ABSTRACT
The microeconomic foundations of post-Keynesian macroeconomic theories of growth and distribution have always puzzled critics. They have asserted that, at best, post-Keynesian theory relies on a simple (and unexplained) mark-up pricing formula. The crux of post-Keynesian theory is the relationship between the savings and investment plans of businessmen. And so it is with the post-Keynesian theory of pricing. In neoclassical theory, competition is viewed both as the process by which a market clearing price is reached through the interaction of demand and supply and as a description of a market structure. The emphasis on “causal” links, with its implicit “periodization,” carries over to the post-Keynesian analysis of pricing. Post-Keynesian economists argue that the pricing behavior of oligopolistic firms in the manufacturing sector of industrialized capitalist economies can be explained by the demand for funds from internal sources for purposes of investment expenditure.
