Hyman Minsky, full employment, and political demands
From the Boston Globe article "Why Capitalism Fails":
http://www.boston.com/bostonglobe/ideas/articles/2009/09/13/why_capitalism_fails/?page=2
[...]
In his writings, Minsky looked to his intellectual hero, Keynes, arguably the greatest economist of the 20th century. But where most economists drew a single, simplistic lesson from Keynes - that government could step in and micromanage the economy, smooth out the business cycle, and keep things on an even keel - Minsky had no interest in what he and a handful of other dissident economists came to call "bastard Keynesianism."
http://www.boston.com/bostonglobe/ideas/articles/2009/09/13/why_capitalism_fails/?page=5
Minsky, however, argued for a "bubble-up" approach, sending money to the poor and unskilled first. The government - or what he liked to call "Big Government" - should become the "employer of last resort," he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else's wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.
While economists may be acknowledging some of Minsky's points on financial instability, it's safe to say that even liberal policymakers are still a long way from thinking about such an expanded role for the American government. If nothing else, an expensive full-employment program would veer far too close to socialism for the comfort of politicians.
I was informed by a US comrade that, had it not been for Tenth Amendment issues, two such employment programs would have been been followed through by FDR.
Notwithstanding this history trivia, what are your general thoughts on this full employment measure? How does it relate to worker struggles and socialist principles, and how does it fail to do so? How radical is it, whether reform-enabling on other economic fronts or being at the absolute most that capitalism can offer?
Thanks for the link J.R.
Full employment has always been radical (even when it wasn't a fringe idea as it is now). It was a promise made from left to right in the interwar, WWII and immediate post-WWII eras in Britain and elsewhere (and in the US during the New Deal as you mentioned). It seems nowadays to be an idea much more associated with Minsky's "bastard Keynesians" and the old liberals, rather than among today's socialists.
Full employment is a revolutionary idea IMO. Its logic as a concept is inherently opposed to both the "law of the market" and that fundamental tenet of conservatism that tells us that unemployment and class stratification are both natural.
I wish organized labour and the left would talk about this concept more. I'd like to hear a little more about employment rather than just employment insurance. I think the left is afraid to tackle the concept of dependence for a lot of reasons that are obvious and probably justified. I have to wonder in the midst of the debate over EI: what's in it for the federal parties to be at least rhetorically supporting EI and EI reforms rather than the types of things that Keynes and Minsky advocated: massive government-led job creation, investment in infrastructure and public services and wealth redistribution directly to the poor. The simple answer is that one policy is a lot cheaper and easier and a lot less risky for the state than the other.
With the rise of monetarism, the full-employment idea was seen as out of touch among the right, even though it was never really 'in-touch' with that set. It appears to be "old" with the left as well given that there is a degree of consensus among the academic left inside and outside economics (especially those who are social democrats rather than Marxists) who see decommodification and a massive welfare state to protect workers from the excesses of capitalism as preferable to an employment-led or employment-based social policy. The focus on jobs rather than welfare (which is itself an unnecessary dichotomy) is also seen as reactionary or an attack on welfare, all though it need not be.
This story caught my eye the other day and left me thinking how can you not like a guy who said: “There's nothing wrong with macroeconomics that another depression won't cure?”
The concept of the natural unemployment rate has always gotten my knickers in a twist, because I've always suspected that it's economists' code for the precise number of workers that need to be unemployed to keep the rest in line. Is it paranoid to wonder how long it will take for a quiet revision of the natural unemployment rate? (The natural unemployment rate is 9%. The natural unemployment rate has always been 9%. We have always been at war with Eurasia…)
...The concept of the natural unemployment rate has always gotten my knickers in a twist, because I've always suspected that it's economists' code for the precise number of workers that need to be unemployed to keep the rest in line.
Yep. It's also a concept accepted by most social democrats because insurance for the unemployed is widely seen as easier and a better option than government-led employment growth.
I wonder how many jobless recoveries it will take for a rethinking on that. As more than one poster has noted, the jobs that are disappearing aren't coming back. At some point won't that government-led growth finally be cheaper than insurance for the unemployed?
What insurance?
Many if not most of the workers who are displaced from living-wage jobs will never again find that kind of work. When their EI runs out they are faced with spending the rest of their life in poverty, unless they have contributed to and are old enough to draw on a substantial pension to supplement low-paid work. Retraining programs on the whole are remarkably unsuccessful. Even if workers can access and complete the training -- which excludes the majority -- the jobs are simply not there for these workers changing fields later in life.
Full employment is a revolutionary idea IMO.
You bet it is.
About 10 years ago (maybe more?) our union had Ed Broadbent as a guest speaker at a conference. Among other things, he spoke about his work as head of the International Centre for Human Rights and Democratic Development (now called "Rights and Democracy"), to which he was appointed by Brian Mulroney in 1990 and served till 1996. He dealt with the importance of human rights and the Charter among other subjects.
During the Q&A, I asked him whether the time had not come to recognize additional rights as human rights protected by the Charter - such as the right to gainful employment for those able to work.
His reply was that economic rights should not be entrenched in a constitution. I asked about the right to shelter, food, health care, and education - his reply was the same.
So yes - the right to employment is too revolutionary for some. You are constitutionally free to practise your religion, or to start up a television network, but not to work.
Because putting guaranteed employment in the constitution will somehow lower the unemployment rate?
Instead of pursuing legal gimmicks, why not push for reality-oriented legislative changes?
Because putting guaranteed employment in the constitution will somehow lower the unemployment rate?
Not sure I follow you. Right now there is no enforceable legal obligation - whatsoever - on the part of any level of government to provide skills training or job-search assistance to a willing able-bodied individual, let alone to actually provide them with gainful employment. Do you foresee some pitfalls in society's recognizing that the right to a livelihood is as fundamental as the right to practise one's religion? Why not start with recognition of the principle, then work to make it a reality?
Protection of freedom of speech in the Charter doesn't guarantee full freedom of speech, but it provides a powerful tool to enforce that freedom which legislators can't easily bypass.
This thread is about "full employment". How about naming a single reality-oriented legislative change which would bring that goal closer - keeping in mind that legislation can be gutted or repealed or made inoperative by policy decisions (remember EI then and now?).
Any legislation can be gutted, just like full employment can be brought in and taken away, as is being done with the social safety net that currently exists. A friend of mine was recently told by a Quebec doctor he needs to pay $175/year to be his patient, otherwise the waiting list will be longer.
I think a better analogy to free speech would be Broadbent's resolution to eliminate child poverty by the year 2000. It was passed with bravado, but nothing came of it. As for free speech, the government does not need to crack down because speech is very well-regulated by social norms and the corporate media. Human rights legislation is by and large a crutch, that gives a false sense of accomplishment at victories that are small, but also yields a large stick for rich, western countries to be self-righteous to the rest of the world. A lawyer cannot bring full employment, he cannot get you a job. Even if he were to have the tools to demand it, he would have no means to specify how it is to be done. Should McDonalds be fined if the manager says they only need 12 new cashies for the new store? Is that logical? No.
I can see it now, one lawyer would argue that we need to invest in the third world, bring electricity to Africa to increase demand for consumption. On his side he would have another lawyer argue for greater investments in technology. On the other side, a lawyer would argue that we need to cut social programs, to cut taxes, that a rising tide will lift all boats. After 25 years of Harper (The way the liberals are going) there would be a stacked bench and the supreme court would no doubt agree. Sounds like a recipe for nightmare.
During the Q&A, I asked him whether the time had not come to recognize additional rights as human rights protected by the Charter - such as the right to gainful employment for those able to work.
Do people have the right to work?
Should there be a corresponding constitutionally guaranteed duty on the part of government to provide employment to those in need of work?
I say, absolutely.
Good post ladies and gentlemen!
Any legislation can be gutted, just like full employment can be brought in and taken away, as is being done with the social safety net that currently exists. A friend of mine was recently told by a Quebec doctor he needs to pay $175/year to be his patient, otherwise the waiting list will be longer.
You seem to be confirming my point, that fundamental rights such as work and free and effective health care need constitutional protection. Empty resolutions or amendable and repealable laws aren't good enough.
A constitution is a piece of paper. It can be reinterpreted at will.
Economic and social reality is backed up by social norms, the organization of the means of production, technological change, etc.
A constitution is a piece of paper. It can be reinterpreted at will.
Economic and social reality is backed up by social norms, the organization of the means of production, technological change, etc.
Economic and social reality backed up by social norms are by far the easiest to change. Legislation is also quite easily changed. Constitutionally enshrined rights and freedoms of the governed and corresponding duties and obligations of government are, in fact, the most difficult to change.
The problem with reopening the Charter is that for a virtual certainty this will result in constitutionally enshrined property rights, which would in many cases negate any advantage conferred under the existing protected (or analogous) grounds.
The problem with reopening the Charter is that for a virtual certainty this will result in constitutionally enshrined property rights, which would in many cases negate any advantage conferred under the existing protected (or analogous) grounds.
I don't think that will adversely affect/be adversely affected by the addition of the right to employment/duty to provide employment.
Not directly. Property rights have long been a pet project of the Alberta neocons who have such political sway at this point. You can bet your bottom dollar that if we reopen the Charter they will not rest until property is added to the list. The reason it is so important to them is because it would give almost unlimited scope to challenge remedial legislation based on infringement of property rights -- not to mention the advantages of a countervailing Charter right in defending against human rights claims.
Economic and social reality backed up by social norms are by far the easiest to change. Legislation is also quite easily changed. Constitutionally enshrined rights and freedoms of the governed and corresponding duties and obligations of government are, in fact, the most difficult to change.
I doubt that.
Also, the wording of the constitution may be difficult to change, but the meaning changes easily.
Sometimes this positive, like how gay rights were added in the 1990s, even though Chretien specifically didn't want them in back in 1982.
Obviously, that can go both ways. For example Bush vs Gore 2000 in the USA.
The problem with reopening the Charter is that for a virtual certainty this will result in constitutionally enshrined property rights, which would in many cases negate any advantage conferred under the existing protected (or analogous) grounds.
Yes, right-wingers (including Harper) have proposed enshrining property rights. You think they're waiting for some other demand by working people as a pretext to do their dirty deed? You think fear of that prospect is a good reason not to seek constitutional guarantees for social and economic rights? You think we can't beat them in that battle, so we shouldn't bother pressing our own demands? I'm having trouble following your thinking here.
Generally, yes.
I do also suspect other schemes underway, for example, in Brantford, Ontario, where it smells to me like there has been federal Tory assistance in grooming and massaging the City's response to Six Nations protests as a potential test case contest between inherent property rights vs. the Charter rights of indigenous people.
But by far the easiest way for the right to move ahead with this phoenomenally huge take-back would be to hitch on to a push from the left for reopening the Charter.
But by far the easiest way for the right to move ahead with this phoenomenally huge take-back would be to hitch on to a push from the left for reopening the Charter.
Then the left should oppose it, and if that fails, rally behind the implementation of a Canadian "Social Charter".
But by far the easiest way for the right to move ahead with this phoenomenally huge take-back would be to hitch on to a push from the left for reopening the Charter.
In the meantime, property rights are de facto sacred (without needing Charter protection), while the right to training and jobs is non-existent both de facto and de jure. We're doing real well.
You're sounding uncharacteristically fatalistic, TM. With your approach, workers would never go to the bargaining table or go on strike, for fear that it would be used as a pretext to strip them naked. If the enemies are as powerful as you appear to believe, they don't need an excuse.
Economic and social reality backed up by social norms are by far the easiest to change. Legislation is also quite easily changed. Constitutionally enshrined rights and freedoms of the governed and corresponding duties and obligations of government are, in fact, the most difficult to change.
I doubt that.
Also, the wording of the constitution may be difficult to change, but the meaning changes easily.
Sometimes this positive, like how gay rights were added in the 1990s, even though Chretien specifically didn't want them in back in 1982.
Obviously, that can go both ways. For example Bush vs Gore 2000 in the USA.
Your further analysis contradicts your initial doubt.
It boils down to the interpretation of the law. Call me an optimist, but I believe people's rights will be upheld in the end. It is, after all, called the Charter of Rights and Freedoms.
Unionist, thanks for noting that I'm not usually known for any undue aversion to challenging the powers that be.
I just think that we have a lot more to lose in a functioning Charter than they do. If we open that door, I can't seriously imagine which of our current two governing parties would be caught dead taking a stand against property rights.
Reading over the suggestion of "right to work" such as cleaning streets, providing childcare - I had to laugh. On the one hand, children are always held up as our "most precious resource" and yet, when saying we would provide full employment and thus any person who wants to work could do this - provide childcare belies that faux sentiment.
I couldn't resist this small dig. Another name for this full employment program in the wrong hands is welfare for work. As long as the work is voluntary, paid at minimum wage and not demeaning and publicly shaming than I have no problem.
And I agree, having full employment would maintain stable wages for those higher up on the front line worker scale.
I never thought about that irony regarding the absence of child labour, actually. That is, however, worth a chuckle, if not necessarily a Joker-style laugh.
Reminded me of the late, great Utah Phillips, who said in a commencement address, “People are going to tell you that you, our young people, are our most precious natural resource. Have you seen how we treat natural resources?!”
I just think that we have a lot more to lose in a functioning Charter than they do. If we open that door, I can't seriously imagine which of our current two governing parties would be caught dead taking a stand against property rights.
Not to mention the provincial governments which would also have a say. I can't imagine formal opposition by any of the provinces west of Quebec.
Correct me if I am wrong, but it was an NDP provincial government or two that blocked the first attempts to put property rights in the Charter. I wonder if they would still oppose it.
Correct me if I am wrong, but it was an NDP provincial government or two that blocked the first attempts to put property rights in the Charter. I wonder if they would still oppose it.
Not that I recall. The opposition Conservatives tried something along these lines in a non-confidence vote in the House in 1983 (soon after the Constitution was repatriated), but the motion failed.
Would "full employment" be enforced against potential workers? Would the individual worker decide whether he or she was willing to work or woud a gov't committee? like jan, it wounds somewhat like "workfare". Would someone like me who is saving like mad in hopes to stay home for 4-5 years with kids before returning be allowed to do this?
I agree that there are serious problems right now. One thing that definitely needs to be improved upon is job training - especially encouragement of trades and healthcare professions. Right now, we are heading towards a crisis in terms of plumbers, carpenters, engineers, doctors and nurses.
Would "full employment" be enforced against potential workers? Would the individual worker decide whether he or she was willing to work or woud a gov't committee? like jan, it wounds somewhat like "workfare". Would someone like me who is saving like mad in hopes to stay home for 4-5 years with kids before returning be allowed to do this?
No, the government would tell you when to work, how long to work, and how hard. Just like with "freedom of the press", everyone is required to publish newsletters or appear on TV once in a while. Thanks for pointing out the danger of "full employment" policies.
That "crisis" has been ongoing for years. Do you think there's a more serious shortage in 2009 of any of these groups than there was five years ago? In fact, the shortages are more acutely felt in times of growth. And it's not just an issue of training.
unionist, I was just asking questions about how full employment would be enforced in people's minds here on a practical level? Why the snark? I was being serious. I live in a place with very high unemployment, so I am interested in any and all possible solutions.
You are characterizing it more like "freedom of the press". Well, the immediate response to that would be that we already have freedom to work. You just don't have a guarantee of being hired, just as you don't have a guarantee of having your letter to the editor published.\
I am not saying that the crisis is new to 2009 or that training is the only issue. However, there are a heck of a lot of people who's parents tell them university is the only worthwhile course and that taking trades at college is somehow a lessor path. Quite a lot of high schools have this viewpoint.
Ghislaine, I said clearly that we should entrench the right to gainful employment for those willing and able to work. If you're afraid of people being hauled off to the factory kicking and screaming by some government squad, then of course you don't have to join the fight. These are the kinds of objections or questions which really divert from the discussion of fighting for full employment - at least on a progressive board.
I am not saying that the crisis is new to 2009 or that training is the only issue. However, there are a heck of a lot of people who's parents tell them university is the only worthwhile course and that taking trades at college is somehow a lessor path. Quite a lot of high schools have this viewpoint.
Systemic discrimination - by employers, by educational institutions, by trade unions, by governments, by religious institutions, by culture, by fathers, by husbands/partners/boyfriends/brothers - keeps women from skilled trades jobs. Women are told, in a million ways, what kinds of employment are acceptable for them, and that all of those must take second place to their domestic "duties". Besides the non-existence (outside Québec) of affordable publicy-subsidized child care, adequate maternity and parental leave provisions, and easily available and affordable skills training, the drive to open doors to women and give them "permission" to work in skilled trades is virtually non-existent. It is one of the starkest examples of employment inequity that I know - and it pervades every cell of our society. Some women's organizations are active in addressing this scandal, but not enough and without significant support from others.
My concern lies more with the type of job assigned rather the the above. I'm not receptive towards having hazardous jobs on the table, for example.
By the way, isn't the above little different from working in a government job (full time, 40 hours and sometimes more, working harder when urgent projects arise)?
Of course along with universal access to good employment, we will also need universal education and universal childcare. We will need safe workplaces, a healthy environment, better health care, and good access to cheap healthy food, since to be fair, disability benefits will have to be tied to a living wage. And, we'll be needing free legal services for all the hundreds of thousands of employability and job suitability appeals.
No complaints here!
Just think, all it will take is for rich people to give up their excess standard of living.
What's the closest that any country has ever come?
Ok, TM, you've made your point very well that fighting for full employment is futile.
Why? What it and all other real reforms I have in mind take is class struggle across borders.
No, I think that reopening the Charter at this point would be more than futile, it would be disastrous. But I'm actually really curious to know if any country has managed to support full employment and if so, how did they do it?
And short of that, it seems to me that more modest goals like reducing the work week, or outlawing temp agencies, or tying subsidies to jobs (for real), or even limiting some raw material exports should certainly be within grasp.
No, I think that reopening the Charter at this point would be more than futile, it would be disastrous. But I'm actually really curious to know if any country has managed to support full employment and if so, how did they do it?
First of all, who ever said that putting a line in the Charter would create full employment? We don't have freedom of the press or of association or of conscience or of speech or equality between men and women either. Those take struggle, not just words. But I find it rather stunning that posters here, like Mr. Broadbent, don't think that economic rights are worth entrenching as much as political ones.
Your previous post, however, essentially pooh-poohed the fight for full employment policies by saying that winning such a battle would require winning every other battle first. You weren't talking about the Charter - you were being fatalistic about the fight, as I suspected earlier. That's your prerogative.
As for your question about whether "any country has managed to support full employment", that's a very strange red herring. You are precisely as capable as anyone here of researching that question. But it's as irrelevant a question as asking whether any country has managed to support public health care or same-sex marriage or free education or universal public child care. We fight for those aims because we need them. Tales of others' failures are the stock in trade of those who want to hold back the wheel of history.
All those other battles are not prerequisites for reopening the Charter, they're a few of the considerations for meaningful full employment, and they all get loaded into the analysis at once if we go for a slam-dunk using the constitution.
I could really do without the hyperbolic invective though, Brother. Seriously -- I'm trying to hold back the wheel of history???
What's so fatalistic about my suggestions?
My Minsky suggestion didn't necessarily imply a constitutional amendment.
All those other battles are not prerequisites for reopening the Charter, they're a few of the considerations for meaningful full employment, and they all get loaded into the analysis at once if we go for a slam-dunk using the constitution.
Please separate the two issues: 1) the Charter; and 2) fighting for full employment policies. I told a story about Ed Broadbent and his belief that economic rights (jobs, health care, education) don't belong in the Constitution. Why not forget about that for a moment and deal with this question: Should a political party espouse full employment as a policy? Should it engage the population in that discussion? Should it bring in all the elements that would be pre or post requisites? My impression is that your answer is "no", but I'm having a hard time hearing you past your fear of reopening the Charter.
Unionist,
What do you mean by full employment policies?
Different economists will give different answers.
Unionist,
What do you mean by full employment policies?
Different economists will give different answers.
Policies whereby society takes all necessary measures to ensure gainful, decent employment for all who are willing and able to work.
I fully welcome public discourse and policies intended to create ample good jobs in Canada. I do not support trying to amend the Charter to this end, for the reasons I have indicated. You were the one conflating the two ideas, Unionist, and somehow in your mind, the fact that I and others like Ed Broadbent (!!!) don't agree with your proposal makes us all fatalists and, variously, non-supporters of economic equality. That's pretty fucking insulting frankly.
Unionist,
What do you mean by full employment policies?
Different economists will give different answers.
Policies whereby society takes all necessary measures to ensure gainful, decent employment for all who are willing and able to work.
Some economists might point to the right to work policies in the southern united states.
Of course along with universal access to good employment, we will also need universal education and universal childcare. We will need safe workplaces, a healthy environment, better health care, and good access to cheap healthy food, since to be fair, disability benefits will have to be tied to a living wage. And, we'll be needing free legal services for all the hundreds of thousands of employability and job suitability appeals.
No complaints here!
Just think, all it will take is for rich people to give up their excess standard of living.
What's the closest that any country has ever come?
I'll hazard Cuba and Venezuela.
All those other battles are not prerequisites for reopening the Charter, they're a few of the considerations for meaningful full employment, and they all get loaded into the analysis at once if we go for a slam-dunk using the constitution.
I could really do without the hyperbolic invective though, Brother. Seriously -- I'm trying to hold back the wheel of history???
What's so fatalistic about my suggestions?
Constitutionally enshrining the right to gainful employment/duty to ensure/provide gainful employment opens another front in the perennial fight for social justice and human and workers' rights.
What's wrong with that? The struggle continues comrades.
I fully welcome public discourse and policies intended to create ample good jobs in Canada. I do not support trying to amend the Charter to this end, for the reasons I have indicated. You were the one conflating the two ideas, Unionist, and somehow in your mind, the fact that I and others like Ed Broadbent (!!!) don't agree with your proposal makes us all fatalists and, variously, non-supporters of economic equality. That's pretty fucking insulting frankly.
The remark about "fatalism" related to the view that if we fight to entrench rights, the enemies will awake and entrench their own rights. I guess we'll have to agree to disagree on that. I don't know why you feel "insulted" because I described your response as fatalistic. I wasn't trying to characterize you - because I respect you and your opinions. You obviously feel strongly about what I've said, so I'll apologize and not bother you any more on this.
Some economists might point to the right to work policies in the southern united states.
That's ridiculous. "Right to work" states don't guarantee employment for anyone - they guarantee the right not to have to join a union. Are "some economists" confused by the label? Perhaps they should go back to school and pay attention this time round.
The man was obviously ahead of his time. But I distinctly remember my father saying to me that whatever the economy is, it has to have heart. He grew up in the depression era and thought life in the 1970's was easy peasy by comparison. Dad, with the grade nine education and a graduate of hard knocks u.
But is it possible to have full employment? Should we have full employment given the current literature on dangerous climate change and how human activities in general are contributing factors? Is full employment feasible in a capitalist system, whether mixed market economy or full blown kapitalism? Would it be more wise to limp our way out of the current dysfunctionality of human political economy until such time in the future when today's significant technological hurdles are overcome?
Bump.
Sad to see "full employment" being conflated here with "workfare" and the like, but this is precisely what I was talking about when I suggested some social democrats are the biggest obstacle to full employment because they have an irrational fear of it replacing the welfare state, or, that full employment would require coercing workers to work.
A full employment policy would mean the state using its power to create what is essentially a "permanent labour shortage" (for lack of a better phrase) in key industries so that the supply of new jobs would always be equal to or more than the number of citizens looking for jobs. This can be done any number of ways (nationalization of certain industries, a permanent stimulus fund, long-term investment in the public sector and in infrastructure, etc.). It's rooted in Keynesian thinking but it is also a fundamentally socialist/progressive concept meant to eliminate unemployment - the unwanted kind of unemployment, that is. The cautious/liberal method would be to allow the private sector to have complete control of the labour market, and then the state would step in as a last resort and provide the residual unemployed with jobs.
Full employment policies have existed, a basic wiki/google search turns up these examples: Clement Attlee's near complete adoption of the Beveridge report in the UK; the U.S. Employment Acts of 1946 and 1978 (which Jacob Richter alluded to above)... they came close but got watered down; and Australia came closest in the immediate post-WWII era.
The US Employment Acts weren't the things I referred to. There were two Depression-era employment programs that were shot down by the Supreme Court because of "state rights." I don't recall the names, though.
As for obstacles: MOST social democrats don't care about this proposal. Even now, there was Boston Globe radio chat on Hyman Minsky, and the bourgeois media wants to remember only his musings on finance. History repeats itself, first as tragedy then as farce: Marx the crisis economist (to say nothing about his own take on the labour theory of value, much less his political activity in the IWMA), and now Minsky on finance.
The liberal method would be to have the state provide only unemployment benefits, not the "trickle up" proposal above. Without unemployment, liberals say that wages will spiral upwards ("inflation out of control"). The implementation of this proposal may result in "investment strikes," since the bourgeoisie would lose their biggest stick against labour (unemployment).
The US Employment Acts weren't the things I referred to. There were two Depression-era employment programs that were shot down by the Supreme Court because of "state rights." I don't recall the names, though.
Let us know if you can dig these up - I'm interested in looking into it a bit further.
One was likely the court-ordered overturning of NIRA/NRA in 1935.
The liberal method would be to have the state provide only unemployment benefits, not the "trickle up" proposal above.
You're correct, but I am talking about liberals who want to see full employment. A "full employment liberal" would prefer a passive rather than an active role for the state. A socialist would prefer the opposite.
More...
I'm not sure about the RRA, but yes one of the two measures was indeed NIRA!
Anyway, since this discussion has actually exceeded not just my expectations by the corresponding threads elsewhere, I should quote them here for further contemplation:
http://www.revleft.com/vb/full-employment-under-t118165/index.html
Anybody's thoughts on NIRA, by the way?
Public Employer of Last Resort for Consumer Services
"But if a surplus labouring population is a necessary product of accumulation or of the development of wealth on a capitalist basis, this surplus-population becomes, conversely, the lever of capitalistic accumulation, nay, a condition of existence of the capitalist mode of production. It forms a disposable industrial reserve army, that belongs to capital quite as absolutely as if the latter had bred it at its own cost. Independently of the limits of the actual increase of population, it creates, for the changing needs of the self-expansion of capital, a mass of human material always ready for exploitation." (Karl Marx)
In Chapter 25 of Volume I of Das Kapital, Marx made this damning observation of a phenomenon that, until the advent of the capitalist mode of production, existed only as a result of natural disasters and wars: structural unemployment. Meanwhile, and earlier in this work, the question of comprehensive labour reform in the form of both living-wage minimums and deflation-protected, accurately measured cost-of-living adjustments for various kinds of compensation took into consideration the necessity of applying these towards unemployment insurance and voluntary workfare benefits. Additionally, the question of unemployment arising from workplace closures, mass sackings, and mass layoffs was addressed by means of partially rehabilitating Lassalle's political agitation for the formation of producer cooperatives with state aid (in this case, pre-cooperative worker buyouts of existing enterprises and enterprises just like what happened in the Paris Commune). However, these two measures would still be insufficient to tackle fully the problem of unemployment. In the first instance, the mention of voluntary workfare benefits refers to pay levels and not to operational aspects of the government programs themselves. In the second, unemployment can arise from other situations.
In the recent economic crisis, there has been much discussion in the United States about all the measures of unemployment used by the Bureau of Labor Statistics:
§ U1: Percentage of labor force unemployed 15 weeks or longer
§ U2: Percentage of labor force who lost jobs or completed temporary work
§ U3: Official unemployment rate per the International Labour Organization
§ U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them
§ U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently
§ U6: U5 + Part time workers who want to work full time, but cannot due to economic reasons.
At the end of 2009, U6 was well over 15%.
Now, consider a similar downturn elsewhere and a few years back. Towards the end of 2001, the Argentine economy went into a nosedive after two decades of privatization and liberalization. Official unemployment jumped to 21.5% by the middle of 2002, and over half the population was living in poverty. However, local currency alternatives to government money flourished and, not unlike the workers of the Paris Commune, Argentine workers reclaimed many abandoned factories to form the cooperative movement in that country. Moreover, in April 2002 the government created the Heads of Household program, providing part-time work for all household heads who met various family requirements. This part-time work consisted of participation in nonprofit-administered training programs and, more notably, provision of community services.
In the March 2008 issue of Dollars and Sense: Real World Economics, Ryan A. Dodd described the above before making a general point about that program:
Not surprisingly, as Argentina's economy has recovered from the depths of the crisis, the government has recently made moves to discontinue this critical experiment in direct job creation.
The Argentine experience with direct job creation represents a real-world example of what is often referred to as the employer of last resort (ELR) proposal by a number of left academics and public policy advocates. Developed over the course of the past two decades, the ELR proposal is based on a rather simple idea. In a capitalist economy, with most people dependent on private employment for their livelihoods, the government has a unique responsibility to guarantee full employment. This responsibility has been affirmed in the U.N. Universal Declaration of Human Rights, which includes a right to employment. A commitment to full employment is also official U.S. government policy as codified in the Employment Act of 1946 and the Humphrey-Hawkins Act of 1976.
[...]
Today, the ELR idea is mostly confined to academic journals and conferences.
Because it is long overdue for the class-strugglist left to commit to programmatic clarity, quoted at extensive length is L. Randall Wray of the Levy Economics Institute of Bard College on the subject:
The mainstream interpretation of Keynes's economics seemed to offer theoretical justification for policies that could tame the business cycle, promote full employment, and eliminate poverty. The two main levers to be used would be fine-tuning of investment spending to keep it at the full-employment level, supplemented by welfare spending to keep aggregate demand high while protecting the unfortunate who might be left behind by a rising tide. While Hyman Minsky is best known for his work on financial instability, he was also intimately involved in the postwar debates about fiscal policy and what became the War on Poverty. Indeed, at Berkeley he was a vehement critic of the Kennedy/Johnson policies and played a major role in developing an alternative.
[...]
Minsky argued that we need a "bubble up" policy, not trickle down economics (Minsky 1968). Spending should be targeted directly to the unemployed, rather than to the leading sectors in the hope that tight labor markets might eventually benefit lagging sectors and poor households. For this reason, he advocated an [Employer of Last Resort] program that would take workers as they are and provide jobs that fit their skills (Minsky 1965, 1968, 1973, 1986). He argued that only the federal government can offer an infinitely elastic demand for labor, ensuring that anyone willing to work at the going wage would be able to get a job. Further, he argued that in the absence of tight full employment, the true minimum wage is zero; however, with an ELR program, the program wage becomes an effective minimum wage.
[...]
ELR could include part-time work, child maintenance, and a discounted youth wage, if desired. In addition to providing jobs where they are most needed, ELR would also provide public goods and services where most needed - in urban ghettos - to help quell unrest.
To ensure taxpayer support of the program, it would need to provide readily visible public benefits. Minsky advocated a progressive income tax, and would distribute the benefits of publicly produced goods and services progressively (Minsky no date). Hence, taxpayers would get something for their taxes - parks, safety, clean streets, education, child care and elder care, etc. - but there would be a strong redistributive bias. He recognized that the program would probably need a permanent cadre to provide critical services - as the public becomes accustomed to receiving public services from the ELR program, these cannot be suddenly shut off (Minsky 1973).
One of the goals of the program would be to make labor more homogenous through education and training, but Minsky opposed any education or skills requirement for admission to the program (Minsky 1965). He also opposed means-testing, which would turn the program into what is now called workfare [...] He recognized that the nation would still need some programs for skilled workers who lose high wage jobs and fall into the ELR program. As discussed, a dynamic economy would always be creating structural unemployment, so retraining programs would be needed to ameliorate skills mismatch. He also recognized that the nation would still need welfare for those who could not, or should not work [...] However, he showed that an ELR program by itself would solve most of the poverty problem [...] He saw ELR as an alternative to the dole, arguing that unemployment compensation just institutionalizes unemployment. By contrast, jobs affirm the dignity of labor and allow all to participate more fully in the economy.
This particular kind of job creation program is a major leap in approaching structural unemployment. Traditionally, public works programs have been initiated to get people back to work, but in the recent crisis have been on the whole ineffective because of their treatment as being little more than short-term stimulus spending by governments. Moreover, public works themselves do not take into account the skill set of most workers in developed economies, which is not in manufacturing or construction trades, but rather in skilled and unskilled services. Consequently, grassroots agitation for public works - much less for the traditional Trotskyist call for fully implementing a sliding scale of hours - tends to not win solid support from these workers, to say the least.
Because this is the most that bourgeois capitalism can accommodate with respect to unemployment, this reform - for the expansion of public services to include employment of last resort for consumer services - does not meet the Hahnel criterion for facilitating other threshold demands or even immediate and intermediate ones. The biggest stick of bourgeois capitalism is unemployment; without this threat of employees entering unemployment, employers can only resort to carrots. Other reactions by employers would have to be pre-empted or dealt with swiftly, and a number of measures should be implemented beforehand to prevent capital flight, investment strikes (not investing as required by government plans), and other economic blackmail on the part of the bourgeoisie and petit-bourgeoisie.
Some will undoubtedly rush to say that this proposal is little different from the post-modernist call for unconditional basic income as discussed in Chapter 2. Recall that this scheme would, under bourgeois society, result in both the monetization of social benefits through their privatization and a universally downward shift in wages. Moreover, with jobs come certain psychological benefits not found in mere welfare receipts, not to mention the usual skills development, as demonstrated aptly by the rejection of welfare receipts by some of the very same participants in the Argentine government's job creation program (who in turn preferred work). The brief implementation of proposal in places like Argentina and even in the Depression-era US also means that this threshold demand is, as mentioned earlier, not directional or genuinely transitional.
How, then, does this reform enable the basic principles to be "kept consciously in view"? Besides the obvious call to class strugglism against the biggest stick of bourgeois capitalism, consider the approach to zero unemployment by an economy operating on the principle(s) of social labour, as explained by Paul Cockshott in a video on socialist economies:
One of the key differences between a socialist economy and a capitalist economy is that, in a capitalist economy, there is always unemployment. This unemployment acts as a stick to beat the worker to work harder. Now, in a socialist economy where the allocation of resources is being planned, you tend to get full employment [...] However, full employment could come in two forms. It could either come because, in the economy as a whole, there was sufficient demand for labour to take up all the people willing to work - or it could come because people had a right to work at one particular workplace where they started work. Now, if you have the latter form, you run the danger that the economy will become set in concrete; it becomes very difficult to reallocate resources to new industries and to run down old industries as tastes change or technologies change. So, it has to be the case that the state guarantees people a job, but doesn't necessarily guarantee them a job at the same place indefinitely.
REFERENCES:
Das Kapital, Volume I by Karl Marx
[http://www.marxists.org/archive/marx/works/1867-c1/ch25.htm#S3]
A New WPA? by Ryan A. Dodd [http://www.worldproutassembly.org/archives/2008/04/a_new_wpa_an_in.html]
Minsky's Approach to Employment Policy and Poverty: Employer of Last Resort and the War on Poverty by L. Randall Wray [http://www.levy.org/pubs/wp_515.pdf]
Towards a New Socialism (video) by Paul Cockshott [http://www.youtube.com/watch?v=wl5k1zH2oGM]
The idea behind monetarist monetarism is for governments to run budget supluses and squeeze money from the economy in order to shovel it to the banks. They want to sabotage our ability to get out of debt to banks and foreign creditors by strangling the physical economy with policies for low inflation. Those policies make countries more dependent on foreign imports and creditors. The neoliberal mumbo-jumbo is now exposed to be economic sabotage in the thirdworld capitalist nations as well as affluent western countries. The new business model declares debt to be the new wealth creation. Debt is wealth, and all risk shall be socialized. It's very undemocratic, but what people don't know won't hurt them. It's been the political strategy all along.
Hey guys, gals and those that refuse either term,
Just thought I'd come and chime in on this "full-employment" thread. Hyman Minsky was considered to be part of the economic school of "Post-Keynesianism," and I'd like to highlight here the ways that Post-Keynesianism sees the posibility of full employment political economic policies.
Post-Keynesianism (PKE), like one of its biggest influences Keynes, put thw importance on the demand side of the economy as opposed to Neoclassical economics that is supply side oriented. This has a definite impact on the way that PKE looks at the economy, because the demand for goods is the driving for in the short term and the long term. This pushes PK economists to believe that full employment is possible through government spending increasing demand and in doing so raises the rate of employment. Full employment schemes and policies by governements are highly reliant on business cycles (as emplyment is higher during booms then bust) and on international financing.
Full employment does not automatically mean that the government is creating or giving the unemployed jobs to reach full employment, but more of an effect of increasing aggregate demand through public spending. Unionist is kinda off the mark with his caracterisation of full employment policies when he mentions solely the responsibility of the government to assure employment to those willing to work through employing them themselves.
Can anyone tell me whether or not these policies, including the cyclical deficits that are created by the financing required, can be included into Michal Kalecki's "principle of increasing risk?" Michal Kalecki debated and fought for full employment policies that he thought were a definite posibility with international financing, but he never extrapolated his "principal oof increasing risk" that was created for firms to nation-states. Just wondering if anyone knew about this stuff and could provide an answer, I'll ask my Economics Prof to see, and if anyones interested I'll see what he says.
And many of Keynes' ideas were never implemented after Bretton Woods. We can have the kind of populist policies for fuller employment. The new liberal financial regime in place post-Keynes and Kalecki still provide governments with policy options for sovereign economic decision making in counter to market forces of international capital. But there is no political will in Ottawa to buck capital. And the political impotence is feigned. There is no market rule which says that Ottawa can not pursue policies for fuller employment and funding social programs to pre-1995 levels. This modern form of political impotence is entirely self-imposed by our two old line parties working hand in glove on behalf of marauding capital, banks, and bond holders.
Fidel,
I like you're use of "fuller employment" because it seems to me that that terminology is closer to the truth when speaking of these types of policies.
And to add to your point, their is NO economic reasoning (well if you exclude the neocons and some classicals) that suggests that this type of policy is not feasible. It is all up to political will as Fidel pointed out.
Yes, and Jeffrey Sachs pointed out that there is a valid alternative to the new liberal economic model or neoliberal ideology. That is really something coming from a well-known economic shock therapist and free market advocate. Social democrats and those on the centre-left in general in those countries have realised that full employment is not really doable in even a mixed market economy like their's. They understand that big business is fickle and will go where labour is educated and "flexible" in a different way than labour market flexibility is understood to be in the English-speaking countries. They've proven that social welfare spending tends to compliment competitive economies rather than representing a hinderance as predicted by people like von Hayek and Ricardo. It's about as good as it gets for labour in today's capitalist world.
Eek! It's another economist with a clue!
When someone is laid off, should the government provide high benefits? Traditional theory says no, since big benefits seemingly reduce the incentive to find a job. “Standard models predict that we should have no safety net,” said Chetty.
But in reality, higher benefits are more in line with actual needs, because most Americans have so much income tied up in fixed commitments, such as payments for houses, cars, and furniture. “There are a lot of things you can’t adjust in the short term,” he said.
So the traditional economic models that are used to determine unemployment benefits miss a simple fact: People have bills to pay. “You miss certain features of reality,” said Chetty, “when you’re trying to write down simple models of the world.”
Canada is an immigration coutry. The problem is not full employment but labour shortages. It's been that way for generations. Socialists in particular will argue for robust immigration. There is a tendency by everyone to forget all this.
Labour shortages in the strictest sense means that the unemployment rate is below 0%. That is never the case in any capitalist country. Heck, even Alberta has a bit of unemployment.
U rates across Canadian provinces for November Looks like long-time NDP prairie provinces are faring about the best
Yeah, but they, like most soc-dems, are so myopic to not even consider this kind of policy.
Canada is an immigration coutry. The problem is not full employment but labour shortages. It's been that way for generations. Socialists in particular will argue for robust immigration. There is a tendency by everyone to forget all this.
Canada is the second or third largest country in the world with unparalleled in the world natural resource wealth, and a shitload of energy. Canada also has a relatively tiny population to employ and house and provide adequate health care for. Our stooges in power can't even do this without screwing up.
Most logical people might be inclined to ask how Canada's colonial administrators have managed to achieve so little with so much at their disposal.
Here's the typical socialists economic philosophy. "Capitalism doesn't work, it's irrational. It's corrupt. Just look at the poverty around. Oh, there's labour shortages too. We have to let in a million immigrants pronto. God, capitalism is beautiful."
Social democrats believe in free labour markets whereas believers in British free trade theory believe in rigging markets of any kind to favour capital and a handful of elitists. Socialists in general want the whole system scrapped and replaced with a dictatorship of the proletarian majority. And I tend to lean that way myself, although the NDP are the best shot we all have for democratizing the system.
I tend to think that the free market will produce a $12 an hour defacto minimum wage in growth cities if immigration is kept to Just In Time. Reports are this is the situation in Alberta pre-recession. I calculate the nanny state subsidies of such minimum wage workers as $4 an hour, as taxes are almost flat. Thus the effective minimum wage would be $16 an hour. This is 70% of the average wage of $23 in growth cities, which would not be net subsidized. That is not so bad in terms of wage disparity, 70%. A wage of $12 is not good, but the problem is that's all productivity will support. It's socially acceptable, the Canadian Way. The unemployment level would be kept low by Just In Time immigraion as well. I have support for this idea with the Liberal MPs in Ottawa. The NDP have been silent.
I think what you're longing for is the conservative nanny state version of capitalism. And we share a lot of those same features of economy here in the Northern Puerto Rico already. They don't really believe in free trade. As Gore Vidal once said about it, they practice socialism for the rich while preaching market fundamentalism to everyone else.
You at least read my post, which I find is rare.
I get a lot of support for the idea of tightening immigration until we get to Alberta levels of employment. The defacto minimum wage should go up to $12 an hour. I estimate this would inflate about 0.5% nationally and most of that would be transfers within families. Poverty would come down. This is opposed to the idea of socialistic Scandanavia that spends about 15% more of the GDP through the government (55%, not reliable information).
Alberta has one of the highest levels of unemployment in Canada today, Bruce, and even as they "create wealth" from a natural deposit of it laid down by mother nature. Alberta is a perfect example of rightwing economics running amok, and it will leave them poorer in the end. Northern Canada is strewn with abandoned mining towns, minerals extracted, land devastated, and profits long gone with the capitalist dogs whove moved on to sponge off the next hosts' sweat, blood and tears.
"When money arrives, all is green, bustle and abundance. And when it leaves, all is trampled down, barren and bare" old Chinese proverb
Alberta has unemployment of 7.5% but their participation in the labour force is away higher than in Montreal, Toronto and Vancouver.
Alberta has one of the highest levels of unemployment in Canada today, Bruce, and even as they "create wealth" from a natural deposit of it laid down by mother nature. Alberta is a perfect example of rightwing economics running amok, and it will leave them poorer in the end. Northern Canada is strewn with abandoned mining towns, minerals extracted, land devastated, and profits long gone with the capitalist dogs whove moved on to sponge off the next hosts' sweat, blood and tears.
"When money arrives, all is green, bustle and abundance. And when it leaves, all is trampled down, barren and bare" old Chinese proverb
Oh, really. Back in the day when Communist China was centrally planned the phrase "Iron Rice Bowl" came to the language. Some people had stable jobs and others were insecurly employed. There's a world of difference. Confucious basic philosophy was to "work for the government" as they have the prime jobs. There will always be secure jobs and boom and bust jobs. Personally I've had some 40 different jobs.
China is still centrally planned. And they're employing many more workers there than we have in total population here in a land of resources and unemployed and underemployed, and of waning ideology. Can we imagine if that many workers flooded into Canada looking for jobs and housing? Our own stooge central planners wouldnt know whether to crap or go blind. Theyre paying cash for apartments and new cars in China. Personal savings rates among the elderly as high as 50%. And now China looks like they will beat the USA to socialized medicine with the building of 30,000 new hospitals, clinics and other care facilities across China. China bustles with Keynesian-Confucianism while our "new" liberalised economies remain stagnant and mired in recession. Asia was once home to the largest and most influencial economies in the world. And they will be again.
China is centrally planned, eh. And doing better than Canada because of it. This is your dinner talk to the wife. Actually the Canadian economic strategy is immigration and this is by the central authorities - the central plan.
Yes, centrally planned and making the west look like we're standing stil and doing itl with Keynesianism and plenty of interventionism in the economy.
Capitalism is about maintaining vast regions of the world as under-developed preserves of natural resource wealth and cheap labour for supranationals to raid at will. At least China gets something out of it. All those other thirdworld capitalist hell holes are still under-developed hell holes and bastions of human rights abuses by the time the latest ideology for centrally planned state-capitalism expires.
Fidel, do you have any idea who the proletariat is? I work as an auto parts courier and rub shoulders with them daily. Before Christmas "P" got fired because he couldn't control himself. He was always yelling at the customers, the fellow employers and the bosses. One day they told him to apolgize so he simply left. The other workers were relieved. Oficially "P" has grade eight but in reality it's probably grade six. Before that it is was "B". "B" smelled so bad that people didn't want to work with him. One day he cut a car off while driving and almost killed himself. They cut him off at that point. "B's"opinion was an interest in politics was similar to mental illness. Then there is "M". They made "M" a supervisor at one point ( that's businesses being innovative). He tried to punch out one of his staff. "M" has three children and his girl friend has two but all five have been taken away by the grandparents. Between "M" and his girlfriend they have produced five orphans. Then there is "V". "V" is a Jamacan immigrant and very religious. However he thinks he is poor because Jewish bankers control the world economy. This idea that the worker should be King, be comfortable, is a bit far fetched. I'm average myself and I can tell you from personal experience that is not that good. At the bottom there are problems and fortunately they are getting by at this time in Canada. God Bless.
Sounds like they need to invest everything in a handful of well-educated middle and upper management types for the sake of maximizing efficiency and to wring as much productivity from blue collar slobs as possible, and who themselves only need to be prodded and cajoled to get any work out of their lazy, useless eater carcasses. Ahhem! Kapitalists don't really understand human beings or what motivates them other than self-interest. It's why capitalism's on its ass again. It's a miserable system.
Again sir, have you any experience with well educated the upper management types. For one they are out of the price range of auto parts. For two they are not that good. They brought the tech bubble in 2000 which produced a recession in the uSA and the mortgage fiasco in 2008 which produced a world recession. That's what we have to work with.
I was pulling your leg, Bruce, sorry. I realize you are serious about this topic of discussion and should let someone else comment. Think free labour markets and a borderless world, and a real information based economy to allocate labour and resources as efficiently as possible. There is work to be done everywhere around the world, and this system isnt working to bring millions of idle hands to that work. We need a new way, imo. Carry on.