> This is a macro result. You want a mainstream macro text.
All the mainstream macro texts I've seen treat the labor demand curve as
if it were any other demand curve, without a word addressing its special
character, namely that the sellers have to sell, no matter what the price.
Do bourgeois economists have a justification for why they think, in a pure
competition world, that workers' wages are equal to their marginal
productivity? And so that when productivity rises, or the price of goods
rises, wages rise? Do they think assume there are less workers than there
are jobs and that capital is forced to bid up wages to that point? And if
so, is there any theoretical ground for why this is a decent heuristic
assumption? As opposed to, say the opposite assumption, that there are
more workers than jobs, and that wages are bid down towards the "marginal
cost of production of a worker" (plus social faux frais) as Marx might
have put it?
Michael
>>>>>>>>>
Answering all this would require a treatise. I'd say the overriding presumption is that firms will hire up to the point where a worker's contribution to output (and hence firm revenue) justifies his/her cost to the firm. From this standpoint, if productivity goes up wages should as well, other things equal. If more workers show up looking for jobs, wages should go down, but they will still end up equating to marginal productivity (albeit at a different level than previously). More or fewer job applicants don't change that; it only changes what marginal productivity finally settles to.
The literature is much more sophisticated than this capsule, though it could still be wrong. Firms don't necessarily seek to maximize profits; labor markets are not necessarily like 'spot markets.' Workers don't necessarily bargain for a given real wage, as Keynes proposes in the opening of the GT. Etc. etc.
I don't buy the idea of the wage equating to the cost of reproducing labor, if that's what you're saying. There's very often enough competition (albeit 'perfect') to induce employers to pay more than subsistence if the worker is worth more than that to them. There are exceptions in situations where workers have exceedingly constrained choices, but I don't think it is prevalent in the industrial core to make it a reasonable 'law' of economics.
Secondly, the notion of subsistence is not very well-defined, as has been pointed out here not too long ago.
I like the Galbraith-Darity and Davidson macro books.
mbs