81.   The general decline in the level of money wages would lead to reductions in real wages, which in turn would encourage employers to hire more workers.

82.   Applying the marginal productivity theory of the demand for labour in perfect competition permits us to interpret the same angle as a measure of the real wage rate.

83.   But what would happen if the real wage rate were wrong?

84.   Such unemployment is labelled classical in the sense that its sole root cause is an excessively high real wage.

85.   A necessary and sufficient condition for the eradication of classical unemployment is hence a direct downward adjustment of the real wage rate to a level where.

86.   On the other hand apologists for such policies rarely if ever sought to justify them on the grounds that they would reduce the real wage rate la Malinvaud.

87.   The origins of Keynesian unemployment must be traced, not to wrong relative prices -- specifically to a wrong real wage -- but to a deficiency of aggregate demand.

88.   It follows that no adjustment of the real wage rate may be required to reduce unemployment.

89.   If unemployment is classical, steps must be taken to reduce the real wage rate.

90.   Real wage cuts, by reducing aggregate demand, raise the level of Keynesian unemployment.