Re: Postulates of classical economics

[dimitris konstantareas <dimit@xxxxxxxx>]

Paul Davidson recently said that Keynes  ??didn?t explicitly insist
that we can?t draw the same labor supply curve as the classical
economists do?. True, he did not insist, but I would like to draw the
reader?s attention to his reply to Leontief in the 1937 QJE, on the labor
supply issue. Leontief criticized Keynes for contradicting ?the orthodox
homogeneity assumption?. In his reply, Keynes accepted the validity of
Leontief?s observation but rejected  ?orthodox? homogeneity or ?the
orthodox homogeneity postulate?-as defined by Leontief. This shows that
Keynes? own labor market model does not employ the classical labor
supply function. 
A very good reason for which Keynes raised a comprehensive objection to
the classical theory of labor supply is that under this theory the
?second postulate? holds good, in equilibrium. And Keynes who argued that
classical equilibrium, with voluntary or frictional unemployment, is only
??a limiting point of the possible positions of equilibrium?, he no doubt
introduced his General Theory as an equilibrium analysis of
the ?general case?. 
Had Keynes claimed ?unemployment disequilibrium? (Leijonhufvud 1968) then
a homogeneous labor supply could fit with the rest of his system. Thus,
when such a supply is employed doubts can be raised as have been raised,
as to what Keynes meant by the term equilibrium. That is, orthodox
homogeneity in Keynes? system is an intruder that prevents the reader
from taking Keynes literally and seriously on key terms of the General
Theory, and, thereby, on the ?subject? and object of it. Yet, the
"intrusion" begun immediately after Leontief's 1936 paper.
The other related big reason to orthodox homogeneity that has placed the
investigation of Keynes? case on the wrong path and has led from
unsatisfactory to incredible conclusions on Keynes as a logician
cum economist is explored in my ?Keynes and the classics?
I, that can be downloaded from:
http://www.yorku.ca/dimit