Doug writes:
>It's been a while, but don't I remember Keynes using the "wage unit"
as the numeraire in cost comparisons? I'm writing something on oil
right now, and it seems to make more sense to compare prices over
time using the average hourly wage rather than the CPI, given all the
guesswork involved in producing a price index.<
in the GT, Keynes proposed measuring total spending in wage units by deflating the
nominal amount by the wage: (total nominal spending)/(average wage). He did this
because it would be proportional to total employment. It's akin to Adam Smith's "labor
commanded theory of value," in which the "value" of a commodity is how much labor it
can buy. (He also has a labor embodied theory of value, which produces different
results. The two are akin to exchange-value and value in Marx.)
jim devine
