Labor Rights and Labor Power and Welfare Maximization in a Market Economy: Revising the Conventional Wisdom

International Journal of Social Economics , Vol. 27, pp. 1252-1269, 2000

Posted: 17 Jan 2010

Date Written: 2000

Abstract

Standard neoclassical theory argues that an economy is negatively affected by increased labor rights and power since it is assumed that economic agents are always x-efficient; performing at the height of efficiency. However, a behavioral model of the firm suggests that more rights and power, with its positive impact on labor standards, need not produce the deleterious results predicted by conventional economic wisdom, due to their productivity-efficiency enhancing impact on the firm. This suggests that we should not assess the impact of enhanced labor power and control in terms of a zero sum game. It is possible to have both equilibrium improvements in working conditions and economic prosperity, with the former contributing to the latter.

Keywords: Labour rights, Welfare, Market economy, Efficiency, Labour standards, Working conditions

JEL Classification: I31, J83, J22

Suggested Citation

Altman, Morris, Labor Rights and Labor Power and Welfare Maximization in a Market Economy: Revising the Conventional Wisdom (2000). International Journal of Social Economics , Vol. 27, pp. 1252-1269, 2000. Available at SSRN: https://ssrn.com/abstract=1536820

Morris Altman (Contact Author)

University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

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