Class Notes (809,447)
Canada (493,713)
ECON 460 (38)
Lecture 2

lecture 2 econ 460.docx

4 Pages
Unlock Document

McGill University
Economics (Arts)
ECON 460
William Watson

ECON 460 History of Thought Lecture 2 Tuesday, September 11, 2012 Keynes: The General Theory of Employment, Interest and Money Life in 1936  Fascists and communists up, democrats down  Capitalism was doomed  People argued that civilization was at stake Preface: writing to economists; question their premises Question the premises of economics (who was Keynes to do so?). Divergences among economists have destroyed the discipline’s practical influence. Money not separate. “A monetary economy, we shall find, is essentially one in which changing views about the future are capable of influencing the quantity of employment and not merely its direction.” Classical theory a special case. His theory is a general theory. “A long struggle of escape from habitual modes of thought and expression...” (Maybe not for us, as we live in the Keynesian age.) “I must ask forgiveness, if in the pursuit of sharp distinction, my controversy is itself too keen”- however he loves controversy “A monetary economy is essentially one in which changing views about the future are capable for influencing the quantity of employment and not merely its direction” Book I: Introduction
Chapter 1: The General Theory Teaching classical special case “misleading and disastrous.” Characteristics of the special case “not those of the economic society which we actually live...” solecism (fn. 1): “a grammatical mistake in speech or writing: a breach of good manners; a piece of incorrect behaviour” Chapter 2: The Postulates of the Classical Economics Who was (poor!) Professor Pigou?  Discussed externalities; pigou taxes; professor at Cambridge  Idea of taxes on externalities  Coined poor because he is barely literate by Keynes What are the two classical postulates?  W= MPL=MDL, what determines wage is MPL; you cant pay more because you loose money and cant pay less because then labor migrates; graph: MPL slopes down and MDL slopes up; wage in y-axis and labor in x-axis; if you are not at L* then people are not accepting that wage and therefore the MDL line is somewhere else because of min wage, fixed contracts, union contract How do they determine the level of employment? (What would graphing them look like?) What is frictional employment?  Spell of unemployment as people change jobs; institutional arrangements can affect frictional unemployment What is voluntary employment? What are “wage-goods”?  Produced and consumed by labor How do you get an increase in employment in this world?  Only 4 possible means of increasing employment: 1. an improvement in organization or in foresight which diminishes frictional unemployment 2. decrease in MDL, as expres
More Less

Related notes for ECON 460

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.