Toward a New Economics: Essays in Post-Keynesian and Institutionalist Theory

By Alfred S. Eichner | Go to book overview

identified by following press reports of collective bargaining in the unionized sector of the economy. Taking into account the multi-year duration of many labor contracts, the wage standard can then be used to explain the observed movement of money wages in the unionized sector, which largely corresponds to the oligopolistic component of the industrial sector plus the public sector. The alternative Phillips curve hypothesis is rejected by showing that, once the national incremental wage pattern is correctly identified and then properly incorporated into the money wage equation, the unemployment rate no longer has any explanatory power. The exception is again in the unorganized, or small business, sector where a change in the unemployment rate will partly affect the differential that normally exists between wages in that sector and wages throughout the rest of the economy.

This is not to argue that the national incremental wage pattern, though socio-politically determined and therefore exogenous to the economic system, will necessarily be immune to all economic influences. Indeed, it can be shown that any change in the socio-politically determined wage standard is likely to reflect a change in the growth of business profits and/or a change in the growth of consumer prices. Moreover, the political authorities may even opt for a free market incomes policy, meaning they hope a deliberately induced high unemployment rate will persuade the unionized work force to accept a lower rate of growth of money wages--in which case the national incremental wage pattern may itself be influenced by the unemployment rate, especially if the free market policy is pushed with sufficient abandon. The point is rather that, whatever may be the socio-political factors, economic or otherwise, shaping the national incremental wage pattern, that wage standard is not itself a variable uniquely determined by economic factors and therefore endogenous to the model. The distinction is an important one because it raises the possibility that, through some form of incomes policy other than a "free market" one, a national incremental wage pattern can be established which is noninflationary and in this way economic expansion, together with price stability, can be achieved.


Conclusions

This discussion of the several key elements of post-Keynesian theory and the econometric model of the American economy being constructed based on those elements has necessarily had to be somewhat

-173-

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Toward a New Economics: Essays in Post-Keynesian and Institutionalist Theory
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface viii
  • 1 - Introduction 3
  • 2 - The Megacorp as a Social Innovation 10
  • Afterword 27
  • 3 - Micro Foundations of the Corporate Economy 28
  • Afterword 73
  • 4 - An Anthropogenic Approach to Labor Economics 75
  • Afterword 96
  • 5 - The Demand Curve for Money Further Considered (Written With, and Based on the Econometric Work of, Leonard Forman and Miles Groves) 98
  • Afterword 109
  • 6 - Stagflation: Explaining the Inexplicable 113
  • Addendum 145
  • Afterword 148
  • Notes to the Addendum 149
  • 7 - The New Paradigm and Macrodynamic Modeling 151
  • Introduction 151
  • Conclusions 173
  • 8 - Post-Keynesian Theory and Empirical Research 176
  • Afterword 199
  • 9 - Reflections on Social Democracy 200
  • Afterword 218
  • References 219
  • Index 231
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