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KEYNES ON WAGE FLEXIBILITY AND THE AUSTRALIAN WAGES SYSTEM *
Author(s) -
ASPROMOURGOS TONY
Publication year - 1997
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.1997.tb00825.x
Subject(s) - economics , flexibility (engineering) , wage , unemployment , full employment , relevance (law) , efficiency wage , real wages , labour economics , quantity theory of money , keynesian economics , post keynesian economics , macroeconomics , monetary policy , law , management , political science
Keynes' General Theory briefly discusses the Australian wages system, as an example of a system in which an attempt was made to fix real wages by law. Keynes argues that such a system, strictly enforced, generates an unstable unemployment equilibrium or highly volatile money wages and prices. This paper clarifies Keynes' views on the Australian system, with a view to their wider relevance for the significance of real and money wage flexibility and inflexibility in Keynes' economics. The most striking finding is that money wage stickiness is a conclusion, not an assumption, of Keynes' theory of employment.