ABSTRACT
This chapter proposes reconstruction of Schumpeter's price theory starting from the revised theoretical normal prices rather than from prices determined by competitive Walrasian equilibrium. It presents the micro analysis derived from post-Keynesian pricing theories, with links to both the Sraffian framework and the analysis of disruptive innovation. The chapter integrates the micro and meso analyses with Schumpeter's macro analysis to provide a reconstructed theory of prices in motion over the course of the business cycle. The meso analysis shows price leadership delays the downward impact on prices from improvements in production technology in the form of reduced labour requirements or lower technical coefficients for intermediate inputs. Schumpeter argues that theoretical normal prices are determined by perfectly competitive Walrasian equilibrium, with the price of each product equal to its reproduction costs.
