Re: Fwd: Re: Keynes and competition

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

> > > Kazuhiro Kurose  wrote:
> > >
> > >
> > > Then I would like to ask you whether you think that there is the
> > > disequilibrium (the gap between demand and supply) in goods market in
> > > Keynes' system. If you think that there is no disequilibrium in goods
> > > market, the arguments on imperfect competition has nothing to do with
> > > Keynes' system, and I can satisfy with your opinion that the fault of
> > > neo-classical or new-Keynesian is that they don't think of money as
> > > non-reproducible asset. In this case,

Paul Davidson wrote:

> > The trouble here is that you are (like most mainstream economists)
> > confusing market clearing with market equilibrium.  As I have
> > written many times (but no one bothers to read Davidson) Marshall
> > took the term equilibrium from physics where it means merely a
> > balancing of forces.  Thus a market can be in equilibrium WITHOUT
> > it being cleared!!  Keynes, a good Marshallian followed Marshall's
> > terminology (and generally accepted "scientific" terminology)  --
> > but it was the General  Equilibrium people who conflated CLEARING
> > with Equilibrium.


There is a still a conundrum.

The conventional definition of  labour is suited to a market clearing analysis,
not to an equilibrium analysis. The supply of labour is defined as
NUMBER OF PERSONS offering their labour for hire. Formally, THIS definition
makes the supply of labour equivalent to the supply of any other
marketable good.
Markets don't care whether it is people that are for rent or if it is
computers that are
for rent. Therefore the formality of this definition is consistent
with a market
clearing analysis no matter how we may feel about this approach.

The solution to the conundrum requires that the nature of employed labour
be redefined. The new definition will divorce labour formally and completely
from the market for goods.  The new definition of employed labour will not
revolve around the concept of wage labour. The new definition of employed
labour will clearly distinguish between measures of employed labour  (e.g.
unemployed wage labour statistics) and the nature of employed labour. The
new definition of labour will reflect our intuition concerning the present
economy's peculiar state of simultaneous over and under employment.

Harry Veeder