On Keynes' inverse relation between real wages and employment: a debate over excess capacity^∗

Animal spirits in his soup: a look at the methodology and rhetoric of The General Theory

“…Keynes is perhaps unusual amongst economists in being conscious of his own rhetorical pose. See Brown (1991) and Boland (1985) for a short discussion of this point as well as Dow (1988) and Harcourt (1986).…”

“…Lawlor, Darity, and Horn (1987) and Brown (1991) for convincing demonstrations of Keynes' intentions. For Keynes, price stickiness rather than presenting a problem provided a market economy with stability.…”

“…He reintroduces the troublesome factor of human perceptions and expectations which relatively few economists are ever eager to include. Flexible wages will not bring full employment since they are only presented as a technical condition resting on a special set of circumstances which are unlikely to obtain at any given time or place.19 A system of wage bargaining which does not necessarily mirror a movement towards an equilibrium real wage is not a traditional approach no matter how Keynes dresses up the analysis in marginal clothing and no matter how much he clings to a standard labour demand function (see Applebaum 1979 andBrown 1991). Labour demand and supply curves more closely resembles the parameters of bargaining described by reservation prices.…”

“Relative Movements of Real Wages and Output”—how Does Keynes’s 1939 Essay Relate to His Theory of Effective Demand?

“…Vivienne Brown (1991) has carefully studied this theoretical debate over the nature of marginal returns. She argues that it was Keynes's "unrecognized use of a concept of marginal productivity which was different from theirs" (Brown 1991, p. 440) that explains most of the disagreement between him and his critics.…”

The General Theory, Chapter 2: A Confusing Message

“…Forced by empirical evidence to the contrary (Dunlop 1938, Tarshis 1939, Keynes (1939) subsequently retracted the idea that marginal productivity is necessarily decreasing. For recent discussions, see McCombie 1985, Mongiovi 1991, Brown 1991. The summer 1987 issue of the Journal of Post Keynesian Economics devotes a section to a symposium on this issue.…”