Post-Keynesian Economics: New Foundations by Marc LavoieChapter 2: Theory of Choice

This work presents and discusses chapter two of Marc Lavoie's book Post-Keynesian Economics: New Foundations. It begins by analysing the concepts of uncertainty and rationality which are extremely important for the post Keynesian approach, and for economic theorizing in general. The notions of...

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Published in:Review of political economy 2023-10, Vol.35 (4), p.1034-1044
Main Author: Drakopoulos, Stavros A.
Format: Article
Language:English
Subjects:
human needs
Keynesian theory
post Keynesian microeconomics
Post-Keynesianism
Rationality
Theorists
theory of household choice
Uncertainty
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description This work presents and discusses chapter two of Marc Lavoie's book Post-Keynesian Economics: New Foundations. It begins by analysing the concepts of uncertainty and rationality which are extremely important for the post Keynesian approach, and for economic theorizing in general. The notions of fundamental uncertainty and the closely related concept of procedural rationality, are employed in order to build the foundations of a theory of household choice. It proceeds by investigating the repercussions of the theory in a lexicographic/hierarchical analytical framework. In this framework, groups consume different goods depending on their respective needs, income effects are more important than substitution effects, and price competition has a secondary role. It is also shown that Lavoie's approach does not only draw from the work of Keynes and other major post-Keynesian theorists, but also utilizes contributions from other strands of heterodox economics, thus providing an agenda for a possible theoretical synthesis.
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subjects human needs
Keynesian theory
post Keynesian microeconomics
Post-Keynesianism
Rationality
Theorists
theory of household choice
Uncertainty
title Post-Keynesian Economics: New Foundations by Marc LavoieChapter 2: Theory of Choice
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