Keynes' abominable Z-footnote
Keynes' concept of a Z w-function relates the value of aggregate supply in wage units to employment. It aroused much controversy until the very recent past. A special bone of contention was the question of whether Keynes intended the Z w-curve to be drawn as a 45� line. This note argues that the 45� line, which Keynes did mention referred to equilibrium conditions 'on' the Z w-curve but not to the shape of the curve itself. Keynes assumed that the Z w-curve is linear and its slope is determined by the share of wages in total income. The linearity assumption is helpful for consistent aggregation. This curve is based on conventional (neo)classical assumptions of profit maximisation under atomistic competition and on well-behaved production functions on the microeconomic level. The Z w-curve is the basis for Keynes's claim that there is a reliable relation between effective demand and employment. Seeing this concept in vicinity to (neo)classical analysis is important for three reasons: (i) it substantiates Keynes's claim to have a General Theory in the sense that it contains the classical analysis; (ii) the approach refutes what the note calls 'Hayek-type' criticism of Keynes, namely the claim that classical theory shows that Keynes is wrong in claiming the existence of a reliable relationship between effective demand and employment; (iii) the approach refutes what the note calls 'Hawtrey-type' criticism, namely that the (neo)classical analysis is logically so flawed that on this basis no connection can be derived between effective demand and employment. Copyright The Author 2010. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 35 (2011)
Issue (Month): 3 ()
|Contact details of provider:|| Postal: |
Fax: 01865 267 985
Web page: http://www.cje.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:cambje:v:35:y:2011:i:3:p:619-633. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.