The Study Of Post-Keynesian Price Theory And Its Recent Development

The study of price, which reflects the relationship of goods exchange, has a history as long as economic issues started to be concerned the history.As commercial activity increases currency came into being after which came up the concept of price and its study whose start and development experience and establishment have go through a long history ever since and could be traced back to the theories of the Greek philosopher, Aristotle, ancient Rome and Medieval scholastic school.Its development can be divided into4stages: enlightment, controversy, preliminary unification, and further development and introspection of self-examination.The period before16th century is regarded as the enlightment stage during which price started to be explained with the contributions of Albertus Magnus, who advocates to measure the value of goods through its relationship with opus(labor), Thomas Aquinas’Just Price theory and so on.From17th century to19th century is the period of theory controversy in which there were disputes over the price between different schools, labor value theorists, such as William Petty, David Ricardo, John Stuart Mill, Carl Marx etc. and the theorists of marginal utility value like Carl Menger, William Stanley Jevons, Leon Walras, Friedrich Freiherr von Wieser and so on. The former think the price is determined by the labor input in the production of the goods while the later argue that price is determined by the marginal utility of the goods. From the end of the19th century to the mid20th century, systematic price theory started to take its initial shape whose core doctrine is that equilibrium price is determined by supply and demand and the theorists are Afred Marchall, Edward Hastings Chamberlin etc. With the evolution and development a systematic price theory had been formed and widely accepted though there were a lot of disputes between the schools. From the mid20th century on is the period when the the theory is improved and perfected and there have been a great many achievements with deep understanding and serious introspection of the theory whose main framwork of Keynesian price theory is the basis on which most theorists donduct their studies, i.e. the market is clear and imperfect with auctioneer; firms’prices are set in terms of maximum profit.Like the development and evolution of the study of economic issues price theory also develops and evolves resulting in different theoies or doctrines of a school in different economic contexts or historical backgrounds as well as different theories or doctrines held by different schools in the same economic contexts and historical backgrounds. For example, classical price theory had their studies based on the components of value of goods in terms of labor value and rent, which suggest that their studies were closely related with the productivity of the time and the arrival of industrial era led to the consideration of the factor of technology in the analysis of pricing determination and price behaviour in the economy and later on as the financing sector develops and participates more and more in the economic performance, an increasing number of studies have focused on the pricing of financial derivatives. The comparison of New Keynesian price theory with Post-Keynesian one by Melmies(2010) shows that the price theory is still a hot topic concerned by western economists though it has such a long history and so many doctrines developed by different schools of the same time or different times indicating the importance in the economics studies that the western economists worship.In the co-existence with the New Keynesian price theories Post-Keynesian economists have also done a great deal of research in the area and developed a large number of theories or doctrines from its unique angles and frameworks significantly different from those mainstream or orthodox ones, which contain quite many appropriate and proper implications and significanc compared with those by orthodox theorists—noe-classical synthesis, Keynesian or/and neo-classical economists, though it is regarded as heterodox. Though regarded as heterodox they donot give up their own doctrines, however, they have persisted in their framework and made great contribution to the price theory providing the methods and ideas to explain the pricing determination and price behavior that can not be done by those orthodox economists with huge amount of theoretical and empical studies. Besides the empical studies for last thirty years there have been also some Post-Keynesian economists such as Lee(1984;1990-1991;1994;1998), Downward (1995,1999,2000,2001,2002) etc, critically reviewing the development the Post-Keynesian price theories.However, Post-Keynesian price theory has not been given enough attention for its heterodox position, is marginalized especially in our country. From the literature including the those searched on the internet through key words, those who introduce price theories and Post-Keynesian economics into our country are Gu(1985), Su(1992)、Wei (2000)、 Yan (2001)、Cao (2002)、Zheng (2003)、Xu (2005)、Wang (2008) and so on who made reviews of price theories while Feng&Xu (1998)、Liu&Wang (1992)、 Fan&liu(2006)、Zhang (2008)、Jia&Ma(2011)、Liu&Liu (2003) and Li (1990)、 Liu et al (2010)、Ma (2007) reviewed the Post-Keynesian economics theories developed by western economists or compared it with other schools or did some empirical research based on its framework. The later are the main economists in our country who keep track of the development of Post-Keynesian economics theories. Even though there were some empirical studies based on its framework and reviews in the80s last century there has been a big gap been our knowledge and the latest development in Post-Keynesian price theory that have been ignored by our scholars just because it is heterodox. And compared with the mainstream doctrines the Post-Keynesian analysis framework, methodology and conclusions are more practical and instructive and their conclusions and policy implilcations are well grounded and profound and hence should not be ignored at all.The co-existence of Post-Keynesian economics with the mainstream shows the academic attitude of accomodation of different schools irrespective of whether it is orthodox or heterodox. Compared with their academic atmosphere it seems there is a kind of discrimination against the heterodox and academic hierarchy dictatorship of the orthodox that lead to the lag of tracking the development of the heterodox theories, as my supervisor makes comments on today’s academic environment, that is " we vow the academic democrocy a lot but we have done very little, for people worship and keep pursuing the mainstream only." Therefore it is helpful and meaningful both theoretically and empirically to review and study Post-Keynesian price theory.As the imbalance between the tracking of the Post-keynesian price theories and its development increases my supervisor proposed a project of reviewing the latest development of Posk-Keynesian economics, part of which is the price theory, and fully sponsored by the National Planning Office of Philosophy and Social Science. The thesis consists4chapters. Chapter one is the introduction including the background of the research and juistification of the choice of the topic, its significance and the structure of the thesis. Chapter2is the review the Post-Keynesian price theory and its early development is provided in Chapter Ⅱ including the origin of the theory, the definitions of price and value, the main models and the representative economists developing thoes models and theories, Chapter Ⅲ, which is the main body of the thesis covers the summary of its latest developmenet with critical comments and decomposition of their policy implications while in Chapter4are the briefs of the price theories of other schools and both the theoretical and empirical implications that the Post-Keynesian Price Theory offer us.As for the creativeness, the thesis itself possesses no such property as it is a review of the theories of a school. However it is still significant since this thesis provides a comparatively comprehensive panarama of the price theory of Post-Keynesian economics. And further more the thesis also targets to dig out the implications of those models and theories and also their applications of the empirical results in the practice in our economy both macroeconomicallly and microeconomically.