Re: Full Employment

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

Paul Davidson wrote:
> what is that Forrest Gump said that is relevant ot this last comment of yours.

My favourite is, "Life is like a box of chocolates..."


> My definition has nothing to do with money growing on trees!

> Full employment is defined as when the marginal utility of the last
> unit of labor employed just equals the marginal disutility of the
> last unit of labor supplied.

Each unit of labour supplied comes with a supply price and this
requires the unit of
labour employed to demand income. The supply price and demand for income
go hand in hand. I don't see how could it be otherwise.

If labour is demanding income then the money tree must still be
present. It doesn't
matter if the supply price is  only 1 cent/year, labour remains a harvester of
money in your definition whether labour wishes it or not.

So we have a definition of labour which implicity requires that all labour be
harvesting money.Then Keynes discovers that labour can't statisfy this full
employment defintion because money doesn't grow on trees. Initially labour is
told what to do, then labour learns it can't be done. This is a very confusing
state of affairs for labour!

Futhermore, regarding units Keynes says:
"We shall call the unit in which the quantity of employment is measured
the labour-unit; and the money-wage of a labour-unit we shall call the
wage-unit. Thus if E is the wages (and salaries) bill, W the wage-unit,
and N the quantity of employment,  E = NW." (p.41, GT)

There is disconnect here between units proposed in theory and units used
in practice. In theory the quantity of employment is measured in labour-units,
yet in practice it is the number of people that is measured.  On the one hand
Keynes is telling us what ought to be measured, but in practice
something else is measured.

Harry Veeder