"In the end, it all comes down to the theory of value". David Ruccio.
The late Prof. Frederic (Fred) S. Lee, it seems, did not mince words. That's an admirable quality, particularly when the targets of one's words are our colleagues.
His 1998 book "Post Keynesian Price Theory" (Cambridge University Press) opens with a highly critical review of what passes for a post Keynesian price theory (this post's title borrows from a subtitle in that book's Introduction).
Lee closes the first section of the Introduction with these electrifying words:
"Post Keynesian price theory has no real existence beyond the idiosyncratic writings of various Post Keynesian economists, its various renditions are theoretically incompatible to a lesser or greater degree, and it has not been entirely freed from neoclassical concepts and terminology. My objective in this book is to move Post Keynesian analysis forward towards a more comprehensive, coherent, realistic - and, indeed, believable - non-neoclassical theory of prices by setting out its non neoclassical pricing foundation by developing an empirically grounded pricing model". (p. 3)
Lee was certainly harsh, but was he right on his assessment of post Keynesian "price theory"? Perhaps more importantly: did he succeed in providing "a more comprehensive, coherent, realistic - and, indeed, believable - non-neoclassical theory of prices"?
Two reviews of his book by high-profile post Keynesian academic economists seem appropriate here.
Neither reviewer disputes Lee's assessment about the poverty of post Keynesian "price theory". Indeed, without openly endorsing Lee's appraisal, Nina Shapiro (2000: 990) does acknowledge that "little attention has been given to the microeconomics of the school".
Lee believes such poverty is due to post Keynesian economists' systematic failings: (1) they are unaware of empirical investigations on the subject, and (2) they "have largely rejected or ignored the contributions of economists who happen to have resided out of Cambridge (UK), to have political beliefs not consistent with those Cambridge economists, or to have carried out their work without slavish praise to Keynes and Kalecki" (p. 3)
Malcolm Sawyer (2000: 649) takes issue with that:
"These claims are not substantiated, and there is no substantive discussion of the contributions of authors associated with Cambridge such as Geoff Harcourt or Wynne Godley."Shapiro does not comment.
Both reviews also suggest an answer to our second question: did Lee succeed in providing post Keynesianism with a price theory?
Shapiro opens her review thus:
"While a work on Post Keynesian price theory would be a welcome addition to the literature -- little attention has been given to the microeconomics of the school -- this book does not live up to its title. Lee neither illuminates the theory nor develops its concepts, and readers will have a difficult time following his presentation of its arguments"And closes it with:
"Prices are firm rather than product specific, and the product centered (input-output) pricing model developed in Lee (chapter 12) cannot be the 'foundation' of a Post Keynesian price theory." (p. 991)Sawyer is slightly more positive:
"It does provide interesting material on the development of ideas on pricing, and is one step on the path to the development of a coherent post Keynesian analysis of prices and pricing."
Shapiro, N. 2000, 'Post Keynesian Price Theory', Journal of Economic Issues (Association for Evolutionary Economics), vol. 34, no. 4, pp. 990-992.
Sawyer, M. 2000, 'Post Keynesian Price Theory (Book Review)', Journal of Economic Literature, vol. 38, no. 3, p. 648.
Lee, F. S. 1998. Post Keynesian Price Theory. Cambridge University Press, Cambridge and New York.