Published In Journal of Post Keynesian Economics, 6, 4. Keynes ' Labor Market: A Reply

Professor Tuchscherer (1984) offers a number of comments on my interpretation of Keynes1 labor market, but the main points of his criticism concern three issues. First is the labor supply function. Second is the meaning of involuntary unemployment. Third is the determination of money wages. If differences on these three points can be reduced, other comments loosely scattered through his text and footnotes will not be major barriers to understanding, so I shall confine my response to these issues. Unlike Tuchschirer, I do not see all of these issues as resolvable within the labor sub-system, so I reproduce the principal equations used in my interpretation of Keynes ' general equili-brium theory. The output market and money market equations are summarized in two equilibrium relations, the IS and LM equations. These equations are, as I have said, as close to conventional as I can make them. IS: A ( r,- |,E) LM: |- = B ( r, r e, f