Comments on: Demand for Commodities Is Not Demand for Labor

By: Sheldon Richman

Sheldon Richman — Thu, 19 Feb 2009 15:36:00 +0000

By the way, I was happy to see Garrison describe Mill’s maxim as “cryptic.” It’s not just me!

By: Sheldon Richman

Sheldon Richman — Thu, 19 Feb 2009 12:12:23 +0000

Thanks, Peter!

By: Peter Klein

Peter Klein — Thu, 19 Feb 2009 03:19:56 +0000

Sheldon, I’m not a Mill scholar, but I can tell you what Hayek thought Mill’s proposition implied. Hayek was thinking primarily in terms of the time-structure of production — namely, that an increase in the demand for present consumption can simply shift resources, labor included, away from the production of higher-order (early-stage) goods and toward the production of lower-order (later-stage) goods. There is no necessary increase in employment. Keynes had in mind a one-period production scheme in which labor is either used to produce consumption goods or is simply idle, hence increasing the demand for consumption goods increases employment. It never occurred to Keynes that this increase in demand — say, for building houses — might bid labor and other factors away from the production of other goods and services, particularly capital goods.

Garrison has a nice summary in his review of Hayek’s early essays on money:

http://www.auburn.edu/~garriro/r5hayek.htm

By: Sheldon Richman

Sheldon Richman — Wed, 18 Feb 2009 21:31:24 +0000

Peter, was Mill saying that the demand for commodities was not a demand for labor in general, but rather for specific labor? Or: was he saying that machines, rather than labor, may satisfy a particular consumer demand? Or: that saving could boost the demand for labor in earlier stages of production? Or was he saying all these things? I’d like to see an elaboration of Mill’s fourth principle.

By: Recommended Reading « The Everyday Economist

Recommended Reading « The Everyday Economist — Wed, 18 Feb 2009 03:08:43 +0000

[...] 17, 2009 · No Comments 1. “Demand for Commodities Is Not Demand for Labor” — Peter [...]

By: Why Obama’s Stimulus Won’t Work and What Might « ThinkMarkets

Why Obama’s Stimulus Won’t Work and What Might « ThinkMarkets — Sat, 14 Feb 2009 13:47:57 +0000

[...] link: Peter Kein has a very interesting post at Organizations and Markets called, “Demand for Commodities in Not Demand for Labor.” The historian of economic thought will note that this is one of John Stuart Mill’s tests of an [...]

By: Gary

Gary — Thu, 12 Feb 2009 17:18:01 +0000

In answer to Craig Pirrong’s (rhetorical) question, the answer is that Obamulus is not stimulus but payback for the unions (including public unions) and other special interest groups that sent $750 his way. It’s the Obamian hundredfold payback, which I call Obamulus.

By: Michael F. Martin

Michael F. Martin — Wed, 11 Feb 2009 17:45:56 +0000

Indeed:

http://www.fivethirtyeight.com/2009/02/why-were-probably-in-for-long-recession.html