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Lucas on Involuntary Unemployment

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  • Michel, De Vroey

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

The aim of this paper is to examine critically Lucas’ arguments against Keynes’s General Theory and in particular against Keynes’s concept of involuntary unemployment. It comprises two main parts. In the first, I question Lucas’s claim that Keynes betrayed the equilibrium discipline by freeing himself from the postulates of optimising behaviour and market clearing. In the second, I discuss Lucas’ three arguments against the involuntary unemployment concept - first, that there is no rationale for drawing a distinction between two sorts of unemployment, second that every economic outcome features voluntarity and involuntarity jointly and, third, that alternatives to unemployment are always present.

Suggested Citation

  • Michel, De Vroey, 2002. "Lucas on Involuntary Unemployment," LIDAM Discussion Papers IRES 2003016, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2003016
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    References listed on IDEAS

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    1. Lucas, Robert E, Jr, 1996. "Nobel Lecture: Monetary Neutrality," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 661-682, August.
    2. Michel De Vroey, 1999. "From Labor Rationing to (Involuntary) Unemployment: A Conceptual Elucidation," Eastern Economic Journal, Eastern Economic Association, vol. 25(3), pages 315-330, Summer.
    3. Michel De Vroey, 1997. "Involuntary unemployment: the missing piece in Keynes's General Theory," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 4(2), pages 258-283.
    4. De Vroey, Michel, 2002. "Equilibrium and Disequilibrium in Walrasian and Neo-Walrasian Economics," Journal of the History of Economic Thought, Cambridge University Press, vol. 24(4), pages 405-426, December.
    5. Michel De Vroey, 1998. "Is the tatonnement hypothesis a good caricature of market forces?," Journal of Economic Methodology, Taylor & Francis Journals, vol. 5(2), pages 201-221.
    6. Michel De Vroey, 2000. "Marshall on equilibrium and time: a reconstruction," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 7(2), pages 245-269.
    7. Michel De Vroey, 2001. "Friedman and Lucas on the Phillips Curve: From a Disequilibrium to an Equilibrium Approach," Eastern Economic Journal, Eastern Economic Association, vol. 27(2), pages 127-148, Spring.
    8. Brian Snowdon & Howard R. Vane, 1999. "Conversations with Leading Economists," Books, Edward Elgar Publishing, number 1607.
    9. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    10. Donald A. Walker (ed.), 2000. "Equilibrium," Books, Edward Elgar Publishing, volume 0, number 1585.
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    Cited by:

    1. Alex Gymnopoulos & Thanos Poulakis & Haris Poulakis & Nikolaos Chatzarakis, 2021. "Investigating the Greek Unemployment from a Classical Perspective," Bulletin of Political Economy, Bulletin of Political Economy, vol. 15(1), pages 69-91, June.
    2. Michel De Vroey, 2007. "Did The Market‐Clearing Postulate Pre‐Exist New Classical Economics? The Case Of Marshallian Theory," Manchester School, University of Manchester, vol. 75(3), pages 328-348, June.
    3. John S.L. McCombie & Ioana Negru, 2014. "On economic paradigms, rhetoric and the micro-foundations of macroeconomics," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(1), pages 53-66, April.

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    More about this item

    Keywords

    Keynes; Lucas; Involuntary Unemployment;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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