The Morality of Radical Economics by Ron P. Baiman

Author:Ron P. Baiman
Language: eng
Format: epub
Publisher: Palgrave Macmillan US, New York

(6.1)

(6.2)

where RAD is Real AD, w is nominal wage, p is overall price level, a is “autonomous” (not dependent on income) investment and capitalist consumption, N is the number of employed workers, and T is output per employed worker, and q is overall economic output. Equation (6.1) is a demand equation stating that RAD equals what workers spend (the total wage bill (w/p)N) plus investment and capitalist consumption (a). Equation (6.2) is a supply equation stating that economic output in this simple closed economy (q) will be equal to the number of workers employed (N) times average productivity per worker (T).

At equilibrium AD must equal AS or:

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