Abstract
Frankel’s charge against Keynes, that he sought to use public deceit in monetary policy, by the deliberate use of money illusion in the labour market, carries with it very serious implications. Not only, it is claimed, will the discovery of the bluff lead to inflationary expectations being ‘built in’ to wage claims and other contracts expressed in money terms, but it will also progressively undermine the moral authority of the monetary order itself.1
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Notes and References
S. H. Frankel, Money: Two Philosophies (Oxford: Blackwell, 1977) p. 77.
See, for example, J. Tobin, ‘Inflation and Unemployment’, American Economic Review (March 1972) pp. 1–8;
J. Trevithick, ‘Money Wage Inflexibility and the Keynesian Labour Supply Function’, Economic Journal (June 1976) pp. 327–32.
J. T. Addison and J. Burton, ‘Keynes’s Analysis of Wages and Unemployment Revisited’, The Manchester School (March, 1982) p. 9.
A. Leijonhufvud, On Keynesian Economics and the Economics of Keynes (New York: OUP, 1968) p. 97.
It is interesting to note that Leijonhufvud’s criticism by way of comparison with the consumption function is reversed in the later criticism by H. Grossman of Leijonhufvud’s own acceptance of R. W. Clower’s reinterpretation of the consumption function. See H. Grossman, ‘Was Keynes a “Keynesian”, A Review Article’, Journal of Economic Literature (1972) pp. 26–30.
J. M. Keynes, ‘Relative Movements of Real Wages and Output’, Economic Journal (March 1939) pp. 34–51.
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© 1989 Gordon A. Fletcher
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Fletcher, G.A. (1989). Employment Policy. In: The Keynesian Revolution and its Critics. Keynesian Studies. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20108-2_22
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DOI: https://doi.org/10.1007/978-1-349-20108-2_22
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