We studied Microeconomics in our first year college classes, and now in second year we have Macroeconomics. We have in our syllabus Keynesian theory of employment, and the books issued by college explains a few pages of classical theory of employment before explaining Keynesian theory, so, there is a little gap here. Though, the book explains Keynesian theory quite well but as it is totally a critique of classical theory and classical theory has not been explained well, I'm a little in need of bridging.

In a short time I did a heavy searching and reading; what I found is that the classical theory is just a conclusion drawn from Says law of Market. Says law states: whatever quantity of outputs is produced in an economy, it will be consumed totally. Well, that seems quite reasonable in early industrial periods because population was booming and the rate in increase of output was not that paceful (got this notion from Ricardo's Political Economy, I'm not very sure if he really said it that explicitly), so, it was thought that whatever be the supply it would always be consumed. Now, this conception is taken to the employment; an economy shall always employ as much labourer as they are present, because there is no tendency to reduce the supply and make people jobless.

I... get this feeling that that not really what the classical concept was. I would like to request you to please explain the classical concept of employment rigorously, in an advanced manner, assuming me to know all the component parts of it (that is you can save the space by assuming me to know Says law, law of supply and demand, the inverse relation between interest rate and investments etc). What I really have a doubt is in the term "full employment", in early industrialization periods the factories employed as much workers as they could, so, in a sense they employed full but they employed full to their capacity not to number of workers present. Therefore, it should have been called "All jobs were filled" not "everyone had a job".



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