"Demand for commodities is not demand for labor. The demand for commodities determines in what particular branch of production the labor and capital shall be employed; it determines the direction of the labor; but not the more or less of the labor itself, or of the maintenance or payment of the labor. These depend on the amount of capital, or other funds directly devoted to the sustenance of labor."This is something that is often cited as being misunderstood or abandoned by Keynes. I've always been somewhat confused by the point. Keynes has an employment function that is a function of output, which I suppose is the source of the concern. But Keynes:
1. Talks about employment functions for specific industries and firms and contrasts this with the aggregate employment function.
2. Talks about the importance of capital employed in and industry in the determination of the employment function.
3. Talks about how the total employment function can change depending on whether labor is directed towards industries and firms with high or low elasticities of labor demand.
So to me, Keynes seems to hit all of Mill's bases. I honestly don't know what the issue is. I have argued that Keynes could have pushed this analysis farther, but I don't think he completely dropped the ball on the employment function, the way some people suggest. I think where Keynes could most revise his employment function is in bringing his liquidity preference into it, not in abandoning the project for some other formulation.