Developments in Major Fields of Economics
Edited by Gilbert Faccarello and Heinz D. Kurz
Chapter 26: Labour and employment
The problem of employment is a central topic in economic thought. Economists of all traditions and schools have always admitted short-run fluctuations in aggregate employment levels associated with the business cycle and explained them with reference to a variety of factors. Yet the central question is, of course, fluctuations around what longrun level of employment? Concerning the replies to this question provided in the course of the history of economic thought, there is often a good deal of misapprehension among economists, to which John Maynard Keynes himself contributed, by attributing to all his predecessors from David Ricardo to Arthur Cecil Pigou (with few exceptions including Thomas Robert Malthus and Karl Marx) the view that both Say’s law and full employment hold. Yet things are not so simple, and Keynes’s definition of “classical” economists must be questioned in the light of recent developments in economic theory and the history of economic thought.
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