Institutional unemployment is not the outcome of the decisions of the individual job seekers. It is the effect of interference with the market phenomena intent upon enforcing by coercion and compulsion wage rates higher than those the unhampered market would have determined.
"Refusing to accept wage reductions, workers must accept unemployment."
"Because of rate busting, society as a whole will move toward greater and greater satisfaction and prosperity."
From Part I of A History of Money and Banking in the United States: The Colonial Era to World War II: “The History of Money and Bank
The argument of sticky wages does not justify the existence of a central bank. Market prices, including wages, are flexible enough to smooth out macroeconomic disturbances.
"The only possible solution to the inflation problem is an open opposition to the unions and to the idea that higher money wages are the only means for improving the condition of the masses."
Caplan's claim that the value-scale approach is inadequate for explaining these effects is simply an incorrect interpretation of Professor Rothbard's theoretical framework.
The inevitable collapse — and the moral outrage of those it hurts — will continue for as long as the public buys into the myth that higher education (and its professors) are too important to have to keep their costs and production in line with consumer demand.
But if a little time is spent on this formula of the five costs of production, it is simple to establish that there is no such thing as "surplus value," and that the "labor theory of value" is an oversimplification.
