The Liberatory Possibilities of Full Employment

Shawn Gude has a very worthwhile post up about what I would call the liberatory possibilities of full employment, which he prefers to see as “radical.”

It’s a great post, but it has what I think is a false note where he wonders why a notorious neoliberal sellout squish like me would be so favorable to this radical doctrine. I’d flip this around: Once you recognize the full liberatory possibility of full employment, many criticisms of market institutions begin to look much less appealing. I remain concerned about environmental problems and land scarcity, but a huge share of what people find unsatisfactory about economic life as such is addressed by consistent full employment policies.

Something that often comes up in this regard is Michel Kalecki’s fascinating and in some ways prescient World War II-era article on “Political Aspects of Full Employment” in which he predicts that bosses will be less enthusiastic about full employment than you might superficially think. It’s a very insightful piece. But I also think it’s important not to overstate its insightfulness, as it’s sometimes read as suggesting that full employment policies are impossible to pursue. In fact they were pursued in the West for ~30 years after World War II and they were ultimately discredited by actual mismanagement of the macroeconomic stabilization regime (basically policymakers tried to respond to negative supply shocks by increasing aggregate demand) rather than an inexplicable revolt of the bosses. And today countries from China to India to Brazil show that a variety of political economies that are not myopically focused on 2 percent inflation targeting are perfectly possible. Australia hasn’t had a recession in over twenty years. This can be done right.

Along similar lines, I also recommend without wholly endorsing Pascal Emannuel-Gobry’s post on the American establishment’s misguided preference for pushing more college as the solution to all ills.

Much as consistently applied full employment policies will achieve many liberatory aims without employing especially radical means, centrist elites ought to consider that matching workers with in-demand job skills really ought to be the kind of thing a market economy can do reasonably well. Rather than skills-mismatch explaining high unemployment, it’s the absence of full employment that explains skills-mismatch. If you want workers to learn to do something, you try to teach them to do it and if necessary pay them more money.

Long story short: Full employment policies are great and we ought to be demanding them from our macroeconomic stabilization policymakers rather than accepting excuses about how it’s hard.