Keynes on the Australian Wages System

Tony Aspromourgos

No 205, Working Papers from University of Sydney, School of Economics

Abstract: Keyne's General Theory briefly discusses the Australian wages system, as an example of a system in which an attempt was made to fix real wages by law. Keynes argues that such a system, strictly enforced, generates an unstable unemployment equilibrium or highly volatile money wages and prices. This paper clarifies Keynes's views on the Australian system, with a view to their wider relevance for the significance of real money and wage flexibility and inflexibility in Keynes's economics. The most striking finding is that money wage stickiness is a conclusion, not an assumption, of Keynes's theory of employment.

Date: 1994-07
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