,& ! ,NOBEL PRIZE = ECONOMICS GOES TO444 ,K>L ,M>X6 

,PEOPLE 3 

,AU?OR 3 ,IA9 ,MC,KAY 

,TEXT 3 

,UNSURPRIS+LY1 ! ,ECONOMI/ WAS COCK-A-HOOP OV] ! GIV+ ( ! 7NON-7,NOBEL PRIZE = ECONOMICS TO ,$MUND ,PHELPS 70,A NATURAL *OICE3 ,$MUND ,PHELPS E>NS ! ECONOMICS PR(ESSION'S HI<E/ ACCOLADE01 ,! ,ECONOMI/1 ,OCT #a#b? #b#f74 ,! REASONS :Y BECOME CLE>4 

,ACCORD+ TO ! MAGAZ9E1 0,PHELPS WON HIS LAURELS 9 P>T = KICK+ ! FEET FROM UND] HIS 9TELLECTUAL =]UNN]S0 BY PRES5T+ A NEO-CLASSICAL EXPLANATION = ! BREAKD[N ( ! SO-CALL$ 0,PHILLIPS CURVE0 :I* PRES5T$ A /ATI/ICAL TRADE(F BETWE5 9FLATION & UNEMPLOYM5T 70UNEMPLOYM5T WAS L[ 9 ,BRITA9 :5 WAGE 9FLATION WAS HI<1 & HI< :5 9FLATION WAS L[074 ,! PROBLEM WAS ?AT ECONOMI/S 0W]E QUICK - TOO QUICK - TO CONCLUDE ?AT POLICYMAK]S !RE=E FAC$ A GR&1 MACROECONOMIC TRADE(F40 ,! MAGAZ9E PRES5TS IT AS FOLL[S3 

0,9 SU* A TI<T LABOR M>KET1 COMPANIES APPEASE WORK]S BY (F]+ HI<] WAGES4 ,!Y !N PASS ON ! CO/ 9 ! =M ( DE>] PRICES1 *EAT+ WORK]S ( A HI<] REAL WAGE4 ,?US POLICYMAK]S CAN 5G9E] L[] UNEMPLOYM5T ONLY ?R\< DECEPTION40 

,PHELPS 9NOVATION WAS TO >GUE ?AT 0.<E.>V5TUALLY WORK]S WILL COTTON ON1 DEM&+ /ILL HI<] WAGES TO (FSET ! RIS+ CO/ ( LIV+4 ,!Y CAN BE DUP$ = AS LONG AS 9FLATION /AYS ONE /EP AHEAD ( !IR RIS+ EXPECTATIONS ( :AT IT WILL BE40 ,?IS MEANT ?AT ! 0/ABLE TRADE(F DEPICT$ BY ! ,PHILLIPS CURVE IS ?US A DANG]\S MIRAGE0 :I* BROK5 9 ! #a#i#gS ) ! RISE ( /AGFLATION 7HI< UNEMPLOYM5T & HI< 9FLATION74 ,PHELPS1 REPORTS ! ,ECONOMI/1 >GU$ ?AT !RE WAS A 0NATURAL0 RATE ( UNEMPLOYM5T1 :]E 0WORK]S' EXPECTATIONS >E FULFILL$1 PRICES TURN \T AS ANTICIPAT$1 & !Y NO LONG] SELL !IR LABOR UND] FALSE PRET5SES40 ,?IS 0EQUILIBRIUM DOES NOT1 SADLY1 IMPLY FULL EMPLOYM5T0 & SO CAPITALISM REQUIR$ 0LEAV+ SOME WORK]S MOLD]+ ON ! %ELF4 ,GIV5 ECONOMI/S' ALMO/ !OLOGICAL COMMITM5T TO ! NOTION ?AT M>KETS CLE>1 ! PRES5CE ( UNEMPLOYM5T 9 ! WORLD REQUIRES A !ODICY TO EXPLA9 IT40 ,! RELIGI\S METAPHOR DOES SEEM APPROPRIATE AS MO/ ECONOMI/S 7& ! ,ECONOMI/7 DO TREAT ! M>KET LIKE A GOD 7A !ODICY IS A SPECIFIC BRAN* ( !OLOGY & PHILOSOPHY ?AT ATTEMPTS TO RECONCILE ! EXI/5CE ( EVIL 9 ! WORLD ) ! ASSUMPTION ( A B5EVOL5T ,GOD74 

,&1 AS ) ALL GODS1 SACRIFICES >E REQUIR$ & ,PHELPS' !ORY IS ! MEANS BY :I* ?IS IS A*IEV$4 ,AS ! ,ECONOMI/ NOTES3 09 MU* ( HIS WORK HE CONT5DS ?AT UNEMPLOYM5T IS NECESS>Y TO C[ WORK]S1 5SUR+ !IR LOYALTY TO ! COMPANY & !IR DILIG5CE ON ! JOB1 AT A WAGE ! COMPANY CAN AF=D TO PAY0 7I4E41 ONE :I* W\LD 5SURE A PR(IT74 ,UNSURPRIS+LY1 ATTEMPTS TO L[] ! 0NATURAL RATE0 HAVE ALL 9VOLV$ US+ ! /ATE TO BREAK ! ECONOMIC P[] ( WORK+ CLASS PEOPLE 7ATTACK+ UNIONS1 9CREAS+ 9T]E/ RATES TO 9CREASE UNEMPLOYM5T 9 ORD] TO TEMPOR>ILY 0C[0 WORK]S & SO ON74 ,ALL SO ?AT PR(ITS CAN BE KEEP HI< 9 ! FACE ( ! RIS+ WAGES CAUS$ BY ! NATURAL ACTIONS ( ! M>KET6 

,YET ,PHELPS' CONCLUSIONS >E H>DLY NEW4 ,AN>*I/S & O!R SOCIALI/S HAVE BE5 >GU+ ?AT CAPITALISM HAS NO T5D5CY TO FULL EMPLOYM5T S9CE ! #a#h#dS EI!R 9 !ORY OR 9 PRACTICE4 ,!Y HAVE ALSO NOT$ H[ P]IODS ( FULL EMPLOYM5T BOL/]$ WORK]S' P[] & H>M$ PR(ITS4 ,IT IS ! FUNDAM5TAL DISCIPL9>Y ME*ANISM ( ! SY/EM 70A :IP 9 .<! BOSSES'.> H&S1 CON/ANTLY HELD OV] Y\1 SO Y\ WILL SLAVE H>D = HIM & 'BEHAVE' Y\RSELF10 TO USE ,B]KMAN'S MEMORABLE PHRASE74 ,IT IS1 9 O!R WORDS1 09H]5T 9 ! WAGE SY/EM0 & 0! FUNDAM5TAL CONDITION ( SUCCESSFUL CAPITALI/ PRODUCTION40 ,:ILE IT IS 0DANG]\S & DEGRAD+0 TO ! WORK]1 IT IS 0V]Y ADVANTAGE\S TO ! BOSS0 & SO CAPITALISM 0CAN'T EXI/ )\T IT40 7,ALEX&] ,B]KMAN1 ,:AT IS ,AN>*ISM81 P4 #b#f7 

,!SE K9DS ( >GUM5TS US$ TO BE DISMISS$ AS NONS5SE BY NEO-CLASSICAL ECONOMI/S 7! MA9 BRAN* ( ! RELIGION74 ,SO IT IS IRONIC ,PHELPS HAS GOT A 7NON-7,NOBEL PRIZE = RE/AT+1 9 NEO-CLASSICAL J>GON1 ! MODEL ( ! LABOR M>KET EXP\ND$ 91 SAY1 ,*APT] #be ( ! FIR/ VOLUME ( ,M>X'S ,CAPITAL3 

0,IF .<CAPITAL'S.> ACCUMULATION1 ON ! ONE H&1 9CREASES ! DEM& = LABOR1 IT 9CREASES ON ! O!R ! SUPPLY ( LABOR]S BY ! 'SETT+ FREE' ( !M1 :IL/ AT ! SAME TIME ! PRESSURE ( ! UNEMPLOY$ COMPELS ?OSE ?AT >E EMPLOY$ TO FURNI% MORE LABOR1 & !RE=E MAKES ! SUPPLY ( LABOR1 TO A C]TA9 EXT5T1 9DEP5D5T ( ! SUPPLY ( LABOR]S4 ,! ACTION ( ! LAW ( SUPPLY & DEM& ( LABOR ON ?IS BASIS COMPLETES ! DESPOTISM ( CAPITAL4 ,AS SOON1 !RE=E1 AS ! LABOR]S LE>N ! SECRET1 H[ IT COMES TO PASS ?AT 9 ! SAME MEASURE AS !Y WORK MORE1 AS !Y PRODUCE MORE WEAL? = O!RS 444 AS SOON AS1 BY ,TRADES' ,UNIONS1 ETC41 !Y TRY TO ORGANIZE A REGUL> COOP]ATION BETWE5 EMPLOY$ & UNEMPLOY$ 9 ORD] TO DE/ROY OR TO WEAK5 ! RU9\S EFFECTS ( ?IS NATURAL LAW ( CAPITALI/IC PRODUCTION ON !IR CLASS1 SO SOON CAPITAL & ITS SYCOPHANT1 ,POLITICAL ,ECONOMY1 CRY \T AT ! 9FR+EM5T ( ! 'ET]NAL' & SO TO SAY 'SACR$' LAW ( SUPPLY & DEM&4 ,EV]Y COMB9ATION ( EMPLOY$ & UNEMPLOY$ DI/URBS ! 'H>MONI\S' ACTION ( ?IS LAW4 ,BUT1 ON ! O!R H&1 AS SOON AS 444 ADV]SE CIRCUM/ANCES PREV5T ! CREATION ( AN 9DU/RIAL RES]VE >MY &1 ) IT1 ! ABSOLUTE DEP5D5CE ( ! WORK+-CLASS UPON ! CAPITALI/ CLASS1 CAPITAL 444 REBELS AGA9/ ! 'SACR$' LAW ( SUPPLY & DEM&1 & TRIES TO *ECK ITS 9CONV5I5T ACTION BY =CIBLE MEANS & ,/ATE 9T]F]5CE40 

,?AT ! ,ECONOMI/ & ,PHELPS >E SIMPLY E*O+1 & CONFIRM+1 ,M>X IS OBVI\S4 ,PHELPS' !ORY HAS 9=M$ 0,/ATE 9T]F]5CE0 9 ! ECONOMY = ! LA/ #c ODD YE>S4 ,! USE ( ,PHELPS' !ORY BY CAPITAL 9 ! CLASS W> IS EQUALLY OBVI\S -- AS WAS SO BLATANTLY /AT$ BY ! ,ECONOMI/4 

,FROM 3 ,!,AN>*I/,LIBR>Y4ORG4 

,*RONOLOGY 3 
,FEBRU>Y #b1 #bba 3 ,& ! ,NOBEL PRIZE = ECONOMICS GOES TO444 ,K>L ,M>X6 -- ,ADD$4 
,JANU>Y #g1 #bbb 3 ,& ! ,NOBEL PRIZE = ECONOMICS GOES TO444 ,K>L ,M>X6 -- ,UPDAT$4 

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