You&#x27;re right that if we shift the aggregate demand curve its all econ 101 from there to wage and employment drop.<p>The difference between schools is that even though Keynesians believe in an aggregate demand curve( a relationship between price level and output) the neoclassicals(i.e. Chicago school) do not.<p>Varoufakis is criticizing the neoclassicals because they don&#x27;t believe in an aggregate demand curve.  Instead all of their modelling is done on the supply side.  And its very hard to tell a supply side story where both employment and wages fall.<p>Involuntary unemployment is an easy jump from falling wages and employment.