Labor market in Keynes and the role of rigid nominal wages
This paper discusses the statement that the Keynesian Theory would be “a particular
case of the Classical Theory with rigid wages”. It examines whether Keynesian analysis
depends on the rigidity hypothesis and to what extent the referred hypothesis has actually
been used in The General Theory. The Neoclassical Labor Market is criticized. The Keynesian
Theory of Employment, the Pigou’s Reply and the Neoclassical Synthesis are also examined.
The analysis of the method applied in the General Theory of Employment, Interest
and Money – a static method of a dynamic process – leads to the conclusion that its ideas
represented a complete revolution on the economic thought prevailing before its publication.
JEL Classification: B22; B31; E12.
Keywords: Keynesianism wage determination wage rigidity history of economic thought equilibrium