ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Mathematical Appendix

Thus Cheung and other members of the Chicago school would ignore abundant evidence of imperfect labour markets (including the existence of situations when it is non-sensational to talk about free markets at all), of extra- market coercion used by landlords, traders and moneylenders, of imperfections in capital markets, and happily conclude that their theory is valid if the wage rate or imputed earnings of labour tallied with the marginal productivity of some production function fitted to some data from underdeveloped rural areas. (Sometimes the fitting itself is dubious even by conventional standards of econometric practice as happened in the celebrated case of Hopper's fitting of a Cobb-Douglas production function to some data from an Indian village.12 But this obviously is the result of excess of partisan zeal and should not be taken to conform to the "best-practice technique" of the Chicago school.) , Thus it is extremely pertinent for those who are not adherents of the Chicago school dogma to point out that most of Cheung's results are quite irrelevant in a world characterised by widespread underemployment and unemployment, and by deep imperfections in the labour and capital markets. (I believe incidentally that given Cheung's assumption, his results follow: but that is a doctrinal dispute that may be left to the neoclassical economists to sort out among themselves.) I conclude by reiterating that B-S's assumptions are insufficient to guarantee the existence of an equilibrium in their model in general, that these assumptions are very-odd, and that they totally ignore the implications of both the inequality of economic power between landlords and landless sharecroppers and the existence of widespread unemployment in the countryside of India and other underdeveloped countries.

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