Not on AS-AD

[Jim Devine <JNDF%LMUACAD.BITNET@xxxxxxxxxxxxxxxxxx>]

Those interested in the NAIRU question may want to hear about
Abba Lerner's distinction between "high full employment" and
"low full employment."  These two concepts are forced together
under one roof by Friedman with his "natural rate hypothesis,"
but they are quite distinct: "High full employment" is a
concept relating to the optimum employment of labor (related
to what I call the "best rate of unemployment").  It consists
of that  level of employment where unemployment is only
frictional (temporary, job-search) in nature, allowing people
to find the best jobs for them and employers to find the
best employees (in terms of skills, etc.) for them.  On the
other hand, "low full employment" corresponds to the NAIRU:
it marks  a threshold beyond which the economy suffers
accelerating inflation.  The NAIRU includes not only
frictional unemployment but structural unemployment -- and
the Marxian floating reserve army of labor.  The last fits
in with the bargaining-power theory of inflation that both
Peter and Tom embrace.

For some reason, Lerner's post-Keynesian contribution has
been forgotten  here, even by many post-Keynesians.  I'll
look for the reference if people want it.

sincerely,

Jim Devine   BITNET: jndf@lmuacad    INTERNET: jdevine@xxxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (off); 310/202-6546 (hm); FAX: 310/338-1950
if bitnet address fails, try jndf@xxxxxxxxxxxxxx