Some supplementary explanations on Microfoundations

Yoshinori Shiozawa ()
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Yoshinori Shiozawa: Osaka City University (Actually Osaka Metropolitan University)

Evolutionary and Institutional Economics Review, 2023, vol. 20, issue 2, No 7, 329-365

Abstract: Abstract This study provides some supplementary explanations that are not treated or argued in Shiozawa, Morioka, and Taniguchi (2019) Microfoundations of Evolutionary Economics, Springer Japan, Tokyo. The theory developed in this book depends on three pillars: (1) the separation of prices and quantity adjustments, (2) the theory of prices, and (3) the theory of quantity adjustment processes. Section 2 explains how these three pillars depend on each other. Sections 3–8 discuss the various aspects of the book. Sections 2 and 3 explain how the book gives microfoundations to evolutionary and Post Keynesian (or post-Keynesian) economics, respectively. Section 4 clarifies how old conflicts among different strands of Post Keynesian economics are solved. Section 5 discusses an important assumption, markup pricing, which is only assumed in the traditional treatment and is explained in detail. This provides new contributions to the theory of normal-cost pricing and explains how markup rates are determined and related to profit rates. Section 6 addresses how the book’s new theory can be deemed a monetary theory of production. This book does not include an appropriate theory of inflation. However, Sect. 7 explains that the new microfoundations contain inflation theory in a negative way; that is, when inflation does not occur. Section 8 explains why an economic analysis cannot be based on methodological individualism or holism. Section 9 explains why the logical structure of the book, explained in Sects. 2 and 8 in particular, is inevitable because the economy is a self-organizing system.

Keywords: Microfoundations; Post Keynesian economics; Evolutionary economics; Normal cost pricing; Keynesian revolution (search for similar items in EconPapers)
JEL-codes: B41 D49 E12 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s40844-023-00270-y

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