Skip to main content

Research Repository

Advanced Search

(Mis)understanding labour markets

Fleetwood, Steve



J Murray


Critics of orthodox economics, and in particular orthodox labour economics, often argue that orthodox models of labour markets are unrealistic and false. Most orthodox economists accept this criticism and proceed immediately to three defences: (1) all models simplify, abstract, omit, isolate and idealise, meaning all models are inevitably, and necessarily, unrealistic and false; (2) models should be evaluated on the basis of their predictive efficacy not their realisticness or falsity; (3) as unrealistic and false assumptions are successively relaxed, models will come to approximate reality. These defences fail. As it happens, there are two, more sophisticated, defences ready and waiting for any orthodox economist willing to do some methodological spade work, namely: (4) all models are unrealistic, but they may be true if they contain truth; and (5) the critique of unrealisticness and falsity misunderstands the purpose of models, which is not to resemble reality, but to act as inferential devices. Understanding these defences, however, requires disambiguation of the terms ‘realisticness’, ‘unrealisticness’, ‘truth’ and ‘falsity’. Doing this leads to more sophisticated definitions and, therefore, more clarity apropos what it means to say that a model is unrealistic and/or false. Unfortunately, when we apply these more sophisticated definitions to the sophisticated defences (4) and (5), they too fail. Orthodox models of labour markets are not only unrealistic and false, they have no defences. And this brings us to the second section of the chapter.
Section two shows how a realistic and true, non-mathematical model of labour markets can be built without it being an ‘everything-but-the-kitchen-sink’ model. It is based on two foundations: (a) the ‘socio-economics of labour markets’ (SELM); and (b) the meta-theoretical perspective of critical realism (CR). I combine these to create the SELMCR perspective, and the SELMCR model of labour markets. The first part replaces the terms ‘institutions’ and ‘structures’ with ‘socio-economic phenomena’. This is followed by an elaboration of the Morphogenetic–Morphostatic (M-M) approach to explaining how agents and socio-economic phenomena interact. This culminates in a radical, alternative definition of labour markets. The final part presents the SELMCR model in a series of stages, over three levels of abstraction, all with accompanying diagrams. It ends by re-visiting and applying the sophisticated defences of unrealistic and false models, to show that the SELMCR model is realistic and true.


Fleetwood, S. (2016). (Mis)understanding labour markets. In J. Murray (Ed.), Labor Markets: Analysis, Regulation and Outcomes, 1-85. Nova Science Publishers

Publication Date Jan 1, 2016
Peer Reviewed Not Peer Reviewed
Pages 1-85
Book Title Labor Markets: Analysis, Regulation and Outcomes
ISBN 9781634849425
Keywords labour markets, ontology, epistemology, methodology, meta-theory, aetiology, realisticness, unrealisticness, truth, false, orthodox, heterodox
Publisher URL


You might also like

Downloadable Citations