Abstract
An entrepreneur society is one where managers use forward money contracts to hire inputs for the production process. These contracts provide entrepreneurs with the legal ability to direct the use of labour, materials and other hired inputs in producing output in that manner managers deem to be most cost effective and profitable.
To suppose that a flexible wage policy is a right and proper adjunct of a system which on the whole is one of laissez faire, is the opposite of the truth. It is only in a highly authoritarian society, where sudden, substantial, all-round changes could be decreed that a flexible wage-policy could function with success … the money-wage level as a whole should be maintained as stable as possible … This policy will result in a fair degree of stability in the price level; — greater stability, at least, than with a flexible wage policy.
J. M. Keynes1
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The Stability of the Purchasing Power of Money
Regularity of employment and fair treatment are conditions which Hicks has specified as necessary for the operation of an efficient labour market. See J. R. Hicks, The Theory of Wages, 2nd edn (London, Macmillan, 1966) p. 317.
See A. Okun, Prices and Quantities: A Macroeconomic Analysis (Washington, Brookings Institution, 1981).
See A. Lindbeck and D. Snower, ‘Cooperation, Harassment, and Involuntary Unemployment’, American Economic Review, 78, 1988.
From 1974 to 1979, the OPEC current surplus totalled $224 billion. The ensuing payments and inflationary problems encouraged all consuming nations to be very cautious regarding demand management to avoid recession and unemployment. Cf. A. Maddison, ‘Western Economic Performance in the 1970s: A Perspective and Assessment’, Banca Nazionale Del Lavoro Quarterly Review, September 1980, pp. 247–90.
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© 1992 Paul Davidson
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Davidson, P. (1992). The Stability of the Purchasing Power of Money. In: International Money and the Real World. Palgrave Macmillan, London. https://doi.org/10.1057/9780230378094_8
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DOI: https://doi.org/10.1057/9780230378094_8
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