Norms , Capital Accumulation and Unemployment : A Post Keynesian View Engelbert Stockhammer

150 wds) The paper presents a Post Keynesian view of unemployment. It argues, firstly, that the effective labour demand need not be downward sloping with respect to real wages and aggregate demand need not be downward sloping with respect to inflation; secondly, that there is a broad case for unemployment hysteresis, understood as endogeneity of the NAIRU, based on social norms in wage bargaining and on the supply-side effects of capital accumulation; and, thirdly that, much as Keynes had argued, capital investment (rather than labour market institutions) is the key variable to explain changes in aggregate unemployment performance across countries and over time. Overall, the paper advocates a Keynesian view of the NAIRU where effective demand determines unemployment in the short run and the deviation of actual unemployment from the NAIRU determines the change in inflation. In the medium term the NAIRU is endogenous and follows actual unemployment. JEL codes: E12, E24, E25 Acknowledgements The paper builds on previous work by the author, in particular Stockhammer (2008) and Stockhammer and Klär (2011), which offer a more formal analysis and more econometric evidence respectively. The author is grateful to Philip Arestis, Paul Auerbach, Christopher Bowdler, Yannis Dafermos and an anonymous referee for helpful comments. The usual disclaimers apply.