian economics.

Genres: Economics

292 pages, Hardcover

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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