The GEM Project, with its emphasis on wage rigidities, most heavily contributes to the supply side of macro analysis. Think about how the development of stabilization-relevant macroeconomics would have been altered if, during the brief period of active efficiency-wage …
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(Mis)Understanding Keynes’ General Theory
Johnthan Schlefer in his The Assumptions Economists Make (2012, p.189) provides a familiar, albeit flawed, interpretation of an important episode in the development of Keynesian macroeconomics: “All economists who espoused Keynesian theory in the 1930s saw in it a …
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Fundamental Contribution of the Mid-Century Labor Economists
Despite innovations that appear to break substantially with textbook macro theory, generalized-exchange modeling is best understood as incremental. Its debt to the middle-century intrafirm analysis of the Neoclassical-Revisionist labor economists has been emphasized by this Blog. In his take …
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Useful Macro Modeling for the Corporate Age
Market-centric general equilibrium (GME), pioneered by Walras and infused with the genius of Arrow and Debreu, is a towering scholarly achievement. It has long been economists’ dominant model of rational price-mediated exchange. Like the succession of beautiful theories in …
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A Compact Case for Rational Exchange Generalization
A compact case for the model-building necessity of the exchange generalization featured on this website can be constructed on three robust characteristics of modern, highly specialized economies. (1) Workplaces restricted by substantial employer-employee information asymmetry broadly exist. (2) Downward …
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GEM Context: Labor in New Corporate Forms
Workplace research. Serious academic research on large-establishment employee behavior can be roughly dated from the celebrated 1924-32 Hawthorne experiments. Conducted at the Hawthorne plant of the Western Electric Company, the study was originally designed to be technical in nature: …
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GEM Context: Second Industrial Revolution
It is possible to chart a plausible time path of global living standards (output per capita) over tens of thousands of years. The evidence indicates that it took some 12,000 years (ending around 1000 BC, the time of the …
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GEM Context: The Great Fact
It is possible to chart a plausible time-path of global living standards (output per capita) over tens of thousands of years. The evidence indicates that it took some 12,000 years (ending around 1000 BC, the time of the Ancient …
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Managing Extreme Instability
In the GEM Project’s rational-behavior modeling, extreme instability is a hugely damaging mass-market failure that results from nonstationary contractions of nominal demand. New Keynesian theorists do not have much that is useful to say on this crucial phenomenon. They do …
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Adam Smith, Arthur Okun, and the Generalization of Rational Exchange
In his masterwork, Adam Smith (1776) provides two particularly deep insights about economic activity: the spontaneous organization of self-interested market exchange (the “invisible hand”) and the nature and implications of production specialization (the “pin factory”). John Stuart Mill notably …
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