Full text: Price Takers' Plenty in a Model of Pure Capitalism.

his nonv.’age policies and short-run responses to external shocks will be biased 
in the direction of increasing employment and activity. In other words, just 
as the price-maker seller behaves as if he had an excess supply to sell, so 
the price-maker buyer of labor and other inputs behaves as if he had an 
excess demand to buy. 
For example, if he can find unemployed workers willing to work for him 
at his set wage, he will find it profitable to employ them and anxious to do 
so. Of course, if the wage originally set was the equilibrium wage, it will 
have absorbed all the workers willing to work at that wage and qualified to 
work for him.| But changing tastes and conditions may have released workers 
in other firms, or the end of the school year may have suddenly increased 
the size of the labor force; and the price-maker employer will find it 
profitable to employ such newly available workers, considering that the MVP 
of labor to him exceeds his set wage. 
The standard argument is that the availability of the extra workers would 
depress the wage; but the social cost of lowering wages is too high to let 
that happen. The employer-employee relation is an amalgam of cooperation 
lc IfO'T- 
and conflict; and since smooth relations are very much in the employer’s 
interest, he must always stress the cooperation and play down the conflict. 
That rules out wage reductions in any but the most extreme cases, considering 
the stress they put on the element of conflict. It is very probable therefore 
that the newly available workers will be hired at the existing wage.

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