Are you arguing that
demand for commodities is demand for labor because labor is the source of all
production? I don?t think this is
what is generally taken to be the meaning of Mill?s dictum. I think that it means that permanent
technological unemployment is possible because capital-labor ratios are not
constant in a world of labor- (and capital-) displacing technological change
and where factors of production are not perfectly divisible, substitutable or
homogeneous. Employment may not
increase pari passu with
demand. Labor-displacing
technological change can even result in a decline in aggregate demand if it
results in a shift in income distribution away from wages and toward profits
and capitalists have a smaller marginal propensity to consume. There are forces of compensation and
forces of displacement, and the compensation mechanisms usually rely on some
version of Say?s Law. (See Hans Neisser, 1942,
"Permanent" Technological Unemployment: "Demand for Commodities Is Not Demand
for Labor", American Economic
Review, Vol. 32, No. 1. (Mar.), pp. 50-71, and more recently Harald Hagemann, 1994,
?Technological Unemployment,? The Elgar Companion to Radical Political Economy,
edited by Philip Arestis and
Malcolm
Sawyer, Aldershot, Hants, England ; Brookfield, Vt., USA :
Edward Elgar, c1994.)
While Keynes assumed in the General
Theory that technology and income distribution are given, elsewhere
he expressed the view that technological unemployment was possible and a real
world concern.
mat
-----Original
Message-----
From: Gunnar
Tomasson [mailto:gunnar.tomasson@xxxxxxxxxxx]
Sent: Thursday, January 23,
2003 1:48
PM
To: pkt@xxxxxxxxxxxxxxxx
Cc: Gang8
Subject: Keynes - Creditary
Economist?
John Stuart Mill's confident assertion in
his Principles that
"Demand for commodities is not demand for labour"
is curiously at odds with the Keynesian rationale for Aggregate
Demand Management - for how could two brilliant minds draw such radically
conflicting conclusions from the facts of the matter?