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

The employment so created is strictly limited if the newly employed 
workers save part of their additional income. But as rising employment and 
output approach the physical limits of productive capacity, that may 
stimulate investment as well; and an investment-connected multiplier, of 
course, requires no price reductions nor extra sales effort. In short, the 
employers 1 excess demand for labor in a producer-dominated labor market is 
quite likely to generate upward cumulative processes in the face of economy 
wide unemployment. Accordingly, generalized, nationwide unemployment, if not 
incompatible with a producer-dominated labor market, is at least likely to be 
mitigated and unlikely to persist. 
(As an aside, let me mention the use of the above argument in 
relating the macroeconomic theory of the multiplier to the microeconomic 
theory of the price-maker employer's response to the availability of 
unemployed labor, and in making more explicit how and why an upward 
multiplier process can increase employment and output without also 
raising x-rages and prices.) 
So far, I was trying to show how the price maker's excess 
demand for labor leads him to employ additional workers involuntarily 
unemployed. The same excess demand, however, can also keep him from 
firing workers when demand for his products declines. for he may 
well find it profitable to respond to the fall in sales by trying to 
restore them through a price reduction or increased advertising, 
while keeping wages and the number of \vorkers employed unchanged. 
That conclusion follows from the fact that since the MVP of 
labor is initially higher, perhaps quite a bit higher than the

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