The Determination of the General Level of Wage Rates

Monetary theorists have not taken much explicit interest in the determination of the general level of wage rates. By and large, the ‘ classical ‘ monetary theorists were concerned with the determination of the price level, taken to be the focal point of analysis of the trade cycle and the mechanism of international adjustment. Money wage rates, like the prices of particular goods, were left to be inferred from the price level by the application of value and distribution theory. On the other hand, modern theorists, following Keynes, have been chiefly concerned with the determination of the level of output and employment, and of the rate of interest. In their analysis, the money wage level has tended to be placed outside the range of economic analysis, being treated either as a datum or as an exogenous variable.