From: gerald_a_levy (gerald_a_levy@MSN.COM)
Date: Sat Nov 22 2003 - 07:37:11 EST
Ajit wrote: > This proposition makes no sense to me. Why should > money wages fall with the rise in productivity and > real wages being fixed? By assumption and _only_ by assumption -- given the ceteris paribus conditions posited by Mike L. I.e. _if_ productivity increases result in lower prices for means of consumption then a _given_ real wage requires that workers receive less money wages, ceteris paribus. > I think one can point out not > one but several cases, including the USA in the last > ten to twenty years, where real wages have remained > constant or even declined but money wages almost > invariably have been on the rise. Yes, I agree. > I think your > proposition sounds more absurd that what you are > declaring to be absurd. You are confusing a theoretical condition whose logic I am attempting to explain with my position. The only point where my position entered into this was my assertion that the 'absurdity' (of declining money wages under the condition of increasing productivity and a fixed wage) means that we need to drop the assumption of a fixed real wage in a dynamic analysis. To explain _why_ real wages have in practice remained stagnant yet money wages increase (the empirical and historical issue you raise above) requires that we drop the ceteris paribus assumption and consider the major variables that have brought about this consequence. One might want to include variables that, for example, can lead to inflation. In solidarity, Jerry
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