Abstract
Nobel Laureate economist Edmund Phelps blames the increasing marginalisation of a large number of workers in unstimulating jobs on low wages as a contributory factor to productivity slowdown in the West. He blames utilitarian economics because it cannot accommodate the idea of social inclusion. In our view, the problem is best understood as a manifestation of the poverty of the theory of prices governing the allocation of resources.
Highlights
Nobel Laureate economist Edmund Phelps blames the increasing marginalisation of a large number of workers in unstimulating jobs on low wages as a contributory factor to productivity slowdown in the West
A consequence of the reward structure and the nature of the employment contract is the emergence of an economy where creativity and imagination are seldom encouraged
The accusations are sweeping and, to keep track of the arguments, we shall hang our analysis on a single peg: his concern ‘‘about the terms on which each participant contributes to the fruit of the society’s economy’’
Summary
In a provocatively-titled essay, Edmund Phelps outlines his disquiet about the evolution of an unjust society in the West where a significant number of citizens are denied the ability to fulfil their ‘‘desire to participate in a community in which they can interact and develop’’.1 They are not ‘‘given the experience of using their minds’’ even when they are able to find paid employment or when they are protected, as in some countries, from the worst aspects of financial deprivation by the safety net of a Rawlsian welfare state. In a provocatively-titled essay, Edmund Phelps outlines his disquiet about the evolution of an unjust society in the West where a significant number of citizens are denied the ability to fulfil their ‘‘desire to participate in a community in which they can interact and develop’’.1. They are not ‘‘given the experience of using their minds’’ even when they are able to find paid employment or when they are protected, as in some countries, from the worst aspects of financial deprivation by the safety net of a Rawlsian welfare state.
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