What If There Are No Conventional Price Mechanisms?. Issue 2 (2nd April 2016)

• Record Type: Journal Article
• Authors: Jo, Tae-Hee
• Is Part Of: Journal of economic issues. Volume 50:Issue 2(2016)
• Page Start: 327
• Page End: 344
• Publication Date: 2016-04-02
• Subjects: Frederic S. Lee -- heterodox economics -- institutional economics -- price mechanism -- social provisioning process; B5 -- D2 -- L11; Economics -- Periodicals; Economics; Économie politique -- Périodiques; Economie; ECONOMICS; ECONOMIC POLICY; Periodicals; 330.05
• DOI: 10.1080/00213624.2016.1176474
• Languages: English
• ISSNs: 0021-3624

Abstract

Abstract: Inspired by Frederic ("Fred") S. Lee's theoretical contribution to institutional-heterodox economics, I make the case that the neoclassical price mechanism is not only flawed, but also irrelevant for the study of actual coordination mechanisms, hence the price mechanism — as a theory as well as a way of thinking — should be discarded. While this position was addressed by early institutionalists, starting with Thorstein Veblen, later institutionalists have not completely rejected the price mechanism. The sympathy for the price mechanism has prevented institutionalists (and other heterodox economists) from fully developing an alternative theoretical framework concerning how actual economic activities are organized. I, therefore, provide an institutionalist-heterodox framework of the provisioning process focusing on business enterprise activities. This framework shows how institutional economics becomes more refined and useful when it is married to other traditions in heterodox economics, in particular, Marxian, social, and post-Keynesian economics. Such an integrative approach is what Fred Lee showed through his work toward producing a better theory and policy for the underlying population.