(The Devine) Jim responded to my comments about the illogicality of heterodox economists even accepting NRU OR Nairu as the basis of macroeconomic debate by talking about shifts in the institutions governing the labour market and the effect that this can have on the trade-off between inflational and unemployment. Now, of course, no one can deny that institution change can improve or reduce the efficiency of the trade-off i.e. can shift the Phillips curve (though I reject the sexist and classist explanations for the shift offered by orthodox economists as explained in my last post). But Jim seems to ignore the whole point I was trying to make. Whether one is talking Nairu or NRU, you have to accept a VERTICAL PHILLIPS CURVE by definition. There is no trade-off. Nairu stands for Non-accellerating inflation rate of unemployment. i.e. below that unemployment rate inflation must continue to accelerate so that attempting to reduce that level of unemployment will automatically accelerate into runaway inflation until that Nairu rate of unem. is reestablished at which the rate of inflation will stabilize. That means you can not reduce unemployment through macro policy without first changing the institutions (destroying unions, capping wages, reducing minimum wages, UI payments, deregulating labour markets, etc., all the elements of the neo-con agenda.) This is what is so dangerous in accepting this approach. Now with Bill M's, my own, and someone else on the list that posted on this the "class stuggle rate of unemployment", this problem is averted because it isn't the rate of unemployment that is the determinant, but rather the rate of inflation acceptable to the capos which is also compable with the minimum rate of profits acceptable to the capos. It forces the debate onto not why wages and employment must be contained, but why profits and rentier income have accelerated to the point where unemployment has had to rise to keep wages down so that productivity gains can be expropriated virtually entirely by property. Paul Phillips, economics, University of Manitoba