Supply and Demand: fundamentally flawed model of labor market
from Asad Zaman
I am currently engaged in teaching the final semester of Advanced Micro in our Ph.D. program. I have freedom to do here at PIDE, Pakistan, what may be extremely difficult in US/Europe — My course is built around demonstrating how conventional micro theory is strongly contradicted by empirical evidence. I also go on to build a convincing alternative. The first lecture on micro topics, starts by dismantling the fundamental Supply and Demand model in the context of the Labor Market. This is exactly where Keynes starts his book the General Theory. What amazes me is that conventional Labor Econ texts use exactly the same theory that Keynes demolished, and never mention Keynes — his objections are swept under the carpet, instead of being adressed or answered. I have posted an outline of the first lecture on WEA Pedagogy Blog:
This is an outline of the lecture 3 in Advanced Microeconomics — expands somewhat on the slides available from the link. This should be useful to heterodox economists looking for ways to teach an alternative course, radically different from conventional approaches. First two lectures consisted of some preliminary math, and can be skipped without lack of continuity. Video of the lecture (90m) is available at the bottom of the post.
Supply & Demand is Central to Economics: This is the modern Theory of Value. The market price determines the value – this is in conflict with classical conceptions of value.
BUT, this theory is WRONG! The central question in theory of Value is: HOW are prices determined? Why are water and tomatoes cheap, and why are diamonds expensive? read more