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Efficiency Wages and Classical Wage Theory

Published online by Cambridge University Press:  11 June 2009

Michael E. Bradley
Michael E. Bradley
Affiliation:
Professor of Economics, University of Maryland, Baltimore County.
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Extract

In The General Theory, John Maynard Keynes lumped together the marginalist and neoclassical economics of the late nineteenth and twentieth centuries and the more narrowly defined “classical” economics of Adam Smith, David Ricardo, J. R. McCulloch, James and John Stuart Mill and other mainstream economists of the late eighteenth and early nineteenth into what he called the “classical theory of employment,” which he reduced to two “fundamental postulates”:

(a) The wage is equal to the marginal product of labour…

(b) The utility of the wage when a given volume of labour is employed is equal to the marginal disutility ofthat amount of employment…(Keynes 1936, p. 5).

Type
Research Article
Information
Journal of the History of Economic Thought , Volume 29 , Issue 2 , June 2007 , pp. 167 - 188
Copyright
Copyright © The History of Economics Society 2007

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