Labor market coordination and monetary equilibrium: W H. Hutt’s place in “Pre-Keynesian” macro

Conclusion

As the search for microfoundations of macroeconomics has intensified over the last 25 years or so, macroeconomists have paid increasing attention to the economics of the labor market. Hutt’s work on the labor market could provide the microfoundations of a macroeconomics which emphasizes a process perspective and the importance of psychological, institutional, and political rigidities in how that process plays out. The work of the Austrians and the monetary disequilibrium theorists has articulated a consistent vision of how disequilibria in the money market spill over into nonmoney markets and cause real disturbances therein. Along with Hayek’s more general work on the informational properties of prices, Hutt’s work on the price coordination pro-cess in labor markets, can provide a more complete theory of the pricing process which implicitly and explicitly underlies the macroeconomics of those two schools of thought. Aside from his contributions to labor economics per se, Hutt’s work has implications for many fundamental questions in macroeconomics, as his life-long critique of Keynes illustrates. As modern macroeconomics continues its frustrating slide into complex, yet unrealistic, technique, perhaps Hutt’s work will finally begin to get its due when more macroeconomists begin to look for a more institutionally rich and realistic theory of the labor market to serve as their microfoundations.