Is full employment possible under capitalism?

An interesting interview with Robert Pollin on the Real News Network, in which he discusses the possibility of achieving full employment under capitalism. He considers the ideas on this subject of Marx, Keynes, Kalecki and Friedman.

For me, the historical record seems to support the ideas of Kalecki and Marx, in that achieving full employment may be possible, but sustaining it is much more difficult. This is because it tends to change the balance of power in society in favour of the workers, which the employers don’t like. If high inflation or a squeeze on profits is to be avoided, a new bargain between employers and workers is necessary.

The solution is thus a political one, and leads to a different kind of capitalism. It may be possible for a while but, once again, history suggests that this is hard to sustain, and that a squeeze on profits will result, leading to a slowdown in investment and growth and subsequently to a rise in unemployment once again. This also lends support to the ‘classical’ ideas of Anwar Shaikh on wages and unemployment, which I discuss here.

3 thoughts on “Is full employment possible under capitalism?

  1. If full employment is to be achieved at all, it would appear that an open society is requisite in which access to the arenas of political competition is possible for all contestants, including capital and labour. I grant that it lies in the nature of a pluralistic democratic society that the outcome of the processes of political competition are indeterminate, cannot be predicted with certainty, and thus it is possible that the kind of balance between labour’s and capital’s political impact which is needed to ensure sufficient participation of labour in productivity growth may not always be achievable — as has been sadly the case in the past 30 years, since the left has abandoned its role as protector of the interests of labour to lend its support to neoliberal schemes such as the EU, which (the EU) is also a “great” means of weakening democracy, another protector of the working class. Somehow the left has always ended up betraying the interests of labour, most massively during the horrific age of “real socialism” and communism which has seen the unmitigated exploitation of the working class. If the agents of labour habitually turn against their clientele, it would seem to me that this constitutes a separate problem from the tendency of capital to lend too much weight to its side of the equation. So, I wonder what alternative to a system of open political competition do you suggest or Anwar Shaikh to ensure enduring full-employment?

    • Thanks for your interesting comment. Full employment was achieved in political systems far from being free, both fascist and communist, but certainly at too great a cost. The difficulty which Keynes identified was in achieving FE in a free society, so as to preserve individual freedom and economic efficiency while admitting the need for state intervention. Particular capitalist nations have achieved it, and sustained it for a while, but it seems that at some point, structural change to allow for continued growth produced rising unemployment once again.

      Given the historical record on FE under capitalism, if it is to be achieved at all, then policies which support sufficiently rapid growth without high inflation may require some form of incomes policy, which in turn requires cooperation between the state, business and strong but hopefully not militant trade unions. This can surely work for some time, but even then, it seems to break down eventually. This is why I remain a little pessimistic about FE being sustained in the long run under capitalism, even with open political competition as you say.

      A strong social safety net and policies which support and manage structural change in employment and output are therefore absolutely necessary in my opinion. But there is no ‘happily ever after’ under capitalist accumulation, while the alternatives that we can imagine or have tried to date are worse. However, this does leave room for alternative models of capitalism itself.

  2. Could Kalecki’s observations about full employment be read in both “Keynesian fashion” or “Marxist fashion”? Namely, from the Post-Keynesian/MMT perspective, the goal is to design a FE policy, where there are enough “institutional sticks” preventing the rise of working-class power as a threat to capitalist class authority. So as Michael Roberts has observed, MMTers don’t want the public sector to compete with private sector wages. So they fear the “Marxist Kalecki” who would want a “popular FE” rather than the watered down, “political/economic class’ idea of full employment policy.

    In other words, while there might be an increasing popularity on the desirability of FE policies (a recognition that structural unemployment is a “waste of human capital”.), the devil so to speak is in the implementation. Class struggle will ultimately determine the specific content of FE policies.

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