Wednesday, May 28, 2014

This Magazine of Untruth, Revisited

It is widely recognized that the assumption that wages are rigid is central to Keynes' explanation of the persistence of unemployment. J.E.S. 1984.
"[T]he Classical Theory has been accustomed to rest the supposedly self-adjusting character of the economic system on an assumed fluidity of money-wages; and, when there is rigidity, to lay on this rigidity the blame of maladjustment…. In its crudest form, this is tantamount to assuming that the reduction in money-wages will leave demand unaffected.… It is from this type of analysis that I fundamentally differ… J.M.K. 1936.
Two-thousands words into a blog post about the prehistory of "efficiency wage theory" I stumble across the first sentence above. Can anyone please explain to me what the point is of doing "rigorous scholarship" when that kind of slipshod hearsay misrepresentation fronts an entire industry of poverty-pimping, "theoretical modeling" of unemployment?

4 comments:

Unknown said...

Sandwicherdude, have you taken a gander at Daniel Bromley's "The Ideology of Efficiency"? it seems to me that perhaps you are creeping up on the opening of a broader 'attack' on efficiency the way that Robinson and friends went after capital via the critique of production functions etc. Efficiency to a petroleum engineer, an ecologist, a construction project manager and a microeconomist are significantly different. The other one to go after is, of course, the rigidity/resiliency binary.

Just an exhausted thought.

See also, if you have access, the 1st edition of "Economics and the Law: From Posner to Postmodernism and Beyond" as the chapter on Insitutional Economics [the old one] goes into a critique of efficiency as a foil for power and then you can hit the chapter on efficiency in the same text. The isoquants will melt before you!

E.

Sandwichman said...

Thanks, E. I'll have a look. I like the image of melting isoquants.

allis said...

Who is J.E.S.?

sande waters said...

Here, let me google that for you...