Thread: Keynesian vs austrian debates leading up to the resession.

Originally Posted by Longshot

The market for labor operates no differently than a market for widgets.

It must operate differently. A widget can be put in any store and sold to any audience, labor on the other hand is not always willing to relocate and unlike any other product has an opinion on what shelf it's sold on (place of employment), to whom (the employer) and what other products are on the shelf (co-workers).

Labor has preferences and work isn't a neutral activity. Those two features ensure the market cannot behave the same.

Originally Posted by Anikdote

It must operate differently. A widget can be put in any store and sold to any audience, labor on the other hand is not always willing to relocate and unlike any other product has an opinion on what shelf it's sold on (place of employment), to whom (the employer) and what other products are on the shelf (co-workers).

Labor has preferences and work isn't a neutral activity. Those two features ensure the market cannot behave the same.

All sellers have preferences, no?

Originally Posted by Longshot

All sellers have preferences, no?

A supply side comment about preferences? That doesn't make any sense.

I'll address it though because, I do get the point, but the jargon is a mess.

A "seller" (as you say) only cares that a buyer exists, and typically not who or where the buyer is. A laborer cares a great deal who and where the "buyer" is and even ignoring transportation costs/relocation costs the laborer may reject a prospect for reasons that'd make no sense for an object, such as it not being near his family.

Originally Posted by Anikdote

A supply side comment about preferences? That doesn't make any sense.

I'll address it though because, I do get the point, but the jargon is a mess.

A "seller" (as you say) only cares that a buyer exists, and typically not who or where the buyer is. A laborer cares a great deal who and where the "buyer" is and even ignoring transportation costs/relocation costs the laborer may reject a prospect for reasons that'd make no sense for an object, such as it not being near his family.

I agree that a laborer considers these circumstances. This means that all these things are variables that effect that laborer's supply curve, correct?

Originally Posted by Longshot

I agree that a laborer considers these circumstances. This means that all these things are variables that effect that laborer's supply curve, correct?

Not to poison the well, but I'm shocked your making similar arguments to Engel in The Principles of Communism when making the case for labour power.

In either case, yes, but then why is the labor supply curve (unlike others) backwards bending?

Originally Posted by Anikdote

Not to poison the well, but I'm shocked your making similar arguments to Engel in The Principles of Communism when making the case for labour power.

In either case, yes, but then why is the labor supply curve (unlike others) backwards bending?

One possible explanation is what they refer to as the income effect, which has do to with the economic principle of diminishing marginal returns.

So the market for labor is unique because if has a unique supply curve. Anything else?

Originally Posted by Longshot

One possible explanation is what they refer to as the income effect, which has do to with the economic principle of diminishing marginal returns.

It's the only explanation, do cookies get bored after sitting on the shelf for too long, getting sold for too much and decide they'd rather be on vacation?

So the market for labor is unique because if has a unique supply curve. Anything else?

Not very nice to pretend that's the only example I've provided. They difference is so stark to me, I fail to see how any confusion could be had.

Originally Posted by Anikdote

It's the only explanation, do cookies get bored after sitting on the shelf for too long, getting sold for too much and decide they'd rather be on vacation?

Why do you keep pretending that cookies are sentient beings? It's silly. We've already established that is not the cookies themselves but rather the seller of the cookies that is the market participant.

Not very nice to pretend that's the only example I've provided. They difference is so stark to me, I fail to see how any confusion could be had.

You cited a uniquely shaped supply curve (as well as listing may factors that influence said supply curve). Aside from that, I'm not seeing how the market for labor is otherwise unique. It is essentially buyers and suppliers coming together and engaging in transactions. Pretty standard stuff.

Originally Posted by Longshot

Why do you keep pretending that cookies are sentient beings?

I don't, but it's the same convolution that occurs when you attempt to separate labor, from the person providing it.

We've already established that is not the cookies themselves but rather the seller of the cookies that is the market participant.

Your mixing your supply side with your demand side (a cookie vendor with an employee) it's inconsistent. Further, a cookie vendor can be separated from the things he sells, a laborer cannot.

I'm not seeing how the market for labor is otherwise unique.

You said it yourself:

Why do you keep pretending that cookies are sentient beings?

I'm not certain I could put it any better.

Originally Posted by Longshot

Why do you keep pretending that cookies are sentient beings? It's silly. We've already established that is not the cookies themselves but rather the seller of the cookies that is the market participant.


You cited a uniquely shaped supply curve (as well as listing may factors that influence said supply curve). Aside from that, I'm not seeing how the market for labor is otherwise unique. It is essentially buyers and suppliers coming together and engaging in transactions. Pretty standard stuff.

It is quite silly to think standard supply and demand is sufficient to understand the labour market. Productivity, for example, is shown to be a function of wage. We also know that the profit motive is inconsistent with market clearing. Indeed, labour economics will dismiss the primary importance of the external labour market becaus of the unique features of labour (e.g. internal labour markets will be preferred, allowing for greater exploitation and the use of inefficient hierarchy to maximise economic rents)