Notions of the labour supply.

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

> > Harry Veeder:
> > 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.
>
> PD:
> When you learn some economics Harry, you might  comprehend that in
> economics the quantity of labor supplied is typically defined as a
> function of the real wage in the market place-- and typically it is
> assumed that at different real wage rates different quantities of
> labor will be offered for hire.

HV:
The last line doesn't say much, unless you mean the supply of labour
increases as the wage
increases. However, it strikes me as intuitively incorrect that the
supply of labour
can rise indefinitely with higher wages. So, as far as I'm concerned
a better theory
is required.


PD:
> (Wjhether the quantity is measured in hours of work or people  is
> merely a units measurement concept -- similar to measuring
> temperature in either Farenheit or Centigrade units.

HV:
No, it is not "merely a units measurement concept". Time and people
are fundamentally
different quantities, although the labour supply consists of both.
Let me use an
analogy from steam power to explain my reasoning.

The capacity of a steam supply to drive a piston depends on the
steam's pressure
and temperature.  The temperature may be measured in either
Fahrenheit or Centigrade
and the pressure  in mm of mercury or Kilopascal . It would be nonsense to
interchange temperature units with pressure units because temperature
and pressure are
not the same quantity.

Similarly, I hold that hours of work (what I call work periods) and
number of people cannot
be interchanged when discussing the labour supply.  However, if one assumes
all work periods consist of an average work week, as Keynes does in
the GT, then it is
possible to interchange units. Needless to say, this is not a real
world assumption.


HV:
> > 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.
>
> PD:
> And of course this is even further nonsense  -- when you learn what
> the concept of a supply price is in Marshall's PRINCIPLES OF
> ECONOMICS, then perhaps you can make a positive contribution to the
> question at hand --

HV:
The idea that their are set of supply prices that are somehow
distinct from other
market prices  seems  suspect to me. Formally, the current definition
of  labour leaves it stuck
in the goods market. Hanging an imaginary sign around labour's neck
that says in big
bold letters"Supply Price" will not alter the formal definition of labour.

If something is to be designated a supply price, it should be the CB
interest rate which
regulates the quantity of liquidity.


PD:
> As it is your fuzzy "new definition"concepts  (see below) merely
> obfuscates things -- and clarifies nothing.

HV:
These are guidelines for a new definition of labour. A precise
definition has yet
to be written.

> HV:
> > 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