Lee’s Post Keynesian Price Theory: Chapters 7, 8 and 9

Chapters 7, 8 and 9 of Frederic S. Lee’s Post Keynesian Price Theory (Cambridge, 1998) deal with the work of Michał Kalecki (1899–1970). Unfortunately, these chapters are more useful for the history of Kalecki’s work and his influence on some Post Keynesians, rather than administered prices per se. I provide only a brief summary of interesting points below.

Kalecki’s initial work focussed on the price rigidity, monopoly and oligopolistic tendencies in market economies, and was imbued with explicit marginalist ideas (Lee 1998: 147–149).

But Kalecki’s early work, as it had emerged by the 1940s, was subsequently developed in two ways:

(1) from 1952 to the 1980s, by Sraffa, Geoffrey Harcourt, Peter Riach, Joan Robinson, Kaldor, Athanasios Asimakopulos, Adrian Wood, Aldred Eichner, and Kalecki himself, and

(2) from 1945 to the early 1980s by Josef Steindl, Sylos-Labibi, Paul Baran, Paul Sweezy, Harry Braverman, and David Levine in the “stagnation thesis” (Lee 1998: 152).

During WWII, Kalecki worked at Oxford with Steindl, Fritz Burchardt and G. D. N. Worswick, and came to develop his theories (Lee 1998: 153).

Burchardt and Worswick soon became interested in markup pricing, and by 1944 Kalecki himself seems to have been aware of the idea (Lee 1998: 154, n. 2). Strangely, however, Kalecki, in a revised version of his economic ideas, in the Theory of Economic Dynamics (1954) did not explicitly adopt markup, cost-based pricing, and it was not until the 1960s that he adopted it in his analysis (Lee 1998: 167).

All in all, Kalecki’s early work contained a number of marginalist elements, though arguably he abandoned marginalism by 1954 (Lee 1998: 172–173), and a non-marginalist interpretation of Kalecki’s work inspired Post Keynesians to develop some of his theories on monopoly power, administered prices and the causes of the profit markup.


BIBLIOGRAPHY

Lee, Frederic S. 1998. Post Keynesian Price Theory. Cambridge University Press, Cambridge and New York.

Kalecki, Michał. 1954. Theory of Economic Dynamics: An Essay on Cyclical and Long-Run Changes in Capitalist Economy. Allen and Unwin, London.