Re: Full Employment

[Paul Davidson <pdavidson@xxxxxxx>]

At 04:34 PM 5/27/01 +0100, you wrote:
> 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..."


No the quote I was thinking of is "Stupid is as Stupid
does".



> > 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.

No since unless the private sector entrpreneur (in a laissez -faire
economy) is willing to hire each worker who (in your terminology) is
demanding income, this demand for income will go unfullfilled and there
will be involuntary unemployment.  Since money does NOT ggrow on
trees , these unemployed workers who are demanding income (in your
temrinology) are unable to obtain income -- no matter how much they want
to work.  and if they are willing to lower their supply price and
therefore (in your terminology) demand less income -- and are successful
in displacing a higher paid worker,  as long as effective demand is
unchanged, then the displaced worker is now unable to earn income despite
his demand for income.


pAUL

Paul Davidson

Editor, JOURNAL OF POST KEYNESIAN ECONOMICS

Holly Chair of Excellence in Political Economy

Economics Department - University of Tennessee

523 SMC

Knoxville, Tennessee 37996-0550

work phone: (865) 974-4221

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