Re: Full Employment is what?

["Forstater, Mathew" <ForstaterM@xxxxxxxx>]

Please Barkley, I expect more from you!

But, on the other hand, perhaps worded differently, it is a fair and welcome
question.

As such, it requires a lot more time than I have at this moment to devote to a
comprehensive response.  And obviously I can't speak for Bill.

I'm working on my paper now for the Path to Full Employment and Equity
conference at Newcastle and hopefully this will go some way to answering your
question.

Capitalist economies are by themselves unsatisfactory and unsustainable in a
number of ways.  One way they are unsatisfactory is that they do not provide
full employment.  As you know, I support an ELR/JG program for full employment,
run on the principles of functional finance.  You may also know that I and
others have argued that not only is this the only way that capitalist economies
can provide true full employment, but that we see there being a number of other
potential benefits as well.  For example, ideally those employed will provide
public and community services that will increase quality of life, etc.
Certainly environmental services of various kinds are among these.

Capitalist economies, I think the evidence shows, are also by themselves
ecologically unsustainable in a number of ways.  Badly regulated capitalist
economies may be even more unsustainable in some ways.  Here I refer to
subsidies for the wrong kinds of technologies, resource use, etc.  So the rate
of resource depletion, pollution, etc., and the basic technological structure of
production are not consistent with long-term environmental sustainability. Of
course, there are other social costs of market forces that may be addressable
through the ELR, but let's focus on the environment.

Perhaps ELR and an environmental policy program can be combined in a way that
can make up for the unsatisfactory and unsustainable aspects of capitalism.  If
that's the case, and if we view an unsustainable and unsatisfactory capitalism
as a kind of "sick patient" then I took Bill's reference to government as a
"life unit" as reference to the sets of institutions and policies that might
complement and supplement capitalism to make it better.

Now, I think that is very different from the Soviet Union in a number of ways.
On the employment side, the Soviet Union did have full employment, but in the
basic ELR proposal, the idea is to find the right balance of private and public.
On the environmental side, I think that the Soviet Union did not have
environment as a priority, and some of the logic of the Soviet system even
worked against the environment.

So, the short answer is that the "life unit" idea sees government as providing
essential services, policies without which capitalism would be unsustainable and
unsatisfactory.  Surely the reference to "Soviet Union" is a non sequiter, a red
herring, and various other terms people use without knowing what they mean or
why.


-----Original Message-----
From: J. Barkley Rosser, Jr. [mailto:rosserjb@xxxxxxx]
Sent: Thursday, May 31, 2001 1:45 PM
To: Forstater, Mathew
Cc: Post Keynesian Thought
Subject: Re: Full Employment is what?


Bill and Mat,
      Was the Soviet government "an infinite life unit"?
Barkley Rosser
----- Original Message -----
From: "Forstater, Mathew" <ForstaterM@xxxxxxxx>
To: "Bill Mitchell" <ecwfm@xxxxxxxxxxxxxxxxxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>
Sent: Wednesday, May 30, 2001 6:12 PM
Subject: Re: Full Employment is what?


> Bill Mitchell wrote:
>
> >we can also truly see the government as an infinite life unit.
>
> If I understand this correctly, this is an extremely important point.  It
> relates to what Bill wrote in his paper "The Job Guarantee in a Small Open
> Economy" in E. Carlson and W. F. Mitchell (eds.): THE PATH TO FULL
EMPLOYMENT
> AND EQUITY, The Economic and Labour Relations Review, Vol. 11, supplement,
2000:
>
> "Even if it were possible to expand demand enough to promote growth
sufficient
> to keep pace with labour force growth and productivity growth and mop up
the
> huge stocks of long-term unemployment, how could the natural ecosystems,
already
> under great strain, cope? There is a need to change the composition of
final
> output toward environmentally sustainable activities.  It is not increased
> demand per se that is necessary, but increased demand in certain areas of
> activity." (Mitchell, 2000, p. 113 n8)
>
> This also relates, if I may say so, to some of what I was trying to get at
in my
> paper in the same volume, "Full Employment and Economic Flexibility" (as
well as
> in "Flexible Full Employment" JEI, June 1998, and Levy Public Policy Brief
No.
> 50 and Levy Public Policy Brief Highlight No. 50A at
http://www.levy.org ):
>
> "Since the government is not in business to make a profit, it can base its
> decisions about products, production methods, and hiring not on cost
> minimization, but on broader macroeconomic goals or social values...
>
> ...Whereas private firms are compelled by competitive pressures to choose
the
> method of production that will maximize profits, government is not so
> constrained. For any given activity, choice of technique can be based not
on
> cost minimization but on impact on the system as a whole. For example,
more
> labor-intensive methods may be chosen even where more capital-intensive
methods
> are available and might be chosen under different conditions, and
alternative
> technical means may be utilized to ease pressures on natural resources or
the
> assimilative capacity of the environment."
>
> In this sense, activities peopled by the Job Guarantee provide a full
employment
> that is more sustainable than a fully employed private sector capitalism,
even
> if the latter were possible, and further, may provide services without
which the
> private sector itself would be unsustainable, fully employed or not.
>
> Bill: if you read this far, in the "Small Open Economy" paper you refer to
a
> paper where you discuss the job guarantee and environmental
> sustainability--Watts and Mitchell 2000, on the genuine progress
indicator. Is
> that paper available on the web?
>