TITLE:
A Power Model of the Labour Market
AUTHORS:
Piet Keizer
KEYWORDS:
Labour Market, Power, Strike Costs, Strike Benefits, Concession Costs, Framing, Ideology, Militancy, (Ir)rationality, (Im)morality
JOURNAL NAME:
Theoretical Economics Letters,
Vol.10 No.4,
August
5,
2020
ABSTRACT: This article discusses a bilateral monopoly model of
wage determination in which the employers determine the level of production and
employment. The threat of a strike is the principal instrument of the
employees, while employers, being the owners of the monopoly surplus, can
simply ignore wage claims. In the orthodox-economic model the wage elasticity
of labour demand as well as the horizon and the discount rate used when
calculating strike costs and strike benefits, are essential. In a
heterodox-economic model employers can frame their reality in an Austrian or in
a neoclassical way. Employees can frame their reality in a radical-economic or
in a post-Keynesian way. The frame chosen
affects the factors discussed in the orthodox model. Moreover, irrationality (from
behavioural economics) and immorality (from social economics/economic
sociology) play a significant role in the outcome of the negotiations. To make participants more rational and morally
aware, a Communication Platform should be set up, in order to organize
Habermas-like power-free confrontations. In this way society could slowly move
from a shareholder society to a stakeholder society.