unresolved Is it accurate to say that, in the course of negotiating money wages as an imperfect representation of real wages, entrepreneurs don’t want real wages to exceed the marginal utility of utility of labor, and workers don’t want real wages to fall below the marginal disutility of labor? And that employment can increase so long as 1) real wages fall between marginal utility of labor and marginal disutility of labor, and 2) that aggregate demand price is equal to or greater that aggregate supply price?
This analysis supplies us with an explanation of the paradox of poverty in the midst of plenty. For the mere existence of an insufficiency of effective demand may, and often will, bring the increase of employment to a standstill before a level of full employment has been reached. The insufficiency of effective demand will inhibit the process of production in spite of the fact that the marginal product of labour still exceeds in value the marginal disutility of employment.