Academic journal article World Review of Political Economy

Problems with Post Keynesian Price Theory: A Marxist Perspective

Academic journal article World Review of Political Economy

Problems with Post Keynesian Price Theory: A Marxist Perspective

Article excerpt

1. Introduction

With criticisms of mainstream Neoclassical Economics growing, and policy makers at the highest levels in many countries opting for increasingly non-orthodox solutions in dealing with the fallout from the recent and ongoing global economic turmoil, Post Keynesian economics appears to be experiencing something of a (re-)revival, albeit mostly in academic circles.1 Although the focus of most Post Keynesians remains squarely on explanations of the aforementioned global economic turmoil and policy implications thereof, it is quite likely that in the not too distant future, greater attention will once again be paid to certain of its core theoretical foundations. One of these will no doubt be the theory of price, and it is this that is the concern of the article.

As the title of this article suggests, my purpose in what follows is to critically review what I understand to be the Post Keynesian price theory, taking as my point of departure the work of Karl Marx, especially his theory of price in Capital. There have certainly been other reviews of Post Keynesian price theory, most notably by the highly respected Sraffian economist, Ian Steedman (1992), in his provocatively titled article "Questions for Kaleckians," but there have been relatively few, if any, from a Marxist perspective. Such a review is therefore long overdue, especially since it can also help clear up certain misconceptions regarding the supposed commonality of the Post Keynesian and Marxist price theories.

Of course, pivotally important to a review of this type is how one interprets the theory which is to be assessed. The obvious danger is one of setting up straw-persons. With this in mind, I will begin in the next section by delineating what I understand to be the Post Keynesian school of thought and follow this by outlining what I take to be the standard Post Keynesian exposition of price theory, identifying in the process its key elements. Thereafter, I will move to the core of this article, which is a discussion of what I consider to be the major problems with the Post Keynesian price theory from a Marxist perspective. I argue that these problems stem from the tendency of Post Keynesians to look at prices through the eyes of the individual entrepreneur.

2. Delineating Post Keynesians

In comparison with the dominant Neoclassical school of thought, Post Keynesianism is relatively new, emerging sometime in the mid-1970s according to several of its leading adherents. Today, it is seen as one of the major sub-groupings of the so-called Heterodox school of thought, a school whose sole unifying thread appears to be its opposition to mainstream Neoclassical economics.

Although Post Keynesians have always seen themselves as more than simply critics of mainstream Neoclassical Economics, it is unclear that the body of thought they adhere to can be said to constitute a coherent alternative to the latter-to Neoclassical economics. As is generally acknowledged, the major reason for doubting the coherence of Post Keynesian economics is that from its inception it has comprised three distinct strands of thought. These have been classified as fundamentalist Keynesian (i.e., those basing themselves on the works of John Maynard Keynes, and in particular his General Theory), Kaleckian (encompassing those who attach considerable importance to the writings of Michael Kalecki alongside those of Keynes), and Sraffian (encompassing those who take as their points of departure the writings of the great Italian economist, Piero Sraffa). A number of adherents of the Post Keynesian school have argued for the exclusion of Sraffians from their ranks because of what are perceived to be fundamental differences in focus and method. Thus, and notwithstanding the fact that they both focus on distributional issues, whereas Post Keynesians are seen as focusing on macroeconomic phenomena such as growth and employment, Sraffians are seen as more concerned with microeconomic issues such as the determination of relative price magnitudes. …

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