The Politics of Full Employment

The left would do well to dwell on the fact we have seen this film before.  At some point we need an adult conversation about capitalism and not just when it is stuck in a putative liquidity trap:

It may be shown, however, that the stimulation of private investment does not provide an adequate method for preventing mass unemployment.  There are two alternatives to be considered here.  (i) The rate of interest or income tax (or both) is reduced sharply in the slump and increased in the boom.  In this case, both the period and the amplitude of the business cycle will be reduced, but employment not only in the slump but even in the boom may be far from full, i.e. the average unemployment may be considerable, although its fluctuations will be less marked.  (ii) The rate of interest or income tax is reduced in a slump but not increased in the subsequent boom.  In this case the boom will last longer, but it must end in a new slump: one reduction in the rate of interest or income tax does not, of course, eliminate the forces which cause cyclical fluctuations in a capitalist economy.  In the new slump it will be necessary to reduce the rate of interest or income tax again and so on.  Thus in the not too remote future, the rate of interest would have to be negative and income tax would have to be replaced by an income subsidy.  The same would arise if it were attempted to maintain full employment by stimulating private investment: the rate of interest and income tax would have to be reduced continuously– Michal Kalecki Political Quarterly  (1943).

Odd that we should be so stuck in this rut and having nothing close to full employment.  Gives pause to consider how far liberal economists have strayed from their humanist pretensions.

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