Labour Market and Exploitation of Labour in Joan Robinson's 'The Economics of Imperfect Competition'

Abstract

In The Economics of Imperfect Competition Joan Robinson proved that unemployment was not due to market imperfections, because under different conditions imperfect markets are able to employ more than, less than or the same number of workers as perfect competition. Nevertheless, imperfections are responsible for labour exploitation. She also argued that from the point of view of the working class, it could be better to be exploited and remain employed than not to be exploited and risk staying unemployed. If, on the one hand, the reduction or elimination of market imperfections could reduce or eliminate exploitation, on the other hand, there were no guarantees that it would lead to a higher level of employment. These conclusions do not mean that there was no role to be played by trade unions. By assuming that imperfect competition was related to the firms' capacity to raise prices and that it could lead to lower real wage rates, Joan Robinson thought that trade unions should press for higher wage rates so that demand could increase at a level compatible with productivity increase. This paper argues that Joan Robinson's book can be read in the light of Keynes' principle of effective demand.

Keywords: The Economics of Imperfect Competition, principle of effective demand, unemployment, market imperfections

JEL Classification: B3