ABSTRACT
In macro-economics the neoclassical mode of theorizing is generally most comfortable with the assumption of full employment of resources. The regular recurrence of unemployment on a signifi cantly large scale stares awkwardly in the face of neo-classical economics as an uncomfortable fact. The coexistence of unemployment with a positive wage rate implying nonzero ‘opportunity cost’ for labour as an underutilized resource becomes hard to explain, without taking recourse to some particular explanations for the failure of appropriate signalling by the price mechanism. All neoclassical discussions of the unemployment problem are variations on this theme, except those fringe ideologues for whom the market or the price mechanism never fails anyway.
