In the first two parts of my post (here and here), Getting to zero employment, I tried to establish three important points:
First, mainstream economic policy-makers admit the tools they use to ensure so-called full employment are of limited effectiveness. These tools are effective only insofar as they add to output, defined as an increase in aggregate prices of production of all the commodities produced during a given period, aka GDP. Efforts to expand employment beyond this limit by conventional policy measures add to prices, but add nothing to real output. A simpler way to say this is that conventional policy measures produce inflation, but do not increase the production of real goods — cars, houses or shoes. The point where conventional policy fails has been called NAIRU: non-accelerating inflation rate of unemployment: However, NAIRU is not an actual number, corresponding to some definite level of unemployment — like 10% or 5% or even 1% unemployment. Rather, it is a theoretical construct, a crutch, employed by simpleton economists to explain why, at some point, conventional policy fails.
Second, mainstream economic policy-makers admit the tools they use to ensure so-called full employment leaves a huge population of unemployed wage workers — perhaps 100 million or more — unable to sell their labor power. At the same time they insist (to one degree or another) that in our society the normal expectation is that each person must earn wages to access the means of life. The state can step in to offer limited support to “the deserving poor”, like those who, through no fault of their own, are laid off from a job, but the state should not be in the business of providing long-term, permanent income in lieu of a job.
Third, it is characteristic of the American system that the social safety net is meager and leaves the huge population of unemployed in dire economic straits. The American state will literally watch its citizens die on the streets without intervening. Some might find this indifference disturbing, yet they are only moved by the extremity. They never question the fact that the mode of production itself is premised on this extremity, wage labor means labor motivated by threat of hunger and homelessness. If, occasionally, a wage workers should actually freeze to death, this only tells the rest of the proles to get back to work or they may be next.
In addition to leaving a massive population of almost 100 million workers unemployed, I want to show why current full employment policies actually reduce employment and output, and make society poorer.
Continue reading “Getting to Zero Employment: Why “full employment” policies actually limit employment and output”