[PEN-L:2448] Re: unions

[blairs@xxxxxxxxxxx (Blair Sandler)]

At 3:35 PM 1/18/96, Gilbert Skillman wrote:
>Jim writes:
>
>> BTW, on another topic: Barro rejects minimum wages because demand
>> curves are always downward-sloping? this not only ignores
>> Giffen-type effects, as seems reasonable to do, but it ignores the
>> distinction between product and input markets while assuming full
>> employment. The demand for inputs is "derived demand," so that
>> (given inelastic labor demand) generally higher wages might
>> increase aggregate demand, causing the demand-for-labor-power
>> curve to shift rightward. This, in effect, implies an
>> upward-sloping _aggregate_ demand-for-labor-power curve despite
>> downward-sloping micro-economic d-f-l-p curves.
>
>Barro also assumes what must be proven, i.e. that "demand curves" are
>in markets for labor power are both well-defined and operational.
>The former is not the case if buyers for labor power are not
>price-takers; the latter is not the case, e.g., if such markets are
>incomplete in the sense of being characterized by efficiency-wage
>type problems.
>
>Gil Skillman

I thought the whole point was that "downward-sloping demand [or any other]
curves" require the ceteris paribus assumption, so that things hold still
long enough for us to draw a curve. In the real world time passes and
nothing is constant/stays the same, and therefore it's impossible to draw a
curve. In other words, ceteris paribus is useful to show theoretical
relationships, that is, the way our different concepts are related to each
other logically in our [sic] theory, but any analysis that requires a
ceteris paribus assumption, specifically any neoclassical graphical model
or its algebraic equivalent, is useless for attempting to understanding how
real world dynamics will develop. I'm pretty ignorant about P-K material,
but I thought this was the fundamental point of Keynes thinking about
uncertainty (that none of the curves stay still long enough to get a good
look at them, so to speak), and Joan Robinson's "logical time."

I'd appreciate mid-course corrections if I'm spouting nonsense here....

Blair Sandler