,W\LD CUTT+ WAGES R$UCE UNEMPLOYM5T8 

,PEOPLE 3 

,AU?OR 3 ,IA9 ,MC,KAY 

,TEXT 3 

,! 0FREE M>KET0 CAPITALI/ >GUM5T IS ?AT UNEMPLOYM5T IS CAUS$ BY ! REAL WAGE ( LABOR BE+ HI<] ?AN ! M>KET CLE>+ LEVEL4 

,! BASIC >GUM5T IS ?AT ! M>KET = LABOR IS LIKE ANY O!R M>KET & AS ! PRICE ( A COMMODITY 9CREASES1 ! DEM& = IT FALLS4 ,9 T]MS ( LABOR1 HI< PRICES 7WAGES7 CAUSES L[] DEM& 7UNEMPLOYM5T74 ,WORK]S1 IT IS CLAIM$1 >E MORE 9T]E/$ 9 MONEY WAGES ?AN REAL WAGES 7:I* IS ! AM\NT ( GOODS !Y CAN BUY ) !IR MONEY WAGES74 ,?IS LEADS !M TO RESI/ WAGE CUTS EV5 :5 PRICES >E FALL+1 LEAD+ TO A RISE 9 !IR REAL WAGES & SO !Y PRICE !MSELVES \T ( WORK )\T REALIZ+ IT4 ,FROM ?IS ANALYSIS COMES ! >GUM5T ?AT IF WORK]S W]E ALL[$ TO COMPETE 'FREELY' AMONG !MSELVES = JOBS1 REAL WAGES W\LD DECREASE & SO UNEMPLOYM5T W\LD FALL4 ,/ATE 9T]V5TION 7E4G4 UNEMPLOYM5T B5EFIT1 SOCIAL WELF>E PROGRAMS1 LEGAL RI<TS TO ORGANIZE1 M9IMUM WAGE LAWS1 ETC47 & LABOR UNION ACTIVITY >E1 ACCORD+ TO ?IS !ORY1 ! CAUSE ( UNEMPLOYM5T1 AS SU* 9T]V5TION & ACTIVITY =CES WAGES ABOVE !IR M>KET LEVEL & SO =CE EMPLOY]S TO 0LET PEOPLE GO40 ,! KEY TO 5D+ UNEMPLOYM5T IS SIMPLE3 CUT WAGES4 

,SO WAGES MU/ BE CUT AS PR(ITS PROVIDE ! MOTIVE P[] = BUS9ESS ACTIVITY4 ,YET WAGE CUTT+ IS ADVOCAT$ DESPITE WORK]S NOT SETT+ 9T]E/ RATES NOR MAK+ 9VE/M5T DECISIONS4 ,?US WORK+ CLASS PEOPLE MU/ PAY ! PRICE ( ! PR(IT SEEK+ ACTIVITIES ( !IR ECONOMIC MA/]S :O NOT ONLY PR(IT$ 9 GOOD TIMES1 BUT CAN EXPECT O!RS TO PAY ! PRICE 9 BAD ONES4 ,9 ! CURR5T ECONOMIC CLIMATE1 IT IS USEFUL TO EXPLA9 ! FLAWS 9 ! ECONOMICS :I* RATIONALIZES ?IS POSITION 9 ORD] TO BETT] COMBAT SU* >GUM5TS & PRES5T AN ALT]NATIVE TO BOL/] \R ACTIVITY4 

,>E WAGES REALLY TOO HI<8 

,FIR/1 WE MU/ QUE/ION ! UND]LY+ ASSUMPTION4 ,ON ! FACE ( IT1 >GU+ ?AT UNEMPLOYM5T 9 ,AM]ICA TODAY IS CAUS$ BY WAGES BE+ TOO HI< IS H>D TO SUPPORT4 ,ITS CURR5T ECONOMIC EXPANSION LOOKS LIKE BE+ ! FIR/ EV] 9 :I* M$IAN H\SEHOLD 9COME FAILS TO RECOV] ITS PREVI\S PEAK4 ,JOB GR[? HAS BE5 TEPID = MO/ ( IT & ! EMPLOYM5T-TO-POPULATION RATIO HAS REMA9$ WELL BEL[ ITS PREVI\S PEAK4 ,?IS COMES ON TOP ( ?REE DECADES ( WAGE /AGNATION DUR+ :I* H\SEHOLD 9COME ONLY GREW BECAUSE ( LONG] WORK+ H\RS & HAV+ BO? H\SEHOLD HEADS WORK4 

,ONLY ! LATE #aii BOOM 7BAS$ ON ! PREVI\S1 DOT4COM1 BUBBLE7 SAW M>K$ IMPROVEM5TS = WORK]S4 ,YET ! REALITY ( ! MU* PRAIS$ ,AM]ICAN LABOR M>KET 0FLEXIBILITY0 WAS %[N :5 !N HEAD ( ! ,U,S ,F$]AL ,RES]VE ,ALAN ,GRE5SPAN EXPLA9$ 9 #aiig :Y UNEMPLOYM5T MANAG$ TO FALL BEL[ ! /&>D ,N,A,I,R,U RATE )\T 9FLATION 9CREAS+3 

0,9CREASES 9 H\RLY COMP5SATION 444 HAVE CONT9U$ TO FALL F> %ORT ( :AT !Y W\LD HAVE BE5 HAD HI/ORICAL RELATION%IPS BETWE5 COMP5SATION GA9S & ! DEGREE ( LABOR M>KET TI<TNESS HELD 444 ,AS ,I SEE IT1 HEI<T5$ JOB 9SECURITY EXPLA9S A SIGNIFICANT P>T ( ! RE/RA9T ON COMP5SATION & ! CONSEQU5T MUT$ PRICE 9FLATION 444 ,! CONT9U$ RELUCTANCE ( WORK]S TO LEAVE !IR JOBS TO SEEK O!R EMPLOYM5T AS ! LABOR M>KET HAS TI<T5$ PROVIDES FUR!R EVID5CE ( SU* CONC]N1 AS DOES ! T5D5CY T[>D LONG] LABOR UNION CONTRACTS 444 ,! L[ LEVEL ( WORK /OPPAGES ( REC5T YE>S ALSO ATTE/S TO CONC]N AB\T JOB SECURITY 444 ,! CONT9U$ DECL9E 9 ! %>E ( ! PRIVATE WORK=CE 9 LABOR UNIONS HAS LIKELY MADE WAGES MORE RESPONSIVE TO M>KET =CES 444 ,[+ 9 P>T TO ! SUBDU$ BEHAVIOR ( WAGES1 PR(ITS & RATES ( RETURN ON CAPITAL HAVE RIS5 TO HI< LEVELS40.<#a.> 

,UND] SU* CIRCUM/ANCES1 IT IS OBVI\S :Y UNEMPLOYM5T C\LD DROP & 9FLATION REMA9 /EADY4 ,YET !RE IS A MASSIVE CONTRADICTION 9 ,GRE5SPAN'S ACC\NT4 ,AS WELL AS %[+ H[ KE5 ! ,F$]AL ,RES]VE 9VE/IGATES ! /ATE ( ! CLASS /RUGGLE1 READY TO 9T]V5E :5 ! WORK]S MAY BE W9N+1 IT ALSO SUGGE/S ?AT FLEXIBILITY WORKS JU/ ONE WAY3 

0,SOME ( ! FEATURES HI<LI<T$ BY ,GRE5SPAN REFLECT PRECISELY A LACK ( FLEXIBILITY 9 ! LABOR M>KET3 A LACK ( RESPONSE ( COMP5SATION TO TI<T LABOR M>KETS1 A RELUCTANCE ( WORK]S TO LEAVE !IR JOBS1 & ! PREVAL5CE ( LONG-T]M CONTRACTS ?AT LOCK EMPLOYM5T >RANGEM5TS = SIX OR MORE YE>S AT A TIME4 ,& SO ,GRE5SPAN'S PORTRAYAL ( ! UNIQUE FEATURES ( ! ,U,S MODEL SUGGE/S ?AT SOME?+ MORE ?AN FLEXIBILITY IS ! KEY +R$I5T AT WORK -- OR AT LEA/ ?AT 'FLEXIBILITY' IS BE+ 9T]PRET$ ONCE AGA9 FROM AN UNBALANC$ & ONE-SID$ P]SPECTIVE4 ,IT IS1 RA!R1 A HI< DEGREE ( LABOR M>KET DISCIPL9E ?AT SEEMS TO BE ! OP]ATIVE =CE4 ,U,S WORK]S REMA9 9SECURE DESPITE A RELATIVELY L[ UNEMPLOYM5T RATE1 & H5CE COMP5SATION GA9S 444 W]E MUT$4 ,?IS IMPLIES A CONSEQU5T R$I/RIBUTION ( 9COME FROM LABOR TO CAPITAL 444 ,GRE5SPAN'S /ORY IS MORE AB\T FE> ?AN IT IS AB\T FLEXIBILITY -- & H5CE ?IS FAM\S TE/IMONY HAS COME TO BE KN[N AS ,GRE5SPAN'S 'FE> FACTOR' HYPO!SIS1 9 :I* HE CONCISELY DESCRIB$ ! IMPORTANCE ( LABOR M>KET DISCIPL9E = HIS CONDUCT ( MONET>Y POLICY40.<#b.> 

,FLEXPLOITATION 

,SO :ILE ?IS ATTACK ON ! WAGES1 WORK+ CONDITIONS & SOCIAL WELF>E IS CONDUCT$ UND] ! PRE-,KEYNESIAN NOTION ( WAGES BE+ 0/ICKY0 D[NW>D1 ! UND]LY+ DESIRE IS TO IMPOSE A 0FLEXIBILITY0 :I* 5SURES ?AT WAGES >E 0/ICKY0 UPW>DS4 ,?IS SUGGE/S A C]TA9 ONE-SID$NESS TO ! 0FLEXIBILITY0 ( MOD]N LABOR M>KETS3 EMPLOY]S 5JOY ! ABILITY TO PRACTICE FLEXPOILATION BUT ! FLEXIBILITY ( WORK]S TO RESI/ IS R$UC$4 

,!RE IS A UNSPOK5 P>ADOX TO ?IS4 ,IF WE LOOK AT ! /AT$1 PUBLIC1 RATIONALE BEH9D 0FLEXIBILITY0 WE F9D A /RANGE FACT4 ,:ILE ! LABOR M>KET IS TO BE MADE MORE 0FLEXIBLE0 & 9 L9E ) IDEAL ( 0P]FECT COMPETITION01 ON ! CAPITALI/ SIDE NO ATTEMPT IS BE+ MADE TO BR+ IT 9TO L9E ) ?AT MODEL4 ,LET US NOT =GET ?AT P]FECT COMPETITION 7! !ORETICAL CONDITION 9 :I* ALL RES\RCES1 9CLUD+ LABOR1 WILL BE EFFICI5TLY UTILIZ$7 /ATES ?AT !RE MU/ BE A L>GE NUMB] ( BUY]S & SELL]S4 ,?IS IS ! CASE ON ! SELL]S SIDE ( ! 0FLEXIBLE0 LABOR M>KET1 BUT ?IS IS NOT ! CASE ON ! BUY]S 7:]E OLIGOPOLY REIGNS74 ,MO/ :O FAVOR LABOR M>KET 0FLEXIBILITY0 >E ALSO ?OSE MO/ AGA9/ ! BREAK+ UP ( BIG BUS9ESS & OLIGOPOLI/IC M>KETS OR >E AGA9/ ATTEMPTS TO /OP M]G]S BETWE5 DOM9ANT COMPANIES 9 & ACROSS M>KETS4 ,YET ! MODEL REQUIRES BO? SIDES TO BE MADE UP ( NUM]\S SMALL FIRMS )\T M>KET 9FLU5CE OR P[]4 ,SO :Y EXPECT MAK+ ONE SIDE MORE 0FLEXIBLE0 WILL HAVE A POSITIVE EFFECT ON ! :OLE8 

,!RE IS NO LOGICAL REASON = ?IS TO BE ! CASE -- 9 AN ECONOMY ) BO? UNIONS & BIG BUS9ESS1 REMOV+ ! =M] :ILE RETA9+ ! LATT] WILL NOT BR+ IT CLOS] TO ! IDEAL ( P]FECT COMPETITION4 ,) ! RESULT+ %IFT 9 P[] ON ! LABOR M>KET ?+S WILL GET WORSE AS 9COME IS DI/RIBUT$ FROM LABOR TO CAPITAL4 ,:I* IS1 WE MU/ /RESS1 PRECISELY :AT HAS HAPP5$ S9CE ! #a#i#hS & ! MU* LAUD$ 0RE=MS0 ( ! LABOR M>KET4 

,ALL ?IS IS UNSURPRIS+ = AN>*I/S AS WE RECOGNIZE ?AT 0FLEXIBILITY0 JU/ MEANS WEAK5+ ! B>GA9+ P[] ( LABOR 9 ORD] TO 9CREASE ! P[] & PR(ITS ( ! RI* 7H5CE ! EXPRESSION 0FLEXPLOITATION0674 ,A 0FLEXIBLE0 LABOR M>KET BASICALLY MEANS ONE 9 :I* WORK]S >E GLAD TO HAVE ANY JOB & FACE 9CREAS$ 9SECURITY AT WORK 7ACTUALLY1 09SECURITY0 W\LD BE A MORE HONE/ WORD TO USE TO DESCRIBE ! IDEAL ( A COMPETITIVE LABOR M>KET RA!R ?AN 0FLEXIBILITY0 BUT SU* HONE/Y W\LD LET ! CAT \T ( ! BAG74 

,KEYNESIANISM V]SUS ,KEYNES 

,! *A9 ( LOGIC 9 ?IS EXPLANATION = UNEMPLOYM5T IS ROOT$ 9 MANY ( ! KEY ASSUMPTIONS ( NEO-CLASSICAL ECONOMICS - A FIRM'S DEM& = LABOR IS ! M>G9AL PHYSICAL PRODUCT ( LABOR MULTIPLI$ BY ! PRICE ( ! \TPUT & SO IT IS DEP5D5T ON M>G9AL PRODUCTIVITY !ORY4 ,IT IS ASSUM$ ?AT !RE >E DIM9I%+ RETURNS & M>G9AL PRODUCTIVITY AS ONLY ?IS PRODUCES A D[NW>D-SLOP+ LABOR DEM& CURVE4 ,= LABOR1 IT IS ASSUM$ ?AT ITS SUPPLY CURVE IS UPW>DS SLOPP+4 ,SO M>G9AL PRODUCTIVITY !ORY LIES AT ! CORE ( NEO-CLASSICAL !ORIES ( \TPUT & DI/RIBUTION & SO ! M>G9AL PRODUCT ( LABOR IS 9T]PRET$ AS ! LABOR DEM& CURVE4 ,?IS 5=CES ! VIEWPO9T ?AT UNEMPLOYM5T IS CAUS$ BY WAGES BE+ TOO HI< AS FIRMS ADJU/ PRODUCTION TO BR+ ! M>G9AL CO/ ( !IR PRODUCTS 7! CO/ ( PRODUC+ ONE MORE ITEM7 9TO EQUALITY ) ! PRODUCT'S M>KET-DET]M9$ PRICE4 ,SO A DROP 9 LABOR CO/S !ORETICALLY LEADS TO AN EXPANSION 9 PRODUCTION1 PRODUC+ JOBS = ! 0TEMPOR>ILY0 UNEMPLOY$ & MOV+ ! ECONOMY T[>D FULL-EMPLOYM5T4 

,SADLY = !SE >GUM5TS1 ! ASSUMPTIONS REQUIR$ TO REA* IT >E ABSURD AS ! CONCLUSIONS 7NAMELY1 ?AT !RE IS NO 9VOLUNT>Y UNEMPLOYM5T AS M>KETS >E FULLY EFFICI5T74 ,MORE P]NICI\SLY1 :5 CONFRONT$ ) ! REALITY ( UNEMPLOYM5T1 MO/ SUPPORT]S ( ?IS VIEW >GUE ?AT IT >ISES ONLY BECAUSE ( GOV]NM5T-IMPOS$ RIGIDITIES & TRADE UNIONS4 ,9 !IR 0IDEAL0 WORLD )\T EI!R1 !RE W\LD1 !Y CLAIM1 BE NO UNEMPLOYM5T4 ,( C\RSE1 IT IS MU* EASI] TO DEM& ?AT NO?+ %\LD BE DONE TO ALLEVIATE UNEMPLOYM5T & ?AT WORK]S' REAL WAGES BE R$UC$ :5 Y\ >E SITT+ 9 A T5UR$ PO/ 9 ACADEMIA SAVE FROM ! LABOR M>KET =CES Y\ WI% O!RS TO BE SUBJECT$ TO 79 !IR [N 9T]E/S74 

,?IS P]SPECTIVE SUFF]$ DUR+ ! ,GREAT ,DEPRESSION & ! ?REAT ( REVOLUTION PRODUC$ BY P]SI/5T MASS UNEMPLOYM5T MEANT ?AT DISSID5T ECONOMI/S HAD SPACE TO QUE/ION ! OR?ODOXY4 ,AT ! HEAD ( ?IS REEVALUATION WAS ,KEYNES :O PRES5T$ AN ALT]NATIVE ANALYSIS & SOLUTION TO ! PROBLEM ( UNEMPLOYM5T 9 HIS #aicf BOOK ,! ,G5]AL ,!ORY ( ,EMPLOYM5T1 ,9T]E/ & ,MONEY4.<#c.> 

,SOME:AT IRONICALLY1 GIV5 ! ABUSE HE HAS SUFF]$ AT ! H&S ( ! RI<T 7& SOME ( HIS SELF-PROCLAIM$ FOLL[]S71 ,KEYNES TOOK ! ASSUMPTIONS ( NEO-CLASSICAL ECONOMICS ON ! LABOR M>KET AS ! />T+ PO9T ( HIS ANALYSIS1 NAMELY ?AT UNEMPLOYM5T WAS CAUS$ BY WAGES BE+ TOO HI<4 ,H[EV]1 HE WAS AT PA9S TO /RESS ?AT EV5 ) IDEALLY FLEXIBLE LABOR M>KETS CUTT+ REAL WAGES W\LD NOT R$UCE UNEMPLOYM5T4 

,KEYNES >GU$ ?AT UNEMPLOYM5T WAS NOT CAUS$ BY LABOR RESI/+ WAGE CUTS OR BY 0/ICKY0 WAGES4 ,9DE$1 ANY 0,KEYNESIAN0 ECONOMI/ :O DOES >GUE ?AT 0/ICKY0 WAGES >E RESPONSIBLE = UNEMPLOYM5T %[S ?AT HE OR %E HAS NOT READ ,KEYNES -- ,*APT] TWO ( ! ,G5]AL ,!ORY CRITIQUES PRECISELY ?IS >GUM5T4 ,TAK+ NEO-CLASSICAL ECONOMI/S AT ITS WORD1 ,KEYNES ANALYZES :AT W\LD HAPP5 IF ! LABOR M>KET W]E P]FECT & SO HE ASSUMES ! SAME MODEL AS HIS NEO-CLASSICAL OPPON5TS1 NAMELY ?AT UNEMPLOYM5T IS CAUS$ BY WAGES BE+ TOO HI< & !RE IS FLEXIBILITY 9 BO? COMMODITY & LABOR M>KETS4 ,AS HE /RESS$1 HIS 0CRITICISM ( ! ACCEPT$ .<NEO-.>CLASSICAL !ORY ( ECONOMICS HAS CONSI/$ NOT SO MU* 9 F9D+ LOGICAL FLAWS 9 ITS ANALYSIS AS 9 PO9T+ \T ?AT ITS TACIT ASSUMPTIONS >E SELDOM OR NEV] SATISFI$1 ) ! RESULT ?AT IT CANNOT SOLVE ! ECONOMIC PROBLEMS ( ! ACTUAL WORLD40.<#d.> 

,:AT ,KEYNES DID WAS TO CONSID] ! OV]ALL EFFECT ( CUTT+ WAGES ON ! ECONOMY AS A :OLE4 ,GIV5 ?AT WAGES MAKE UP A SIGNIFICANT P>T ( ! CO/S ( A COMMODITY1 0IF MONEY-WAGES *ANGE1 ONE W\LD HAVE EXPECT$ ! .<NEO-.>CLASSICAL S*OOL TO >GUE ?AT PRICES W\LD *ANGE 9 ALMO/ ! SAME PROPORTION1 LEAV+ ! REAL WAGE & ! LEVEL ( UNEMPLOYM5T PRACTICALLY ! SAME AS BE=E40 ,H[EV]1 ?IS WAS NOT ! CASE1 CAUS+ ,KEYNES TO PO9T \T ?AT !Y 0DO NOT SEEM TO HAVE REALIZ$ ?AT 444 !IR SUPPLY CURVE = LABOR WILL %IFT BODILY ) EV]Y MOVEM5T ( PRICES40 ,?IS WAS BECAUSE LABOR CANNOT DET]M9E ITS [N REAL WAGE AS PRICES >E CONTROLL$ BY BOSSES4 ,ONCE ?IS IS RECOGNIZ$1 IT BECOMES OBVI\S ?AT WORK]S DO NOT CONTROL ! CO/ ( LIV+ 7I4E41 ! REAL WAGE74 ,!RE=E TRADE UNIONS 0DO NOT RAISE ! OB/ACLE TO ANY 9CREASE 9 AGGREGATE EMPLOYM5T :I* IS ATTRIBUT$ TO !M BY ! .<NEO-.>CLASSICAL S*OOL40 ,SO :ILE WORK]S C\LD1 9 !ORY1 CONTROL !IR WAGES BY ASK+ = LESS PAY 7OR1 MORE REALI/ICALLY1 ACCEPT+ ANY WAGE CUTS IMPOS$ BY !IR BOSSES AS ! ALT]NATIVE IS UNEMPLOYM5T7 !Y DO NOT HAVE ANY CONTROL OV] ! PRICES ( ! GOODS !Y PRODUCE4 ,?IS MEANS ?AT !Y HAVE NO CONTROL OV] !IR REAL WAGES & SO CANNOT R$UCE UNEMPLOYM5T BY PRIC+ !MSELVES 9TO WORK BY ACCEPT+ L[] WAGES4 ,GIV5 !SE OBVI\S FACTS1 ,KEYNES CONCLUD$ ?AT !RE WAS 0NO GR\ND = ! BELIEF ?AT A FLEXIBLE WAGE POLICY IS CAPABLE ( CONT9U\S FULL EMPLOYM5T 444 ,! ECONOMIC SY/EM CANNOT BE MADE SELF-ADJU/+ ALONG !SE L9ES40.<#e.> ,AS HE SUMM>IZ$3 

0! CONT5TION ?AT ! UNEMPLOYM5T :I* *>ACT]IZES A DEPRESSION IS DUE TO A REFUSAL BY LABOR TO ACCEPT A R$UCTION ( MONEY-WAGES IS NOT CLE>LY SUPPORT$ BY ! FACTS4 ,IT IS NOT V]Y PLAUSIBLE TO ASS]T ?AT UNEMPLOYM5T 9 ! ,UNIT$ ,/ATES 9 #aicb WAS DUE EI!R TO LABOR OB/9ATELY REFUS+ TO ACCEPT A R$UCTION ( MONEY-WAGES OR TO ITS DEM&+ A REAL WAGE BEYOND :AT ! PRODUCTIVITY ( ! ECONOMIC MA*9E WAS CAPABLE ( FURNI%+ 444 ,LABOR IS NOT MORE TRUCUL5T 9 ! DEPRESSION ?AN 9 ! BOOM -- F> FROM IT4 ,NOR IS ITS PHYSICAL PRODUCTIVITY LESS4 ,!SE FACTS FROM EXP]I5CE >E A PRIMA FACIE GR\ND = QUE/ION+ ! ADEQUACY ( ! .<NEO-.>CLASSICAL ANALYSIS40.<#f.> 

,?IS MEANS ?AT ! /&>D NEO-CLASSICAL >GUM5T WAS FLAW$4 ,:ILE CUTT+ WAGES MAY MAKE S5SE = ONE FIRM1 IT W\LD NOT HAVE ?IS EFFECT ?R\<\T ! ECONOMY AS IS REQUIR$ TO R$UCE UNEMPLOYM5T AS A :OLE4 ,?IS IS ANO!R EXAMPLE ( ! FALLACY ( COMPOSITION4 ,:AT MAY WORK ) AN 9DIVIDUAL WORK] OR FIRM WILL NOT HAVE ! SAME EFFECT ON ! ECONOMY AS A :OLE = CUTT+ WAGES = ALL WORK]S W\LD HAVE A MASSIVE EFFECT ON ! AGGREGATE DEM& = !IR FIRM'S PRODUCTS4 

,!RE W]E TWO POSSIBILITIES IF WAGES W]E CUT4 ,ONE POSSIBILITY1 :I* ,KEYNES CONSID]$ ! MO/ LIKELY1 W\LD BE ?AT A CUT 9 MONEY WAGES ACROSS ! :OLE ECONOMY W\LD SEE A SIMIL> CUT 9 PRICES4 ,! NET EFFECT ( ?IS W\LD BE TO LEAVE REAL WAGES UN*ANG$4 ,! O!R ASSUMES ?AT AS WAGES >E CUT1 PRICES REMA9 PRICES REMA9$ UN*ANG$ OR ONLY FELL BY A SMALL AM\NT 7I4E4 IF WEAL? WAS R$I/RIBUT$ FROM WORK]S TO !IR EMPLOY]S74 ,?IS IS ! UND]LY+ ASSUMPTION ( 0FREE M>KET0 >GUM5T ?AT CUTT+ WAGES W\LD 5D ! SLUMP4 ,9 ?IS !ORY1 CUTT+ REAL WAGES W\LD 9CREASE PR(ITS & 9VE/M5T & ?IS W\LD MAKE UP = ANY DECL9E 9 WORK+ CLASS CONSUMPTION & SO ITS SUPPORT]S REJECT ! CLAIM ?AT CUTT+ REAL WAGES W\LD M]ELY DECREASE ! DEM& = CONSUM] GOODS )\T AUTOMATICALLY 9CREAS+ 9VE/M5T SUFFICI5TLY TO COMP5SATE = ?IS4 

,H[EV]1 9 ORD] MAKE ?IS CLAIM1 ! !ORY DEP5DS ON ?REE CRITICAL ASSUMPTIONS1 NAMELY ?AT FIRMS CAN EXP& PRODUCTION1 ?AT !Y WILL EXP& PRODUCTION1 & ?AT1 IF !Y DO1 !Y CAN SELL !IR EXP&$ PRODUCTION4 ,?IS !ORY & ITS ASSUMPTIONS CAN BE QUE/ION$4 

,! FIR/ ASSUMPTION /ATES ?AT IT IS ALWAYS POSSIBLE = A COMPANY TO TAKE ON NEW WORK]S4 ,YET 9CREAS+ PRODUCTION REQUIRES MORE ?AN JU/ LABOR4 ,TOOLS1 RAW MAT]IALS & WORK SPACE >E ALL REQUIR$ 9 ADDITION TO NEW WORK]S4 ,IF PRODUCTION GOODS & FACILITIES >E NOT AVAILABLE1 EMPLOYM5T WILL NOT BE 9CREAS$4 ,!RE=E ! ASSUMPTION ?AT LABOR CAN ALWAYS BE ADD$ TO ! EXI/+ /OCK TO 9CREASE \TPUT IS PLA9LY UNREALI/IC1 P>TICUL>LY IF WE ASSUME ) NEO-CLASSICAL ECONOMICS ?AT ALL RES\RCES >E FULLY UTILIZ$ 7= AN ECONOMY OP]AT+ AT LESS ?AN FULL CAPACITY1 ! ASSUMPTION IS SOME:AT LESS 9APPROPRIATE74 

,NEXT1 WILL FIRMS EXP& PRODUCTION :5 LABOR CO/S DECL9E8 ,H>DLY4 ,9CREAS+ PRODUCTION WILL 9CREASE SUPPLY & EAT 9TO ! EXCESS PR(ITS RESULT+ FROM ! FALL 9 WAGES 7ASSUM+1 ( C\RSE1 ?AT DEM& HOLDS UP 9 ! FACE ( FALL+ WAGES74 ,IF UNEMPLOYM5T DID RESULT 9 A L[]+ ( ! G5]AL M>KET WAGE1 COMPANIES MI<T USE ! OPPORTUNITY TO REPLACE !IR CURR5T WORK]S OR =CE !M TO TAKE A PAY CUT4 ,IF ?IS HAPP5$1 NEI!R PRODUCTION NOR EMPLOYM5T W\LD 9CREASE4 ,H[EV]1 IT C\LD BE >GU$ ?AT ! EXCESS PR(ITS W\LD 9CREASE CAPITAL 9VE/M5T 9 ! ECONOMY 7A KEY ASSUMPTION ( NEO-LIB]ALISM74 ,! REPLY IS OBVI\S3 P]HAPS1 P]HAPS NOT4 ,A SLUMP+ ECONOMY MI<T WELL 9DUCE F9ANCIAL CAUTION & SO CAPITALI/S C\LD /ALL 9VE/M5T UNTIL !Y >E CONV9C$ ( ! SU/A9$ HI<] PR(ITABILITY WILL LA/4 

,?IS FE$S DIRECTLY 9TO ! LA/ ASSUMPTION1 NAMELY ?AT ! PRODUC$ GOODS WILL BE SOLD4 ,ASSUM+ ?AT MONEY WAGES >E CUT1 BUT PRICES REMA9 ! SAME !N ?IS W\LD BE A CUT 9 REAL WAGES4 ,BUT :5 WAGES DECL9E1 SO DOES WORK] PUR*AS+ P[]1 & IF ?IS IS NOT (FSET BY AN 9CREASE 9 SP5D+ ELSE:]E1 !N TOTAL DEM& WILL DECL9E4 ,H[EV]1 IT CAN BE >GU$ ?AT NOT EV]YONE'S REAL 9COME W\LD FALL3 9COMES FROM PR(ITS W\LD 9CREASE4 ,BUT R$I/RIBUT+ 9COME FROM WORK]S TO CAPITALI/S1 A GR\P :O T5D TO SP5D A SMALL] PORTION ( !IR 9COME ON CONSUMPTION ?AN DO WORK]S1 C\LD R$UCE EFFECTIVE DEM& & 9CREASE UNEMPLOYM5T4 ,MOREOV]1 BUS9ESS DOES NOT 7CANNOT7 9/ANTANE\SLY MAKE USE ( ! 5L>G$ FUNDS RESULT+ FROM ! %IFT ( WAGES TO PR(IT = 9VE/M5T 7EI!R BECAUSE ( F9ANCIAL CAUTION OR LACK ( EXI/+ FACILITIES74 ,9 ADDITION1 :I* SANE COMPANY W\LD 9CREASE 9VE/M5T 9 ! FACE ( FALL+ DEM& = ITS PRODUCTS8 ,SO :5 WAGES DECL9E1 SO DOES WORK]S' PUR*AS+ P[] & ?IS IS UNLIKELY TO BE (FSET BY AN 9CREASE 9 SP5D+ ELSE:]E4 ,?IS WILL LEAD TO A R$UCTION 9 AGGREGATE DEM& AS PR(ITS >E ACCUMULAT$ BUT UNUS$1 SO LEAD+ TO /OCKS ( UNSOLD GOODS & R5EW$ PRICE R$UCTIONS4 ,?IS MEANS ?AT ! CUT 9 REAL WAGES WILL BE CANCEL$ \T BY PRICE CUTS TO SELL UNSOLD /OCK & UNEMPLOYM5T REMA9S4 ,9 O!R WORDS1 CONTR>Y TO NEO-CLASSICAL ECONOMICS1 A FALL 9 WAGES MAY RESULT 9 ! SAME OR EV5 MORE UNEMPLOYM5T AS AGGREGATE DEM& DROPS & COMPANIES CANNOT F9D A M>KET = !IR GOODS4 

,SO1 AS IS (T5 ! CASE1 ,KEYNES WAS SIMPLY 9CLUD+ 9TO MA9/REAM ECONOMICS P]SPECTIVES :I* HAD LONG BE5 HELD BY CRITICS ( CAPITALISM & DISMISS$ BY ! OR?ODOXY4 ,KEYNES' CRITIQUE ( ,SAY'S ,LAW ESS5TIALLY REPEAT$ ,M>X'S :ILE ,PR\DHON PO9T$ \T 9 #ahdf ?AT 0IF ! PRODUC] E>NS LESS1 HE WILL BUY LESS0 & ?IS WILL 05G5D] 444 OV]-PRODUCTION & DE/ITUTION40 ,?IS WAS BECAUSE 0?\< ! WORKM5 CO/ .<! CAPITALI/.> SOME?+1 !Y >E .<HIS.> CU/OM]S3 :AT WILL Y\ DO ) Y\R PRODUCTS1 :5 DRIV5 AWAY BY .<HIM.>1 !Y %ALL CONSUME NO LONG]80 ,?IS MEANS ?AT CUTT+ WAGES & EMPLOYM5T W\LD NOT WORK = !Y >E 0NOT SL[ 9 DEAL+ EMPLOY]S A C\NT]-BL[2 = IF PRODUCTION EXCLUDES CONSUMPTION1 IT IS SOON OBLIG$ TO /OP ITSELF40.<#g.> 

,AN UNSCI5TIFIC SCI5CE 

,SO F> \R CRITIQUE ( ! 0FREE M>KET0 POSITION HAS1 LIKE ,KEYNES'S1 BE5 )9 ! ASSUMPTIONS ( ?AT !ORY ITSELF4 ,MORE HAS TO BE SAID1 ?\<1 AS ITS ASSUMPTIONS >E DEEPLY FLAW$ & UNREALI/IC4 ,IT %\LD BE /RESS$ ?AT :ILE ,KEYNES'S ACCEPTANCE ( MU* ( ! OR?ODOXY 5SUR$ ?AT AT LEA/ SOME ( HIS IDEAS BECOME P>T ( ! MA9/REAM1 ,PO/-,KEYNESIANS LIKE ,JOAN ,ROB9SON W\LD LATT] BEMOAN ! FACT ?AT HE S\<T A COMPROMISE RA!R ?AN CLEAN BREAK ) ! OR?ODOXY4 ,?IS LEAD TO ! RISE ( ! PO/W> NEO-CLASSICAL SYN!SIS1 ! SO-CALL$ 0,KEYNESIAN0 >GUM5T ?AT UNEMPLOYM5T WAS CAUS$ BY WAGES BE+ 0/ICKY0 & ! MEANS BY :I* ! RI<T C\LD UND]M9E SOCIAL ,KEYNESIANISM & 5SURE A RETURN TO NEO-CLASSICAL OR?ODOXY4 

,FIR/1 !RE IS ! ROLE ( DIM9I%+ RETURNS4 ,! ASSUMPTION ?AT ! DEM& CURVE = LABOR IS ALWAYS D[NW>D SLOP+ ) RESPECT TO AGGREGATE EMPLOYM5T IS ROOT$ 9 ! NOTION ?AT 9DU/RY OP]ATES1 AT LEA/ 9 ! %ORT RUN1 UND] CONDITIONS ( DIM9I%+ RETURNS4 ,H[EV]1 DIM9I%+ RETURNS >E NOT A FEATURE ( 9DU/RIES 9 ! REAL WORLD4 ,?US ! ASSUMPTION ?AT ! D[NW>D SLOPP+ M>G9AL PRODUCT ( LABOR CURVE IS ID5TICAL TO ! AGGREGATE DEM& CURVE = LABOR IS NOT TRUE AS IT IS 9CONSI/5T ) EMPIRICAL EVID5CE4 0,9 A SY/EM AT 9CREAS+ RETURNS10 NOT$ ONE ECONOMI/1 0! DIRECT RELATION BETWE5 REAL WAGES & EMPLOYM5T T5DS TO R5D] ! ORD9>Y ME*ANISM ( WAGE ADJU/M5T 9EFFECTIVE & UN/ABLE40.<#h.> ,9 FACT1 )\T ?IS ASSUMPTION MA9/REAM ECONOMICS CANNOT %[ ?AT UNEMPLOYM5T IS1 9 FACT1 CAUS$ BY REAL WAGES BE+ TOO HI< 7ALONG ) MANY O!R ?+S74 

,SIGNIFICANTLY1 ACTUAL CORPORATE PRICE IS UTT]LY DIFF]5T FROM ! ECONOMIC !ORY4 ,?IS WAS DISCOV]$ :5 RESE>*]S DID :AT ! ORIG9AL !ORI/S DID NOT ?9K WAS RELEVANT3 !Y ACTUALLY ASK$ FIRMS :AT !Y DID & ! RESE>*]S CONSI/5TLY F\ND ?AT1 = ! VA/ MAJORITY ( MANUFACTUR+ FIRMS !IR AV]AGE CO/S ( PRODUCTION DECL9$ AS \TPUT ROSE1 !IR M>G9AL CO/S W]E ALWAYS WELL BEL[ !IR AV]AGE CO/S1 & SUB/ANTIALLY SMALL] ?AN 'M>G9AL REV5UE'1 & ! CONCEPT ( A 'DEM& CURVE' 7& !RE=E ITS D]IVATIVE 'M>G9AL REV5UE'7 WAS SIMPLY IRRELEVANT4 ,UNSURPRIS+LY1 REAL FIRMS SET !IR PRICES PRIOR TO SALES1 BAS$ ON A M>KUP ON CO/S AT A T>GET RATE ( \TPUT4 ,9 O!R WORDS1 !Y DID NOT PASSIVELY REACT TO ! M>KET4 ,!SE PRICES >E AN ESS5TIAL FEATURE ( CAPITALISM AS PRICES >E SET TO MA9TA9 ! LONG-T]M VIABILITY ( ! FIRM4 ,?IS1 & ! UND]LY+ REALITY ?AT P]-UNIT CO/S FELL AS \TPUT LEVELS ROSE1 RESULT$ 9 F> MORE /ABLE PRICES ?AN W]E PR$ICT$ BY TRADITIONAL ECONOMIC !ORY4 

,NO O!R SCI5CE W\LD ?9K IT APPROPRIATE TO DEVELOP !ORY UTT]LY 9DEP5D5TLY ( PH5OM5ON UND] ANALYSIS4 ,NO O!R SCI5CE W\LD WAIT DECADES BE=E TE/+ A !ORY AGA9/ REALITY4 ,NO O!R SCI5CE W\LD !N SIMPLY IGNORE ! FACTS :I* UTT]LY CONTRADICT$ ! !ORY & CONT9UE TO TEA* ?AT !ORY AS IF IT W]E A VALID G5]ALIZATION ( ! FACTS4 ,BUT1 !N1 ECONOMICS IS NOT A SCI5CE4 ,H[EV]1 IT MAKES S5SE ONCE :AT HAPP5S :5 ! ASSUMPTION ( 9CREAS+ M>G9AL CO/S IS AB&ON$4 ,AS ,/EVE ,KE5 PUTS IT3 

0,/RANGE AS IT MAY SEEM 444 ?IS IS A V]Y BIG DEAL4 ,IF M>G9AL RETURNS >E CON/ANT RA!R ?AN FALL+1 !N ! NEO-CLASSICAL EXPLANATION ( EV]Y?+ COLLAPSES4 ,NOT ONLY CAN ECONOMIC !ORY NO LONG] EXPLA9 H[ MU* A FIRM PRODUCES1 IT CAN EXPLA9 NO?+ ELSE4 

0,TAKE1 = EXAMPLE1 ! ECONOMIC !ORY ( EMPLOYM5T & WAGE DET]M9ATION 444 ,! !ORY ASS]TS ?AT ! REAL WAGE IS EQUIVAL5T TO ! M>G9AL PRODUCT ( LABOR 444 ,AN EMPLOY] WILL EMPLOY AN ADDITIONAL WORK] IF ! AM\NT ! WORK] ADDS TO \TPUT -- ! WORK]'S M>G9AL PRODUCT -- EXCE$S ! REAL WAGE 444 .<,?IS.> EXPLA9S ! ECONOMIC PR$ILECTION = BLAM+ EV]Y?+ ON WAGES BE+ TOO HI< -- NEO-CLASSICAL ECONOMICS CAN BE SUMM$ UP1 AS .<,JOHN ,K5NE?.> ,GALBRAI? ONCE REM>K$1 9 ! TW9 PROPOSITIONS ?AT ! POOR DON'T WORK H>D 5\< BECAUSE !Y'RE PAID TOO MU*1 & ! RI* DON'T WORK H>D 5\< BECAUSE !Y'RE NOT PAID 5\< 444 

0,IF 9 FACT ! \TPUT TO EMPLOYM5T RELATION%IP IS RELATIVELY CON/ANT1 !N ! NEO-CLASSICAL EXPLANATION = EMPLOYM5T & \TPUT DET]M9ATION COLLAPSES4 ,) A FLAT PRODUCTION FUNCTION1 ! M>G9AL PRODUCT ( LABOR WILL BE CON/ANT1 & IT WILL NEV] 9T]SECT ! REAL WAGE4 ,! \TPUT ( ! =M !N CAN'T BE EXPLA9$ BY ! CO/ ( EMPLOY+ LABOR444 .<,?IS MEANS ?AT.> NEO-CLASSICAL ECONOMICS SIMPLY CANNOT EXPLA9 ANY?+3 NEI!R ! LEVEL ( EMPLOYM5T1 NOR \TPUT1 NOR1 ULTIMATELY1 :AT DET]M9ES ! REAL WAGE 444! 5TIRE $IFICE ( ECONOMICS COLLAPSES40.<#i.> 

,NOT-SO M>G9AL PROBLEMS 

,! >GUM5T ?AT UNEMPLOYM5T IS CAUS$ BY WAGES BE+ TOO HI< IS RELAT$ TO ! M>G9ALI/ !ORY ( DI/RIBUTION4.<#a.> ,9 ?AT !ORY1 ! M>G9AL PRODUCT ( LABOR IS 9T]PRET$ AS ! LABOR DEM& CURVE AS ! FIRM'S DEM& = LABOR IS ! M>G9AL PHYSICAL PRODUCT ( LABOR MULTIPLI$ BY ! PRICE ( ! \TPUT & ?IS PRODUCES ! VIEWPO9T ?AT UNEMPLOYM5T IS CAUS$ BY WAGES BE+ TOO HI<4 ,! ASSUMPTION ?AT ADD+ MORE LABOR TO CAPITAL IS ALWAYS POSSIBLE FL[S FROM ! ASSUMPTION ( M>G9AL PRODUCTIVITY !ORY :I* TREATS 0CAPITAL0 LIKE AN ECTOPLASM & CAN BE MOLD$ 9TO :ATEV] =M IS REQUIR$ BY ! LABOR AVAILABLE4 ,TAKE1 = EXAMPLE1 LEAD+ NEOCLASSICAL ,D5NIS ,ROB]TSON'S #aica ATTEMPT TO EXPLA9 ! M>G9AL PRODUCTIVITY ( LABOR :5 HOLD+ 0CAPITAL0 CON/ANT3 

0,IF T5 M5 >E TO BE SET \T TO DIG A HOLE 9/EAD ( N9E1 !Y WILL BE FURNI%$ ) T5 *EAP] SPADES 9/EAD ( N9E MORE EXP5SIVE ONES2 OR P]HAPS IF !RE IS NO ROOM = HIM TO DIG COM=TABLY1 ! T5? MAN WILL BE FURNI%$ ) A BUCKET & S5T TO FET* BE] = ! O!R N9E40.<#a#a.> 

,SO TO WORK \T ! M>G9AL PRODUCTIVITY ( ! FACTORS 9VOLV$1 0T5 *EAP] SPADES0 SOMEH[ EQUALS N9E MORE EXP5SIVE SPADES8 ,H[ IS ?IS KEEP+ CAPITAL CON/ANT8 ,& H[ DOES ?IS REFLECT REALITY8 ,SURELY1 ANY REAL WORLD EXAMPLE W\LD 9VOLVE S5D+ ! T5? DIGG] TO GET ANO!R SPADE8 ,& H[ DO N9E EXP5SIVE SPADES BECOME T5 *EAP] ONES8 ,9 ! REAL WORLD1 ?IS IS IMPOSSIBLE BUT 9 NEOCLASSICAL ECONOMICS ?IS IS NOT ONLY POSSIBLE BUT REQUIR$ = ! !ORY TO WORK4 ,AS ,ROB9SON >GU$1 9 NEO-CLASSICAL !ORY ! 0CONCEPT ( CAPITAL ALL ! MAN-MADE FACTORS >E BOIL$ 9TO ONE1 :I* WE MAY CALL LEETS 444 .<:I*.>1 ?\< ALL MADE UP ( ONE PHYSICAL SUB/ANCE1 IS 5D[$ ) ! CAPACITY TO EMBODY V>I\S TE*NIQUES ( PRODUCTION 444 & A *ANGE ( TE*NIQUE CAN BE MADE SIMPLY BY SQUEEZ+ UP OR SPREAD+ \T LEETS1 9/ANTANE\SLY & )\T CO/40.<#a#b.> ,:ILE ?IS ALL[S ECONOMICS TO AVOID ! OBVI\S AGGREGATION PROBLEMS ) 0CAPITAL0 IT ALSO 5SURES REALITY HAS TO BE IGNOR$ & SO ECONOMIC !ORY NE$ NOT DISCUSS ANY PRACTICAL QUE/IONS3 

0,:5 EQUIPM5T IS MADE ( LEETS1 !RE IS NO DI/9CTION BETWE5 LONG & %ORT-P]IOD PROBLEMS 444 ,N9E SPADES >E LUMPS ( LEETS2 :5 ! T5? MAN TURNS UP IT IS SQUEEZ$ \T TO PROVIDE HIM ) A %>E ( EQUIPM5T N9E-T5?S ( :AT EA* MAN HAD BE=E 444 ,!RE IS NO ROOM = IMP]FECT COMPETITION4 ,!RE IS NO POSSIBILITY ( DISAPPO9T$ EXPECTATIONS 444 ,!RE IS NO PROBLEM ( UNEMPLOYM5T 444 ,UNEMPLOY$ WORK]S W\LD BID D[N WAGES & ! PREEXI/+ QUANTITY ( LEETS W\LD BE SPREAD \T TO ACCOMMODATE !M40.<#a#c.> 

,( C\RSE1 IT IS NOT MEANT TO BE TAK5 LIT]ALLY1 IT IS ONLY A P>ABLE1 BUT )\T IT ! :OLE >GUM5T COLLAPSES4 ,ONCE CAPITAL EQUIPM5T IS ADMITT$ TO BE+ ACTUAL1 SPECIFIC OBJECTS ?AT CANNOT BE SQUEEZ$1 )\T CO/1 9TO NEW OBJECTS TO ACCOMMODATE MORE OR LESS WORK]S1 SU* COM=T+ NOTIONS ?AT PR(ITS EQUAL ! 7M>G9AL7 CONTRIBUTION ( 0CAPITAL0 OR ?AT UNEMPLOYM5T IS CAUS$ BY WAGES BE+ TOO HI< HAVE TO BE DISC>D$ = ! WI%FUL ?9K+ !Y MO/ SURELY >E4 

,H5CE ,JOAN ,ROB9SON'S DISMISSAL ( ?IS ASSUMPTION1 = 0) 'MALLEABLE' CAPITAL ! DEM& = LABOR DEP5DS ON ! LEVEL ( WAGES40.<#a#d.> ,MOREOV]1 0LABOR & CAPITAL >E NOT (T5 AS SMOO?LY SUB/ITUTABLE = EA* O!R AS ! .<NEO-CLASSICAL.> MODEL REQUIRES 444 ,Y\ CAN'T USE ONE )\T ! O!R4 ,Y\ CAN'T MEASURE ! M>G9AL PRODUCTIVITY ( ONE )\T ! O!R40 ,DEM& = CAPITAL & LABOR IS1 SOMETIMES1 A JO9T DEM& & SO IT IS (T5 IMPOSSIBLE TO ADJU/ WAGES TO A WORK]'S M>G9AL PRODUCTIVITY 9DEP5D5T ( ! CO/ ( CAPITAL4.<#a#e.> 

,CUTT+ WAGES & REALITY 

,?US1 IF WE ACCEPT REALITY1 WE MU/ 5D UP 0D5Y+ ! 9EVITABILITY ( A NEGATIVE RELATION%IP BETWE5 REAL WAGES & EMPLOYM5T40 ,PO/-,KEYNESIAN ECONOMI/S HAVE NOT F\ND ANY EMPIRICAL L9KS BETWE5 ! GR[? ( UNEMPLOYM5T S9CE ! E>LY 9 #a#i#gS & *ANGES 9 ! RELATION%IP BETWE5 PRODUCTIVITY & WAGES & SO !RE IS 0NO !ORETICAL REASON TO EXPECT A NEGATIVE RELATION%IP BETWE5 EMPLOYM5T & ! REAL WAGE1 EV5 AT ! LEVEL ( ! 9DIVIDUAL FIRM40 ,EV5 ! BELOV$ M>G9AL ANALYSIS CANNOT BE US$ 9 ! LABOR M>KET1 AS 0.<M.>O/ JOBS >E (F]$ ON A TAKE-IT-OR-LEAVE-IT BASIS4 ,WORK]S HAVE LITTLE OR NO SCOPE TO V>Y H\RS ( WORK1 !REBY MAK+ M>G9AL TRADE(FS BETWE5 9COME & LEISURE4 ,!RE IS ?US NO WORK] SOV]EIGNTY CORRESPOND+ TO ! 7V]Y CONTROV]SIAL7 NOTION ( CONSUM] SOV]EIGNTY40 ,OV] ALL1 0IF A RELATION%IP EXI/S BETWE5 AGGREGATE EMPLOYM5T & ! REAL WAGE1 IT IS EMPLOYM5T ?AT DET]M9ES WAGES4 ,EMPLOYM5T & UNEMPLOYM5T >E PRODUCT M>KET V>IABLES1 NOT LABOR M>KET V>IABLES4 ,?US ATTEMPTS TO RE/ORE FULL EMPLOYM5T BY CUTT+ WAGES >E FUNDAM5TALLY MISGUID$40.<#a#f.> ,9 ADDITION3 

0,NEO-CLASSICAL !ORI/S !MSELVES HAVE CONC$$ ?AT A NEGATIVE RELATION%IP BETWE5 ! REAL WAGE & ! LEVEL ( EMPLOYM5T CAN BE E/ABLI%$ ONLY 9 A ONE-COMMODITY MODEL2 9 A MULTI-COMMODITY FRAMEWORK NO SU* G5]ALIZATION IS POSSIBLE4 ,?IS CONF9ES NEO-CLASSICAL !ORY TO AN ECONOMY )\T MONEY & MAKES IT 9APPLICABLE TO A CAPITALI/ OR 5TREPR5EURIAL ECONOMY40.<#a#g.> 

,ALL ?IS MEANS ?AT 0NEI!R ! DEM& = LABOR NOR ! SUPPLY ( LABOR DEP5DS ON ! REAL WAGE4 ,IT FOLL[S FROM ?IS ?AT ! LABOR M>KET IS NOT A TRUE M>KET1 = ! PRICE ASSOCIAT$ ) IT1 ! WAGE RATE1 IS 9CAPABLE ( P]=M+ ANY M>KET-CLE>+ FUNCTION1 & ?US V>IATIONS 9 ! WAGE RATE CANNOT ELIM9ATE UNEMPLOYM5T40.<#a#h.> 

,SUPPLY CURVE ISSUES 

,AS SU*1 ! 0CONV5TIONAL ECONOMIC ANALYSIS ( M>KETS 444 IS UNLIKELY TO APPLY0 TO ! LABOR M>KET & AS A RESULT 0WAGES >E HI<LY UNLIKELY TO REFLECT WORK]S' CONTRIBUTIONS TO PRODUCTION40 ,?IS IS BECAUSE ECONOMI/S TREAT LABOR AS NO DIFF]5T FROM O!R COMMODITIES YET 0ECONOMIC !ORY SUPPORTS NO SU* CONCLUSION40 ,AT ITS MO/ BASIC1 LABOR IS NOT PRODUC$ = PR(IT & ! 0SUPPLY CURVE = LABOR CAN 'SLOPE BACKW>D' -- SO ?AT A FALL 9 WAGES CAN CAUSE AN 9CREASE 9 ! SUPPLY ( WORK]S40 ,9 FACT1 ! IDEA ( A BACKW>D SLOP+ SUPPLY CURVE = LABOR IS JU/ AS EASY TO D]IVE FROM ! ASSUMPTIONS US$ BY ECONOMI/S TO D]IVE !IR /&>D ONE4 ,?IS IS BECAUSE WORK]S MAY PREF] TO WORK LESS AS ! WAGE RATE RISES AS !Y WILL BE BETT] (F EV5 IF !Y DO NOT WORK MORE4 ,CONV]SELY1 V]Y L[ WAGE RATES >E LIKELY TO PRODUCE A V]Y HI< SUPPLY ( LABOR AS WORK]S NE$ TO WORK MORE TO MEET !IR BASIC NE$S4.<#a#i.> 

,?IS MEANS ?AT ! M>KET SUPPLY CURVE 0C\LD HAVE ANY %APE AT ALL0 & SO ECONOMIC !ORY 0FAILS TO PROVE ?AT EMPLOYM5T IS DET]M9$ BY SUPPLY & DEM&1 & RE9=CES ! REAL WORLD OBS]VATION ?AT 9VOLUNT>Y UNEMPLOYM5T CAN EXI/0 AS R$UC+ ! WAGE NE$ NOT BR+ ! DEM& & SUPPLY ( LABOR 9TO ALIGNM5T4 ,:ILE ! POSSIBILITY ( BACKW>D-B5D+ LABOR SUPPLY CURVES IS SOMETIMES PO9T$ \T 9 TEXTBOOKS1 ! ASSUMPTION ( AN UPW>D SLOP+ SUPPLY CURVE IS TAK5 AS ! NORMAL SITUATION BUT 0!RE IS NO !ORETICAL -- OR EMPIRICAL -- JU/IFICATION = ?IS40 ,SADLY = ! WORLD1 ?IS ASSUMPTION IS US$ TO DRAW V]Y /RONG CONCLUSIONS BY ECONOMI/S4 ,! /&>D >GUM5TS AGA9/ M9IMUM WAGE LEGISLATION1 TRADE UNIONS & DEM& MANAGEM5T BY GOV]NM5T >E ALL BAS$ ON IT4 ,YET1 AS ,KE5 NOTES1 SU* IMPORTANT POLICY POSITIONS 0%\LD BE BAS$ UPON ROBU/ 9TELLECTUAL OR EMPIRICAL F\NDATIONS1 RA!R ?AN ! FLIMSY SUB/RATE ( M]E FANCY4 ,ECONOMI/S >E QUITE PRONE TO DISMISS ALT]NATIVE P]SPECTIVES ON LABOR M>KET POLICY ON ?IS V]Y BASIS -- ?AT !Y LACK ANY !ORETICAL OR EMPIRICAL F\NDATIONS4 ,YET !IR [N POLICY POSITIONS >E BAS$ AS MU* ON WI%FUL ?9K+ AS ON WISDOM40.<#b.> 

,! BACKW>D-B5D+ SUPPLY CURVE ( LABOR SUGGE/S ?AT CUTT+ REAL WAGES WILL HAVE ! OPPOSITE EFFECT ON ! SUPPLY ( LABOR ?AN ITS SUPPORT]S CLAIM4 ,IT IS COMMONLY F\ND ?AT AS REAL WAGES FALL1 H\RS AT WORK BECOME LONG] & ! NUMB] ( WORK]S 9 A FAMILY 9CREASES4 ,?IS IS BECAUSE ! LABOR SUPPLY CURVE IS NEGATIVELY SLOPP$ AS FAMILIES NE$ TO WORK MORE 7I4E41 PROVIDE MORE LABOR7 TO MAKE 5DS MEET4 ,?IS MEANS ?AT A FALL 9 REAL WAGES MAY 9CREASE ! SUPPLY ( LABOR AS WORK]S >E =C$ TO WORK LONG] H\RS OR TAKE SECOND JOBS SIMPLY TO SURVIVE4 ,! NET EFFECT ( 9CREAS+ SUPPLY W\LD BE TO DECREASE REAL WAGES EV5 MORE & SO1 POT5TIALLY1 />T A VICI\S CIRCLE & MAKE ! RECESSION DEEP]4 

,/RONG EVID5CE ?AT ?IS MODEL ( ! LABOR M>KET CAN BE F\ND FROM ! HI/ORY ( CAPITALISM4 ,CONT9UALLY WE SEE CAPITALI/S TURN TO ! /ATE TO 5SURE L[ WAGES 9 ORD] TO 5SURE A /EADY SUPPLY ( LABOR 7?IS WAS A KEY AIM ( /ATE 9T]V5TION DUR+ ! RISE ( CAPITALISM1 9CID5TALLY74 ,= EXAMPLE1 9 C5TRAL & S\!RN ,AFRICA M9+ COMPANIES TRI$ TO GET LOCALS TO LABOR4 ,!Y HAD LITTLE NE$ = MONEY1 SO !Y WORK$ A DAY OR TWO !N DISAPPE>$ = ! RE/ ( ! WEEK4 ,TO AVOID SIMPLY 9TRODUC+ SLAV]Y1 SOME COLONIAL ADM9I/RATORS 9TRODUC$ & 5=C$ A POLL-TAX4 ,TO E>N 5\< TO PAY IT1 WORK]S HAD TO WORK A FULL WEEK4 ,MU* ! SAME WAS IMPOS$ ON ,BRITI% WORK]S AT ! DAWN ( CAPITALISM4 ,AS ,/EPH5 ,M>GL9 PO9TS \T1 ! 09DISCIPL9E ( ! LABOR+ CLASSES1 OR MORE BLUNTLY1 !IR LAZ9ESS1 WAS WIDELY NOT$ BY EI<TE5? C5TURY OBS]V]S40 ,BY LAZ9ESS OR 9DISCIPL9E1 !SE MEMB]S ( ! RUL+ CLASS MEANT ! SITUATION :]E 0AS WAGES ROSE1 WORK]S *OSE TO WORK LESS40 ,9 ECONOMIC T]MS1 0A BACKW>D B5D+ LABOR SUPPLY CURVE IS A MO/ NATURAL PH5OM5ON AS LONG AS ! 9DIVIDUAL WORK] CONTROLS ! SUPPLY ( LABOR40 ,H[EV]1 0! FACT ?AT HI<] WAGES L$ WORK]S TO *OOSE MORE LEISURE 444 WAS DISA/R\S0 = ! CAPITALI/S4 ,UNSURPRIS+LY1 ! BOSSES DID NOT MEEKLY ACCEPT ! WORK+S ( ! 9VISIBLE H&4 ,!IR 0FIR/ REC\RSE WAS TO ! LAW0 & !Y 0UTILIZ$ ! LEGISLATIVE1 POLICE & JUDICIAL P[]S ( ! /ATE0 TO 5SURE ?AT WORK+ CLASS PEOPLE HAD TO SUPPLY AS MANY H\RS AS ! BOSSES DEM&$4.<#b#a.> 

,LOOK+ AT ! ,U,S1 WE F9D EVID5CE ?AT SUPPORTS ?IS ANALYSIS4 ,AS ! WAGES = ! BOTTOM #h.0 ( ! POPULATION FELL 9 REAL T]MS UND] ,REAGAN & ,BU% 9 ! #a#i#hS1 ! NUMB] ( PEOPLE ) MULTIPLE JOBS 9CREAS$ AS DID ! NUMB] ( MO!RS :O 5T]$ ! LABOR M>KET4 ,9 FACT1 0! ONLY REASON ?AT FAMILY 9COME WAS MA9TA9$ IS ! MASSIVE 9CREASE 9 LABOR =CE P>TICIPATION ( M>RI$ WOM5 444 ,PUT SIMPLY1 JOBS PAY+ FAMILY WAGES HAVE BE5 DISAPPE>+1 & SU/A9+ A FAMILY N[ REQUIRES ?AT BO? ADULTS WORK 444 ,! RESULT HAS BE5 A SQUEEZE ON ! AM\NT ( TIME ?AT PEOPLE HAVE = !MSELVES 444 !RE IS A LOSS ( LIFE QUALITY ASSOCIAT$ ) ! DECL9E 9 TIME = FAMILY 444 !Y HAVE ALSO BE5 =C$ TO WORK LONG] 444 ,AM]ICANS >E WORK+ LONG] JU/ TO MA9TA9 !IR CURR5T POSITION1 & ! QUALITY ( FAMILY LIFE IS LIKELY DECL9+4 ,A TIME SQUEEZE HAS !RE=E ACCOMPANI$ ! WAGE SQUEEZE40.<#b#b.> ,?AT IS1 ! SUPPLY ( LABOR 9CREAS$ AS ITS PRICE FELL 7,REAGAN'S TURN TO MILIT>Y ,KEYNESIANISM & 9COMPLETE NATURE ( ! 0RE=MS0 5SUR$ ?AT A DEEP SPIRAL WAS AVOID$74 

,TO UND]/& :Y ?IS IS ! CASE1 IT IS NECESS>Y TO ?9K AB\T H[ ! IMPACT ( ELIM9AT+ ! M9IMUM WAGE & TRADE UNIONS W\LD ACTUALLY HAVE4 ,FIR/1 ( C\RSE1 !RE W\LD BE A DROP 9 ! WAGES ( ! POORE/ WORK]S AS ! ASS]TION IS ?AT !SE 9CREASE UNEMPLOYM5T BY =C+ WAGES UP4 ,! ASS]TION IS ?AT ! BOSSES W\LD !N EMPLOY MORE WORK]S AS A RESULT4 ,H[EV]1 ?IS ASSUMES ?AT EXTRA WORK]S C\LD EASILY BE ADD$ TO ! EXI/+ CAPITAL /OCK :I* MAY NOT BE ! CASE4 ,ASSUM+ ?IS IS ! CASE 7& IT IS A BIG ASSUMPTION71 :AT HAPP5S TO ! WORK]S :O HAVE HAD !IR PAY CUT8 ,OBVI\SLY1 !Y /ILL NE$ TO PAY !IR BILLS :I* MEANS !Y EI!R CUT BACK ON CONSUMPTION &_/OR SEEK MORE WORK 7ASSUM+ ?AT PRICES HAVE NOT FALL51 AS ?IS W\LD LEAVE ! REAL WAGE UN*ANG$74 ,IF ! =M] HAPP5S1 !N FIRMS MAY F9D ?AT !Y FACE R$UC$ DEM& = !IR PRODUCTS &1 CONSEQU5TLY1 HAVE NO NE$ = ! EXTRA EMPLOYES PR$ICT$ BY ! !ORY4 ,IF ! LATT] HAPP5S1 !N ! RANKS ( ?OSE SEEK+ WORK WILL 9CREASE AS PEOPLE LOOK = EXTRA JOBS OR PEOPLE \TSIDE ! LABOR M>KET 7LIKE MO!RS & *ILDR57 >E =C$ 9TO ! JOB M>KET4 ,AS ! SUPPLY ( WORK]S 9CREASE1 WAGES MU/ DROP ACCORD+ TO ! LOGIC ( ! 0FREE M>KET0 POSITION4 ,?IS DOES NOT MEAN ?AT A RECOV]Y IS IMPOSSIBLE1 JU/ ?AT 9 ! %ORT & M$IUM T]MS CUTT+ WAGES WILL MAKE A RECESSION WORSE & BE UNLIKELY TO R$UCE UNEMPLOYM5T = SOME TIME4 

,)9 A CAPITALI/ ECONOMY ! OPPOSITE ASSUMPTION TO ?AT TAK5 BY ECONOMICS IS F> MORE LIKELY1 NAMELY ?AT !RE IS A BACKW>D SLOP+ LABOR SUPPLY CURVE4 ,?IS IS BECAUSE ! DECISION TO WORK IS NOT ONE BAS$ ON ! *OICE BETWE5 WAGES & LEISURE MADE BY ! 9DIVIDUAL WORK]4 ,MO/ WORK]S DO NOT *OOSE :E!R !Y WORK OR NOT1 & ! H\RS SP5T WORK+1 BY COMP>+ !IR 7GIV57 PREF]5CES & ! LEVEL ( REAL WAGES4 ,!Y DO NOT PRACTICE VOLUNT>Y LEISURE WAIT+ = ! REAL WAGE TO EXCE$ !IR SO-CALL$ 0RES]VATION0 WAGE 7I4E4 ! WAGE :I* WILL TEMPT !M TO =SAKE A LIFE ( LEISURE = ! DISUTILITY ( WORK74 ,RA!R1 MO/ WORK]S HAVE TO TAKE A JOB BECAUSE !Y DO NOT HAVE A *OICE AS ! ALT]NATIVE IS POV]TY 7AT BE/7 OR />VATION & HOMELESSNESS 7AT WORSE74 ,! REAL WAGE 9FLU5CES ! DECISION ON H[ MU* LABOR TO SUPPLY RA!R ?AN ! DECISION TO WORK OR NOT4 ,?IS IS BECAUSE AS WORK]S & !IR FAMILIES HAVE A C]TA9 BASIC LIV+ /&>D TO MA9TA9 & ESS5TIAL BILLS :I* NE$ TO BE PAID4 ,AS E>N+S 9CREASE1 BASIC CO/S >E COV]$ & SO PEOPLE >E MORE ABLE TO WORK LESS & SO ! SUPPLY ( LABOR T5DS TO FALL4 ,CONV]SELY1 IF REAL E>N+S FALL BECAUSE ! REAL WAGE IS LESS !N ! SUPPLY ( LABOR MAY 9CREASE AS PEOPLE WORK MORE H\RS &_/OR MORE FAMILY MEMB]S />T WORK+ TO MAKE 5\< TO COV] ! BILLS 7?IS IS BECAUSE1 ONCE 9 WORK1 MO/ PEOPLE >E OBLIG$ TO ACCEPT ! H\RS SET BY !IR BOSSES74 ,?IS IS ! OPPOSITE ( :AT HAPP5S 9 0NORMAL0 M>KETS1 :]E L[] PRICES >E MEANT TO PRODUCE A DECREASE 9 ! AM\NT ( ! COMMODITY SUPPLI$4 ,9 O!R WORDS1 ! LABOR M>KET IS NOT A M>KET1 I4E4 IT REACTS 9 DIFF]5T WAYS ?AN O!R M>KETS4.<#b#c.> 

,UNEMPLOYM5T & HI< WAGES 

,EV5 IGNOR+ ! !ORETICAL PROBLEMS1 ! FACTS >E ?AT HI< WAGES >E G5]ALLY ASSOCIAT$ ) BOOMS RA!R ?AN SLUMPS & ?IS HAS BE5 KN[N TO MA9/REAM ECONOMICS S9CE AT LEA/ #aici :5 9 ,M>* ( ?AT YE> ,! ,ECONOMIC ,J\RNAL PR9T$ AN >TICLE BY ,KEYNES AB\T ! MOVEM5T ( REAL WAGES DUR+ A BOOM 9 :I* HE EVALUAT$ ! EMPIRICAL ANALYSIS ( TWO LABOR ECONOMI/S4 

,!SE /UDIES %[$ ?AT 0:5 MONEY WAGES >E RIS+1 REAL WAGES HAVE USUALLY RIS5 TOO2 :IL/1 :5 MONEY WAGES >E FALL+1 REAL WAGES >E NO MORE LIKELY TO RISE ?AN TO FALL40 ,KEYNES ADMITT$ ?AT 9 ,! ,G5]AL ,!ORY HE WAS 0ACCEPT+1 )\T TAK+ C>E TO *ECK ! FACTS01 A 0WIDELY HELD0 BELIEF4 ,HE DISCUSS$ :]E ?IS BELIEF CAME FROM1 NAMELY LEAD+ #a#i? C5TURY ,BRITI% ECONOMI/ ,ALFR$ ,M>%ALL :O HAD PRODUC$ A 0G5]ALIZATION0 FROM A SIX YE> P]IOD BETWE5 #a#h#h-#h#f :I* WAS NOT TRUE = ! SUBSEQU5T BUS9ESS CYCLES ( #ahhf TO #a#i#a#d4 ,HE ALSO QUOTES ANO!R LEAD+ ECONOMI/1 ,>?UR ,PIG\1 FROM #aibg ON H[ 0! UPP] HALVES ( TRADE CYCLES HAVE1 ON ! :OLE1 BE5 ASSOCIAT$ ) HI<] RATES ( REAL WAGES ?AN ! L[] HALVES0 & 9DICATES ?AT HE PROVID$ EVID5CE ON ?IS FROM #ahe TO #aia 7AL?\< ?IS DID NOT /OP ,PIG\ REV]T+ TO ! 0,M>%ALLIAN TRADITION0 DUR+ ! ,GREAT ,DEPRESSION & BLAM+ HI< UNEMPLOYM5T ON HI< WAGES74.<#b#d.> ,KEYNES CONC$$ ! PO9T1 >GU+ ?AT HE HAD TRI$ TO M9IMIZE DIFF]5CES BETWE5 HIS ANALYSIS & ! /&>D P]SPECTIVE4 ,HE /RESS$ ?AT :ILE HE ASSUM$ C\NT]CYCLICAL REAL WAGES HIS >GUM5T DID NOT DEP5D ON IT & GIV5 ! EMPIRICAL EVID5CE PROVID$ BY LABOR ECONOMI/S HE ACCEPT$ ?AT REAL WAGES W]E PRO-CYCLICAL 9 NATURE4 

,! REASON :Y ?IS IS ! CASE IS OBVI\S4 ,LABOR DOES NOT CONTROL PRICES & SO CANNOT CONTROL ITS [N REAL WAGE4 ,LOOK+ AT ! ,GREAT ,DEPRESSION1 IT SEEMS DIFFICULT TO BLAME IT ON WORK]S REFUS+ TO TAKE PAY CUTS4 ,! NOTION ( ALL P[]FUL UNIONS OR WORK]S' RESI/ANCE TO WAGE CUTS CAUS+ HI< UNEMPLOYM5T H>DLY FITS !SE FACTS4 ,S9CE !N1 ECONOMI/S HAVE G5]ALLY CONFIRM$ ?AT REAL WAGE >E PROCYCLICAL4 ,9 FACT1 0A GREAT DEAL ( EMPIRICAL RESE>* HAS BE5 CONDUCT$ 9 ?IS >EA -- RESE>* :I* MO/LY CONTRADICTS ! NEO-CLASSICAL ASSUMPTION ( AN 9V]SE RELATION BETWE5 REAL WAGES & EMPLOYM5T40.<#b#e.> ,AS ,HU< ,/RETTON SUMM>IZES 9 HIS EXCELL5T 9TRODUCTORY TEXT ON ECONOMICS3 

0,9 DEFIANCE ( M>KET !ORY1 ! DEM& = LABOR T5DS /RONGLY TO V>Y ) ITS PRICE1 NOT 9V]SELY TO IT4 ,WAGES >E HI< :5 !RE IS FULL EMPLOYM5T4 ,WAGES -- ESPECIALLY = ! LEA/-SKILL$ & L[E/ PAID -- >E L[E/ :5 !RE IS LEA/ EMPLOYM5T4 ,! CAUSES *IEFLY RUN FROM ! EMPLOYM5T TO ! WAGES1 RA!R ?AN ! O!R WAY4 ,UNEMPLOYM5T WEAK5S ! B>GA9+ P[]1 WORS5S ! JOB SECURITY & WORK+ CONDITIONS1 & L[]S ! PAY ( ?OSE /ILL 9 JOBS4 

0,! L[] WAGES DO NOT 9DUCE EMPLOY]S TO CREATE MORE JOBS 444 MO/ BUS9ESS FIRMS HAVE NO REASON TO TAKE ON MORE H&S IF WAGES DECL9E4 ,ONLY EMPTY W>EH\SES1 OR ! PROSPECT ( MORE SALES CAN GET !M TO DO ?AT1 & !SE CONDITIONS R>ELY CO9CIDE ) FALL+ EMPLOYM5T & WAGES4 ,! CAUSES T5D TO WORK ! O!R WAY3 UNEMPLOYM5T L[]S WAGES1 & ! L[] WAGES DO NOT RE/ORE ! LO/ EMPLOYM5T40.<#b#f.> 

,WILL ,HUTTON1 ! ,BRITI% NEO-,KEYNESIAN ECONOMI/1 SUMM>IZES RESE>* BY TWO O!R ECONOMI/S ?AT SUGGE/S HI< WAGES DO NOT CAUSE UNEMPLOYM5T3 

0! ,BRITI% ECONOMI/S ,DAVID ,BLAN*FL[] & ,&REW ,OSWALD .<EXAM9$.> 444 ! DATA 9 TWELVE C\NTRIES AB\T ! ACTUAL RELATION BETWE5 WAGES & UNEMPLOYM5T -- & :AT !Y HAVE DISCOV]$ IS ANO!R MAJOR *ALL5GE TO ! FREE M>KET ACC\NT ( ! LABOR M>KET4 ,FREE M>KET !ORY W\LD PR$ICT ?AT L[ WAGES W\LD BE CORRELAT$ ) L[ LOCAL UNEMPLOYM5T2 & HI< WAGES ) HI< LOCAL UNEMPLOYM5T4 

0,BLAN*FL[] & ,OSWALD HAVE F\ND PRECISELY ! OPPOSITE RELATION%IP4 ,! HI<] ! WAGES1 ! L[] ! LOCAL UNEMPLOYM5T -- & ! L[] ! WAGES1 ! HI<] ! LOCAL UNEMPLOYM5T4 ,AS !Y SAY1 ?IS IS NOT A CONCLUSION ?AT CAN BE SQU>$ ) FREE M>KET TEXT-BOOK !ORIES ( H[ A COMPETITIVE LABOR M>KET %\LD WORK40.<#b#g.> 

,UNEMPLOYM5T WAS HI<E/ :]E REAL WAGES W]E L[E/ & NO:]E HAD FALL+ WAGES BE+ FOLL[$ BY RIS+ EMPLOYM5T OR FALL+ UNEMPLOYM5T4 ,BLAN*FL[] & ,OSWALD /AT$ ?AT !IR CONCLUSION IS ?AT EMPLOYES 0:O WORK 9 >EAS ( HI< UNEMPLOYM5T E>N LESS1 O!R ?+S CON/ANT1 ?AN ?OSE :O >E SURR\ND$ BY L[ UNEMPLOYM5T40.<#b#h.> ,?IS RELATION%IP1 ! EXACT OPPOSITE ( ?AT PR$ICT$ BY 0FREE M>KET0 CAPITALI/ ECONOMICS1 WAS F\ND 9 MANY DIFF]5T C\NTRIES & TIME P]IODS1 ) ! CURVE BE+ SIMIL> = DIFF]5T C\NTRIES4 ,?US1 ! EVID5CE SUGGE/S ?AT HI< UNEMPLOYM5T IS ASSOCIAT$ ) L[ E>N+S1 NOT HI<1 & VICE V]SA4 

,:ILE ?IS EVID5CE MAY COME AS A %OCK TO ?OSE :O SUBSCRIBE TO ! >GUM5TS PUT =W>D BY ?OSE :O ?9K CAPITALI/ ECONOMICS REFLECT ! REALITY ( ?AT SY/EM1 IT FITS WELL ) ! AN>*I/ ANALYSIS4 ,= AN>*I/S1 UNEMPLOYM5T IS A MEANS ( DISCIPL9+ LABOR & MA9TA9+ A SUITABLE RATE ( PR(IT 7I4E4 UNEMPLOYM5T IS A KEY MEANS ( 5SUR+ ?AT WORK]S >E EXPLOIT$74 ,AS FULL EMPLOYM5T IS APPROA*$1 LABOR'S P[] 9CREASES1 SO R$UC+ ! RATE ( EXPLOITATION & SO 9CREAS+ LABOR'S %>E ( ! VALUE IT PRODUCES 7& SO HI<] WAGES74 ,?US1 ! FACT ?AT WAGES >E HI<] 9 >EAS ( L[ UNEMPLOYM5T IS NOT A SURPRISE1 NOR IS ! PH5OM5ON ( PRO-CYCLICAL REAL WAGES4 ,AFT] ALL1 ! RATIO BETWE5 WAGES & PR(ITS >E1 TO A L>GE DEGREE1 A PRODUCT ( B>GA9+ P[] & SO WE W\LD EXPECT REAL WAGES TO GR[ 9 ! UPSW+ ( ! BUS9ESS CYCLE1 FALL 9 ! SLUMP & BE HI< 9 >EAS ( L[ UNEMPLOYM5T4 

,IT IS DIFFICULT = WORK]S TO RESI/ WAGE CUTS & SPE$S-UP :5 FAC$ ) ! FE> ( MASS UNEMPLOYM5T4 ,AS SU*1 HI<] RATES ( UNEMPLOYM5T 0R$UCE LABOR'S B>GA9+ P[] VIS-A-VIS BUS9ESS1 & ?IS HELPS EXPLA9 :Y WAGES HAVE DECL9$ & WORK]S HAVE NOT RECEIV$ !IR %>E ( PRODUCTIVITY GR[?0 7BETWE5 #aig & #a#i#i#c1 ONLY ! TOP #b.0 ( ! ,U,S POPULATION 9CREAS$ ITS %>E ( NATIONAL 9COME7.<#b#i.>4 ,/RANGELY1 ?\<1 ?IS OBVI\S FACT SEEMS LO/ ON MO/ ECONOMI/S4 ,9 FACT1 IF Y\ TOOK !IR >GUM5TS S]I\SLY !N Y\ W\LD HAVE TO CONCLUDE ?AT DEPRESSIONS & RECESSIONS >E ! P]IODS DUR+ :I* WORK+ CLASS PEOPLE DO ! BE/6 

,?IS IS ON TWO LEVELS4 ,FIR/1 9 NEO-CLASSICAL ECONOMICS WORK IS CONSID]$ A DISUTILITY & WORK]S DECIDE NOT TO WORK AT ! M>KET-CLE>+ REAL WAGE BECAUSE !Y PREF] LEISURE TO WORK+4 ,LEISURE IS ASSUM$ TO BE 9TR9SICALLY GOOD & ! WAGE ! MEANS BY :I* WORK]S >E 5C\RAG$ TO SACRIFICE IT4 ,?US HI< UNEMPLOYM5T MU/ BE A GOOD ?+ AS IT GIVES MANY MORE PEOPLE LEISURE TIME4 ,SECOND1 = ?OSE 9 WORK !IR REAL WAGES >E HI<] ?AN BE=E1 SO !IR 9COME HAS RIS54 ,ALFR$ ,M>%ALL1 = EXAMPLE1 >GU$ ?AT 9 DEPRESSIONS MONEY WAGES FELL BUT NOT AS FA/ AS PRICES4 ,A 0P[]FUL FRICTION0 /OPP$ ?IS1 :I* 0E/ABLI%.<$.> A HI<] /&>D ( LIV+ AMONG ! WORK+ CLASSES0 & A 0DIM9I%.<+ (.> ! 9EQUALITIES ( WEAL?40 ,:5 ASK$ :E!R DUR+ A P]IOD ( DEPRESSION ! EMPLOY$ WORK+ CLASSES GOT MORE ?AN !Y DID BE=E1 HE REPLI$ 0.<M.>ORE ?AN !Y DID BE=E1 ON ! AV]AGE40.<#c.> 

,?US1 APP>5TLY1 WORK+ CLASS PEOPLE DO WORSE 9 BOOMS ?AN 9 SLUMPS &1 MOREOV]1 !Y CAN RESI/ WAGE CUTS MORE 9 ! FACE ( MASS UNEMPLOYM5T ?AN 9 P]IODS APPROA*+ FULL EMPLOYM5T4 ,?AT ! !ORY :I* PRODUC$ !SE CONCLUSIONS C\LD BE TAK5 REMOTELY S]I\SLY %[S ! DANG]S ( D$UC+ AN ECONOMIC IDEOLOGY FROM A FEW SIMPLE AXIOMS RA!R ?AN TRU/+ 9 EMPIRICAL EVID5CE & COMMON S5SE D]IV$ FROM EXP]I5CE4 ,NOR %\LD IT COME AS TOO GREAT A SURPRISE1 AS 0FREE M>KET0 CAPITALI/ ECONOMICS T5DS TO IGNORE 7OR DISMISS7 ! IMPORTANCE ( ECONOMIC P[] & ! SOCIAL CONTEXT )9 :I* 9DIVIDUALS MAKE !IR *OICES4 

,SO1 9 SUMM>Y1 ! AVAILABLE EVID5CE SUGGE/S ?AT HI< WAGES >E ASSOCIAT$ ) L[ LEVELS ( UNEMPLOYM5T4 ,:ILE ?IS %\LD BE ! EXPECT$ RESULT FROM ANY REALI/IC ANALYSIS ( ! ECONOMIC P[] :I* M>KS CAPITALI/ ECONOMIES1 IT DOES NOT PROVIDE MU* SUPPORT = CLAIMS ?AT ONLY BY CUTT+ REAL WAGES CAN UNEMPLOYM5T BE R$UC$4 ,! 0FREE M>KET0 CAPITALI/ POSITION & ONE BAS$ ON REALITY HAVE RADICALLY DIFF]5T CONCLUSIONS AS WELL AS POLITICAL IMPLICATIONS4 ,ULTIMATELY1 MO/ LAISSEZ-FAIRE ECONOMIC ANALYSIS IS UNP]SUASIVE BO? 9 T]MS ( ! FACTS & !IR LOGIC4 ,:ILE ECONOMICS MAY BE M>K$ BY AXIOMATIC REASON+ :I* R5D]S EV]Y?+ ! M>KETS DOES AS OPTIMAL1 ! PROBLEM IS PRECISELY ?AT IT IS PURE AXIOMATIC REASON+ ) LITTLE OR NO REG>D = ! REAL WORLD4 ,MOREOV]1 BY SOME /RANGE CO9CID5CE1 !Y USUALLY 9VOLVE POLICY IMPLICATIONS :I* G5]ALLY MAKE ! RI* RI*] BY WEAK5+ ! WORK+ CLASS4 ,UNSURPRIS+LY1 DECADES ( EMPIRICAL EVID5CE HAVE NOT %IFT$ ! FAI? ( ?OSE :O ?9K ?AT ! SIMPLE AXIOMS ( ECONOMICS TAKE PREC$5CE OV] ! REAL WORLD NOR HAS ?IS FAI? LO/ ITS UTILITY TO ! ECONOMICALLY P[]FUL4 

,ECONOMICS 9 MORE ?AN ONE LESSON 

,SO1 AS RADICAL ECONOMI/S HAVE CORRECTLY OBS]VE1 SU* CONSID]ATIONS UND]CUT ! 0FREE M>KET0 CAPITALI/ CONT5TION ?AT LABOR UNIONS & /ATE 9T]V5TION >E RESPONSIBLE = UNEMPLOYM5T 7OR ?AT DEPRESSIONS WILL EASILY OR NATURALLY 5D BY ! WORK+S ( ! M>KET74 ,TO ! CONTR>Y1 9S(> AS LABOR UNIONS & V>I\S WELF>E PROVISIONS PREV5T DEM& FROM FALL+ AS L[ AS IT MI<T O!RWISE GO DUR+ A SLUMP1 !Y APPLY A BRAKE TO ! D[NW>D SPIRAL4 ,F> FROM BE+ RESPONSIBLE = UNEMPLOYM5T1 !Y ACTUALLY MITIGATE IT4 ,= EXAMPLE1 UNIONS1 BY PUTT+ PUR*AS+ P[] 9 ! H&S ( WORK]S1 /IMULATES DEM& & KEEPS EMPLOYM5T HI<] ?AN ! LEVEL IT W\LD HAVE BE54 ,MOREOV]1 WAGES >E G5]ALLY SP5T IMM$IATELY & COMPLETELY :IL/ PR(ITS >E NOT4 ,A %IFT FROM PR(ITS TO WAGES MAY /IMULATE ! ECONOMY S9CE MORE MONEY IS SP5T BUT !RE WILL BE A DELAY$ CUT 9 CONSUMPTION \T ( PR(ITS4 ,ALL ?IS %\LD BE OBVI\S1 AS WAGES 7& B5EFITS7 MAY BE CO/S = SOME FIRMS BUT !Y >E REV5UE = EV5 MORE4 ,MOREOV]1 LABOR IS NOT LIKE O!R COMMODITIES & REACTS 9 *ANGES 9 PRICE 9 DIFF]5T WAYS4 

,GIV5 ! DYNAMICS ( ! LABOR 0M>KET0 7IF SU* A T]M MAKES MU* S5SE GIV5 ITS ATYPICAL NATURE71 ANY POLICIES BAS$ ON APPLY+ 0ECONOMICS #a#a0 TO IT WILL BE DOOM$ TO FAILURE4 ,AS SU*1 ANY BOOK 5TITL$ ,ECONOMICS 9 ,ONE ,LESSON MU/ BE VIEW$ ) SUSPICION UNLESS IT ADMITS ?AT :AT IT EXP\NDS HAS LITTLE OR NO BE>+ TO REALITY & URGES ! READ] TO TAKE AT LEA/ ! SECOND LESSON4 ,( C\RSE1 IT IS IRRELEVANT ?AT IT IS MU* EASI] TO DEM& ?AT WORK]S' REAL WAGES BE R$UC$ :5 Y\ >E SITT+ 9 A T5UR$ PO/ 9 ACADEMIA4 ,TRUE TO !IR IDEALS & 0SCI5CE01 IT IS REFRE%+ TO SEE H[ MANY ( !SE 0FREE M>KET0 ECONOMI/S R5\NCE T5URE SO ?AT !IR WAGES CAN ADJU/ AUTOMATICALLY AS ! M>KET DEM& = !IR IDEOLOGICALLY *>G$ COMM5TS *ANGES4 

,SO :5 ECONOMIC !ORIES EXTOLL SUFF]+ = FUTURE B5EFITS1 IT IS ALWAYS WOR? ASK+ :O SUFF]S1 & :O B5EFITS4 ,! NOTION ( WAGE CUTT+ EM]GES FROM !ORETICAL CLAIMS ?AT PRICE FLEXIBILITY CAN RE/ORE FULL EMPLOYM5T1 & IT RE/S DUBI\S LOGIC1 ABSURD ASSUMPTIONS & ON A FALSE ANALOGY COMP>+ ! LABOR M>KET ) ! M>KET = PEANUTS4 ,:I*1 IRONICALLY1 IS APPROPRIATE AS ! LOGIC ( ! MODEL IS ?AT WORK]S WILL 5D UP WORK+ = PEANUTS6 

,:AT N[8 

,TO CONCLUDE1 A CUT 9 WAGES MAY DEEP5 ANY SLUMP1 MAK+ IT DEEP] & LONG] ?AN IT O!RWISE W\LD BE4 ,RA!R ?AN BE+ ! SOLUTION TO UNEMPLOYM5T1 CUTT+ WAGES WILL MAKE IT WORSE4 ,! CAPITALI/ SOLUTION TO CRISIS IS BAS$ ON WORK+ CLASS PEOPLE PAY+ = CAPITALISM'S CONTRADICTIONS4 ,=1 ACCORD+ TO ! MA9/REAM !ORY1 :5 ! PRODUCTION CAPACITY ( A GOOD EXCE$S ANY REASONABLE DEM& = IT1 ! WORK]S MU/ BE LAID (F &_/OR HAVE !IR WAGES CUT TO MAKE ! COMPANY PR(ITABLE AGA94 ,MEAN:ILE ! COMPANY EXECUTIVES -- ! PEOPLE RESPONSIBLE = ! BAD DECISIONS TO BUILD LOTS ( FACTORIES -- CONT9UE TO COLLECT !IR FAT SAL>IES1 BONUSES & P5SIONS1 & GET TO /AY ON TO HELP MANAGE ! COMPANY ?R\< ITS PROBLEMS4 ,=1 AFT] ALL1 :O BETT]1 TO RETURN A COMPANY TO PR(ITABILITY ?AN ?OSE :O 9 !IR WISDOM RAN IT 9TO BANKRUPTCY8 ,/RANGE1 ?\<1 NO MATT] H[ HI< !IR SAL>IES & BONUSES GET1 MANAG]S & EXECUTIVES NEV] PRICE !MSELVES \T ( WORK4 

,?IS SUGGE/S ?AT ! TASK ( AN>*I/S1 9 ! %ORT RUN1 IS TO 5C\RAGE ATTEMPTS TO ORGANIZE UNIONS & RESI/ WAGE CUTS 9 ! WORKPLACE AS WELL AS TAK+ OV] CLOS+ WORKPLACES & PLAC+ !M UND] SELF-MANAGEM5T 7IF S5SIBLE74 ,:ILE 0FREE M>KET0 ECONOMICS PROTRAYS UNIONS AS A =M ( M>KET FAILURE1 AN 9T]F]5CE ) ! NATURAL WORK+S ( ! M>KET SY/EM & RECOMM5D ?AT ! /ATE %\LD ELIM9ATE !M OR 5SURE ?AT !Y >E BASICALLY P[]LESS TO ACT1 ?IS SIMPLY DOES NOT REFLECT ! REAL WORLD4 ,ANY REAL ECONOMY IS M>K$ BY ! ECONOMIC P[] ( BIG BUS9ESS4 ,UNLESS WORK]S ORGANIZE !N !Y >E 9 A WEAK POSITION & WILL BE EV5 MORE EXPLOIT$ BY !IR ECONOMIC MA/]S4 ,LEFT-W+ ECONOMI/ ,?OMAS ,I4 ,PALLEY PRES5TS ! CORRECT ANALYSIS ( WORK+ CLASS ORGANIZATION :5 HE WROTE3 

0,! REALITY IS ?AT UNIONS >E A CORRECTION ( M>KET FAILURE1 NAMELY ! MASSIVE IMBALANCE ( P[] ?AT EXI/S BETWE5 9DIVIDUAL WORK]S & CORPORATE CAPITAL4 ,! IMPORTANCE ( LABOR M>KET B>GA9+ P[] = ! DI/RIBUTION ( 9COME1 MEANS ?AT UNIONS >E A FUNDAM5TAL PROP = WIDESPREAD PROSP]ITY4 ,WEAK5+ UNIONS DOES NOT CREATE A 'NATURAL' M>KET3 IT JU/ CREATES A M>KET 9 :I* BUS9ESS HAS ! P[] TO DOM9ATE LABOR4 

0,! NOTION ( P]FECT NATURAL M>KETS IS BUILT ON ! ASSUMPTION ?AT M>KET P>TICIPANTS HAVE NO P[]4 ,9 REALITY1 ! PROCESS ( LABOR EX*ANGE IS *>ACT]IZ$ NOT ONLY BY ! PRES5CE ( P[]1 BUT ALSO BY GROSS 9EQUALITY ( P[]4 ,AN 9DIVIDUAL WORK] IS AT A GREAT DISADVANTAGE 9 DEAL+ ) L>GE CORPORATIONS ?AT HAVE ACCESS TO MASSIVE POOLS ( CAPITAL & CAN ORGANIZE 9 A FA%ION ?AT R5D]S EV]Y 9DIVIDUAL DISP5SIBLE 444 ,UNIONS HELP RECTIFY ! IMBALANCE ( P[] 9 LABOR M>KETS1 & !Y !RE=E CORRECT M>KET FAILURE RA!R ?AN CAUS+ IT40.<#c#a.> 

,GIV5 ?IS1 IT IS UND]/&ABLE :Y BOSSES HATE UNIONS & ANY /ATE AID :I* UND]M9ES !IR ECONOMIC P[]4 ,?IS MU/ BE SUPPLEM5T$ BY COMMUNITY ORGANIZ+ TO SUPPORT WORKPLACE /RUGGLE AS WELL AS TO RESI/ WAGE 9CREASES 9 COMMODITIES 7BOSSES WILL TRY TO MA9TA9 PR(ITS BY 9CREAS+ PRICES7 AS WELL AS R5T & BASIC UTILITIES4 ,?IS IS NOT TO SUGGE/ ?AT ECONOMIC /RUGGLES >E ! ONLY FOCUS ( /RUGGLE1 SIMPLY ?AT IT IS DIFFICULT TO FI<T AGA9/ ALL =MS ( HI]>*Y :5 Y\ >E WORRI$ AB\T :E!R Y\ WILL HAVE 5\< TO EAT OR A RO( OV] Y\R HEAD4 ,?IS MU/ BE PLAC$ 9 ! CONTEXT ( SOCIAL *ANGE1 ! 5D+ ( CAPITALISM & ITS /ATE & ! CREATION ( A FREE SOCIETY4 

,! 0HALLM>K0 ( ! NEO-LIB]AL AGE 0IS AN ECONOMIC 5VIRONM5T ?AT PITS CITIZ5 AGA9/ CITIZ5 = ! B5EFIT ( ?OSE :O [N & MANAGE0 A C\NTRY4.<#c#b.> ,\R TASK IS TO BUILD A MOVEM5T ROOT$ 9 SOLID>ITY4 ,SO WE HAVE TWO OPTIONS -- ACCEPT A DEEP] DEPRESSION 9 ORD] TO />T ! BOOM-BU/ CYCLE AGA9 OR GET RID ( CAPITALISM & ) IT ! CONTRADICTORY NATURE ( CAPITALI/ PRODUCTION :I* PRODUCES ! BUS9ESS CYCLE 9 ! FIR/ PLACE 7NOT TO M5TION O!R BLI<TS SU* AS HI]>*Y & 9EQUALITY74 ,9 ! 5D1 ! ONLY SOLUTION TO CRISIS IS TO GET RID ( ! SY/EM :I* CREAT$ IT BY WORK]S SEIZ+ !IR MEANS ( PRODUCTION & ABOLI%+ ! /ATE4 ,:5 ?IS HAPP5S1 !N PRODUCTION = ! PR(IT ( ! FEW WILL BE 5D$ & SO1 TOO1 ! CONTRADICTIONS ?IS G5]ATES4 

,BIBLIOGRAPHY 

,BLAN*FL[]1 ,DAVID & ,OSWALD1 ,&REW1 ,! ,WAGE ,CURVE1 ,M,I,T ,PRESS1 ,CAMBRIDGE1 ,MASS41 #a#i#i#d4 

,H[ELL1 ,DAVID ,R4 7$471 ,FI<T+ ,UNEMPLOYM5T3 ,! ,LIMITS ( ,FREE ,M>KET ,OR?ODOXY1 ,OX=D ,UNIV]SITY ,PRESS1 ,NEW ,YORK1 #b#e4 

,HUTTON1 ,WILL1 ,! ,/ATE ,WE'RE ,91 ,V9TAGE1 ,LONDON1 #a#i#i#f4 

,KE51 ,/EVE1 ,DEBUNK+ ,ECONOMICS3 ,! ,NAK$ ,EMP]OR ( ! SOCIAL SCI5CES1 ,PLUTO ,PRESS ,AU/RALIA1 ,ANN&ALE1 #b#a4 

,KEYNES1 ,JOHN ,MAYN>D1 ,! ,G5]AL ,!ORY ( ,EMPLOYM5T1 ,9T]E/ & ,MONEY1 ,MAC,MILLAN ,PRESS1 ,LONDON1 #a#i#g#d4 

,PALLEY1 ,?OMAS ,I41 ,PL5TY ( ,NO?+3 ,! ,D[NSIZ+ ( ! ,AM]ICAN ,DREAM & ! CASE = ,/RUCTURAL ,KEYNESIAN1 ,PR9CETON ,UNIV]SITY ,PRESS1 ,PR9CETON1 #a#i#i#h4 

,RI*>D ,P4 ,F4 ,HOLT & ,/EV5 ,PRESSMAN 7$S471 ,A ,NEW ,GUIDE TO ,PO/ ,KEYNESIAN ,ECONOMICS1 ,R\TL$GE1 ,LONDON1 #b#a4 

,ROB]TSON1 ,D5NIS1 0,WAGE-GRUMBLES01 ,ECONOMIC ,FRAGM5TS1 PP4 #d#b-#e#g1 9 ,W4 ,FELLN] & ,B4 ,HALEY 7$S471 ,READ+S 9 ! !ORY ( 9COME DI/RIBUTION1 ,! ,BLAKI/ON1 ,PHILADEPHIA1 #a#i#e#a4 

,ROB9SON1 ,JOAN1 ,CONTRIBUTIONS TO ,MOD]N ,ECONOMICS1 ,BASIL ,BLACKWELL1 ,OX=D1 #a#i#g#h4 

,/RETTON1 ,HU<1 ,ECONOMICS3 ,A ,NEW ,9TRODUCTION1 ,PLUTO ,PRESS1 ,LONDON1 #b4 

,T>GETTI1 ,F]D9&O1 ,NI*OLAS ,KALDOR3 ,! ,ECONOMICS & ,POLITICS ( ,CAPITALISM AS A ,DYNAMIC ,SY/EM1 ,CL>5DON ,PRESS1 ,OX=D1 #a#i#i#b4 

.<#a.> QUOT$ BY ,JIM ,/AN=D1 0,TE/+ ! ,FLEXIBILITY ,P>ADIGM3 ,CANADIAN ,LABOR ,M>KET ,P]=MANCE 9 ,9T]NATIONAL ,CONTEXT10 PP4 #a#a#i-#a#e#e1 ,FI<T+ ,UNEMPLOYM5T1 ,DAVID ,R4 ,H[ELL 7$471 PP4 #a#c#i-#d 

.<#b.> ,JIM ,/AN=D1 ,OP4 ,CIT41 P4 #ad 

.<#c.> ,IT %\LD BE NOT$ ?AT ! ,POLI% SOCIALI/ ECONOMI/ ,MI*AL ,KALECKI 9DEP5D5TLY DEVELOP$ A SIMIL> !ORY A FEW YE>S BE=E ,KEYNES BUT )\T ! NEO-CLASSICAL BAGGAGE ,KEYNES BR\<T 9TO HIS WORK4 

.<#d.> ,KEYNES1 ,! ,G5]AL ,!ORY1 P4 #c< 

.<#e.> P4 #a#b1 PP4 #h-#i1 P4 #ae & P4 #bfg 

.<#f.> P4 #i 

.<#g.> ,SY/EM ( ,ECONOMICAL ,CONTRADICTIONS1 P4 #bd & P4 #ai 

.<#h.> ,F]D9&O ,T>GETTI1 ,NI*OLAS ,KALDOR1 P4 #cdd 

.<#i.> ,DEBUNK+ ,ECONOMICS1 PP4 #g#f-#g 

.<#a.> ,SIGNIFICANTLY1 ,JOAN ,ROB9SON & ,PI]O ,SRAFFA HAD SUCCESSFULLY DEBUNK$ ?IS !ORY 9 ! #a#i#eS4 0,YET = PSY*OLOGICAL & POLITICAL REASONS10 NOTES ,JAMES ,K4 ,GALBRAI?1 0RA!R ?AN = LOGICAL & MA!MATICAL ONES1 ! CAPITAL CRITIQUE HAS NOT P5ETRAT$ MA9/REAM ECONOMICS4 ,IT LIKELY NEV] WILL4 ,TODAY ONLY A H&FUL ( ECONOMI/S SEEM AW>E ( IT407 0,! DI/RIBUTION ( 9COME01 PP4 #c#b-#d#a1 ,RI*>D ,P4 ,F4 ,HOLT & ,/EV5 ,PRESSMAN 7$S471 ,A ,NEW ,GUIDE TO ,PO/ ,KEYNESIAN ,ECONOMICS1 P4 #c#d7 

.<#a#a.> 0,WAGE-GRUMBLES01 ,ECONOMIC ,FRAGM5TS1 P4 #bbf 

.<#a#b.> ,CONTRIBUTIONS TO ,MOD]N ,ECONOMICS1 P4 #af 

.<#a#c.> P4 #ag 

.<#a#d.> P4 #f 

.<#a#e.> ,HU< ,/RETTON1 ,ECONOMICS3 ,A ,NEW ,9TRODUCTION1 P4 #da 

.<#a#f.> ,JOHN ,E4 ,K+1 0,LABOR & ,UNEMPLOYM5T10 PP4 #f#e-#g#h1 ,HOLT & ,PRESSMAN 7$S471 ,OP4 ,CIT41 P4 #f#h1 PP4 #f#g-#h1 P4 #g#b1 P4 #fh & P4 #gb 

.<#a#g.> ,K+1 P4 #ga 

.<#a#h.> ,K+1 P4 #fe 

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