The article presents the concepts of notional and effective demand for labor within the usual real wage and employment space. Its purpose is to compare various employment models within a single and familiar heuristic framework, taking into account both the profit maximization hypothesis and the effective demand principle. This framework retains the assumption of decreasing returns but adds the impact of income distribution on effective demand through consumption demand.
Get full access to this article
View all access options for this article.
References
1.
Barro, R. J., and H. I. Grossman. 1971. A general disequilibrium model of income and employment . American Economic Review61 (1): 82-93 .
2.
Bénassy, J. P. 1975. Neo-Keynesian disequilibrium theory in a monetary economy . Review of Economic Studies42: 503-523 .
3.
Bhaduri, A. 1983. Multimarket classification of unemployment: A sceptical note . Cambridge Journal of Economics7 (3): 235-241 .
4.
Bhaduri, A., and S. A. Marglin. 1990. Unemployment and the real wage: The economic basis for contesting political ideologies . Cambridge Journal of Economics14 (4): 375-393 .
5.
Colander, D., ed. 1996. Beyond microfoundations: Post Walrasian macroeconomics. New York: Cambridge University Press .
6.
Colander, D. 2001. Effective supply and effective demand . Journal of Post Keynesian Economics23 (3): 375-382 .
7.
Davidson, P. 1983. The marginal product is not the demand curve for labor and Lucas's labor supply function is not the supply curve for labor in the real world . Journal of Post Keynesian Economics6 (1): 105-117 .
8.
Davidson, P. 1994. Post Keynesian macroeconomic theory. Aldershot, UK: Edward Elgar .
9.
Davidson, P. 1998. Post Keynesian employment analysis and the macroeconomics of OECD employment . Economic Journal108: 817-831 .
10.
Davidson, P. 1999. Keynes's principle of effective demand versus the bedlam of the new Keynesians . Journal of Post Keynesian Economics21 (4): 571-588 .
11.
Davidson, P., and E. Smolensky. 1964. Aggregate demand and supply analysis. New York: Harper & Row .
12.
Deprez, J. 1996. Davidson on the labor market in a monetary production economy. In Keynes, money and the ppen economy: Essays in honour of Paul Davidson: Volume one, ed. P. Arestis, 123-143. Cheltenham, UK: Edward Elgar .
13.
Dutt, A. K. 1987. Keynes with a perfectly competitive goods market . Australian Economic Papers (December): 275-293 .
14.
Dutt, A. K., and E. J. Amadeo. 1990. Keynes's third alternative? The neo-Ricardian Keynesians and the post Keynesians. Aldershot, UK: Edward Elgar .
15.
Fazzari, S. M., P. Ferri, and E. Greenberg. 1998. Aggregate demand and firm behavior: A new perspective on Keynesian microfoundations . Journal of Post Keynesian Economics20 (4): 527-559 .
16.
Fujimoto, T., and D. Leslie. 1983. A two-class model of Keynesian unemployment . Metroeconomica35 (1-2): 54-71 .
17.
Harcourt, G. C. 2001. On Keynes and Chick on prices in modern capitalism. In Money, macroeconomics and Keynes: Essays in honour of Victoria Chick. Vol. 1, ed. P. Arestis, M. Desai, and S. Dow, 115-123. London: Routledge .
18.
Harris, D. J. 1974. The price policy of firms, the level of employment and distribution of income in the short-run . Australian Economic Papers13: 144-151 .
19.
Kahn, R. F. 1977. Malinvaud on Keynes . Cambridge Journal of Economics1 (4): 375-388 .
20.
Kalecki, M. 1944. Professor Pigou on the classical stationary state: A comment . Economic Journal54: 131-132 .
21.
Kalecki, M. 1971. Selected essays in the dynamics of the capitalist economy. Cambridge: Cambridge University Press .
22.
Keynes, J. M. 1936. The general theory of employment, interest and money. London: Macmillan .
23.
Keynes, J. M. 1973. The collected writings of John Maynard Keynes: XIV the general theory and after: Part II: Defence and development, ed. D. Moggridge. London: Macmillan .
24.
King, J. E. 1994. Aggregate supply and demand analysis since Keynes: A partial history . Journal of Post Keynesian Economics17 (1): 3-32 .
25.
King, J. E. 2001. Labor and unemployment. In A new guide to post Keynesian economics, ed. R. C. Holt and S. Pressman, 65-78. London: Routledge .
26.
Kurz, H. D. 1985. Effective demand in a classical model of value and distribution: The multiplier in a Sraffian analysis . Manchester School of Economics and Social Studies53 (2): 121-137 .
27.
Kurz, H. D. 1990. Technical change, growth and distribution: A steady-state approach to unsteady growth. In Capital, distribution and effective demand, ed. H. D. Kurz, 210-239. Cambridge, UK: Polity .
28.
Lavoie, M. 1986. Chômage classique et chômage Keynésien: Un prétexte aux politiques d'austérité . Économie appliquée34 (2): 203-238 .
29.
Lavoie, M. 1992. Foundations of post-Keynesian economic analysis. Aldershot, UK: Edward Elgar .
30.
Layard, R., S. Nickell, and R. Jackman. 1991. Unemployment: Macroeconomic performance and the labour market. Oxford, UK: Oxford University Press .
31.
Malinvaud, E. 1977. The theory of unemployment reconsidered. Oxford, UK: Basil Blackwell .
32.
Moore, B. J. 1988. Horizontalists and verticalist: The macroeconomics of credit money. Cambridge: Cambridge University Press .
33.
Mott, T., and E. Slattery. 1994. The influence of changes in income distribution on aggregate demand in a Kaleckian model: Stagnation vs. exhilaration reconsidered. In Employment, growth and finance, ed. P. Davidson and J. A. Kregel, 69-82. Aldershot, UK: Edward Elgar .
34.
Nell, E. J. 1978. The simple theory of effective demand . Intermountain Economic Review (Fall): 1-33 .
35.
Nell, E. J. 1988. Prosperity and public spending: Transformational growth and the role of government. Boston: Unwin Hyman .
36.
Nell, E. J. 1998. The general theory of transformational growth: Keynes after Sraffa. New York: Cambridge University Press .
37.
Palley, T. I. 1996. Post Keynesian economics: Debt, distribution and the macro economy. London: Macmillan .
38.
Pasinetti, L. L. 1974. The economics of effective demand. In Growth and income distribution: Essays in economic theory. Cambridge: Cambridge University Press .
39.
Patinkin, D. 1965. Money, interest, and prices. New York: Harper & Row .
40.
Riach, P. A. 1995. Wage-employment determination in a post-Keynesian world. In The political economy of full employment: Conservatism, corporatism and institutional change, ed. P. Arestis and M. Marshall, 163-175. Aldershot, UK: Edward Elgar .
41.
Robinson, J. 1962. Essays in the theory of economic growth. London: Macmillan .
42.
Rochon, L. P. 2000. Credit, money and production: An alternative post Keynesian approach. Cheltenham, UK: Edward Elgar .
43.
Schefold, B. 1983. Kahn on Malinvaud. In Keynes's economics and the theory of value and distribution, ed. J. Eatwell and M. Milgate, 229-246. Oxford, UK: Oxford University Press .
44.
Skott, P. 1989. Conflict and effective demand in economic growth. Cambridge: Cambridge University Press .
45.
Tobin, J. 1980. Asset accumulation and economic activity. Chicago: University of Chicago Press .
