Methodological, internal and ontological inconsistencies in the conventional micro-foundation of post-Keynesian theory

By the aid of a simple but widely accepted model, the conventional micro-foundation of behavioral hypothesis postulated in post-Keynesian theory in the Kaleckian tradition is critically reviewed. Inconsistencies are identified along three dimensions: A methodological inconsistency arises from presenting macroeconomic arguments formally and microeconomic arguments verbally. An internal inconsistency prevails when the micro-considerations for different behavioral rules are mutually inconsistent. An ontological inconsistency arises since the postulated behavioral rules are invariant to endogenous changes in the micro-environment whereas the micro-considerations imply them to adjust endogenously. We arrive at two conclusions: First, re-visiting the issue of micro-foundation within the post-Keynesian framework may be a rewarding line of research. Second, the post-Keynesian research paradigm should be open to various forms of consistent micro-foundations as long as the economic mechanism characterized by the model are post-Keynesian.