The Wage Theorem of Unilateral and Bilateral Monopoly

Abstract

In my discussion so far I have kept the case of the free market in the foreground for reasons which I have stated: even if no such state ever existed in practice, it would still be necessary for our understanding of processes to establish what is inherent in the essence of the market mechanism and what is not. To know this is essential not only for the diagnosis of the individual case, but also for the resolution of very practical questions; taxes or wage rises lead to very different results depending on whether we are dealing with industries which reach the productivity margins or industries that realise marginal profits.¹ Without some consideration of this difference there can be no real insight into things and one of the commonest mistakes in this debate consists in asserting of one of these cases what applies only to the other.