Jobs for Everyone? It’s Time for a Progressive Vision


employment, jobs, progressive, progressivism,

After the global recession of 2008, a new idea emerged on the political scene; that of ‘Austerity’. Politicians called on the people of Briton to ‘tighten their belts’, to ‘cut back on luxuries’, and for ‘frivolous public spending’ to be reduced in the name of ‘balancing the books’, and bringing down public debt. This is a far cry from addressing unemployment through the creation of public jobs for anyone who wishes to work, a position advanced by modern Keynesian economists.

One could be mistaken at the time for thinking that Britain was on a knife’s edge, with a dire threat of bankruptcy that needed to be averted as soon as possible. The reality was very different however. Although the amount of debt, as well as the size of the deficit were relatively high, there was no reason to believe that they were ‘too high’ or that they were approaching some worrying tipping point as was trumpeted in the press.

An obsession with ‘balancing the books’ is not only unnecessary, but can be very harmful to the general economy. Public debt is best thought of not as a singular value to be managed, but as the flip-side of private debt. When the public sector does deficit spending, i.e., spends more than it takes in in taxes, that money goes to the private sector, bringing down the debts of households, and private businesses. If the public sector aims for a deficit that is too low, the burden of debt in the private sector slows down economic growth and hurts both public and private finances in the long-term. This is particularly important during an economic depression, like we’re in today, where levels of private debt are at record highs.

With that in mind, the primary question of economic policy becomes not how to balance the public budget, but rather what the most efficient uses for government funding are. For classical business economists, the way to get the economy vitalised is through tax cuts, which is effectively handing money to private corporations, in hope that they’ll spend it to create jobs and improve the economy. Since 2008, this has been accompanied with sharp cuts to public services, to make space for more corporate tax cuts, and to open more new sectors of the economy for private exploitation. The results of this approach have been a determined failure. Very little of the money that has been redirected to the wealthy and large businesses has gone towards productive enterprises, with much of it being spent on corporate mergers and acquisitions, financial speculation, and share buybacks.

The classical approach is thus not particularly effective, and in fact, cutting public services has caused rising household debt, hurt the incomes of consumers, and likely also hurt corporate profits in the process. Another approach to economics, more commonly associated with progressives, is supply-side economics, otherwise known as Keynesianism. Keynes was a prominent economist during the depression in the 1930s, drawing attention to the importance of consumer incomes in driving the economy. Though businesses may want to produce, if no-one has the money to buy their products, they simply can’t sell their goods and services. When this goes too far, it can cause an economic crisis, specifically what is known as a Crisis of Overproduction.

jobs, guarantee, monetary, Keynesian
Works under the U.S. Works progress Administration was the largest and most ambitious New Deal agency, employing millions to carry out public works projects and providing income to the scores of unemployed during the Great Depression in the 1930s

Keynes’s ideas significantly influenced many post-war policies; including the welfare state, public health-care, the minimum wage, and other increases to workers’ wages. These policies were central in raising living standards during the post-war era, but many of their advocates overestimated their effectiveness at stimulating economic growth. While it is true that unlimited free-market capitalism pushes cuts to wages too much, and harms growth, but there is also a point at which wages become too high for businesses, and investments begins to fall. Keynesian economics came to a head during the 1970’s Oil Crisis when governments failed to reduce unemployment through large stimulus programmes.

jobs, guarantee, monetary, keynesian
However, focus on improving wages alone does not work beyond a point, and economies began to suffer again

Since then, and up to the 2008 financial crisis, Keynesians have been working to improve their theory, developing what is now called Post-Keynesian Economics. It integrates newly acquired insights into government finance that are collectively called “Modern Monetary theory”, allowing Keynesian economics to explain the real, as well as imagined, limits of government spending. The key policy proposal to come from Post-Keynesian Economics is the Job Guarantee Programme. Whereas the post-war public spending was targeted to increase workers’ wages, in the hopes of stimulating the economy, and thereby creating new jobs, a Job Programme on the other hand directly targets unemployment, by hiring the unemployed to work for the government. Some countries trialled Job programmes on a small scale during the 40s and 50s. Those advocating post-Keynesian policies, however take the idea of Job programme to its natural limits, arguing that the government should initiate a permanent scheme of hiring all of the unemployed. Thus essentially providing a job to everyone and anyone who wants to work.

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What could a job guarantee do to economic decision making and standard of living?

This scheme has obvious benefits as providing jobs to everyone would drastically reduce poverty and it would boost growth by increasing the size of the workforce. The original pioneer of this scheme, Hyman Minsky, and Modern advocates like Warren Mosler, and Randall Wray, argue that it is always within the financial capacity of developed countries to sustain full employment, through deficit spending, and anything less than that is an economic mistake. Unemployment, they argue is thus a political decision, and never an economic necessity.

The Job Guarantee program is increasingly popular among much of the centre-left who think that capitalism can be made into a workable system, and the far-left, who seek a more cooperative and participatory alternative. For the centrists, the Job Guarantee would be at the minimum wage, with the intention that people learn skills on the job, and then transfer to the private sector when ready to earn a higher wage. For them, the Job Guarantee programme would be a way to stabilise capitalism; with the government expanding and picking up the slack when the private sector is faltering, and reducing it’s capacity when the private sector is booming. By providing training to the unemployed and an income, the scheme would help prepare people for private sector work, and boost consumption and demand in the economy.

For the far-left, like the Marxist Michal Kalecki, a job guarantee represents a more radical challenge to private business. He notes that with the government making itself available as the employer of last resort for all citizens, the capitalist class loses one of its most powerful tools for disciplining workers; the threat of unemployment. Taking away the threat of unemployment allows workers to be more radical in their workplace activism, fight for things such as better working conditions, higher wages, and ethical investment, without fear of losing their livelihoods. Kalecki also notes what a Job Guarantee could mean for progressive politicians. Whereas in the past well-meaning politicians have been trapped by the constraints of private business, striking difficult compromises between business and working people that leave much to be desired, if the government could work out how to create jobs for itself, it would empower progressive politicians. This would permit governments to adopt  policies that may result in costs on the private sector,  like imposing strict environmental regulations, which is essential for the longevity of our species. This would however, cause a large fail in private profitability, and a significant loss of private sector jobs.

Randall Wray also stresses on the importance of Job Guarantee being funded by central governments, but yet organised in a decentralised fashion, so those employed by the scheme work to meet the needs of their local community. A Job Guarantee would also therefore restore a degree of power to local communities, and create a public workforce in every community that is dedicated to improving their local area.

Implementing a Job Guarantee in Britain will need to be an experimental process, with kinks and problems worked out along the way. Economics is a complex and constantly evolving field of study, and the specifics of a Job Guarantee scheme will be different in every country, but in it’s essence, it is a very powerful all-around policy, affordable, pragmatic, and forward-thinking. Progressives should unite to help make the provision of public jobs to everyone a reality.

1 Comment

  1. Andrea Grainger’s grip on reality is a bit defective in the sense that we already have a JG scheme of a sort up and running in the UK: the Work Programme. Moreover, I was advocating 20 years ago that JG should be implemented in the form of something resembling WP, so it’s nice to see my ideas being put into practice, even if WP is a long way from perfect.

    Two of the characteristics I advocated in particular were first that JG people should be subsidised into work with EXISTING employers, not into work on specially set up schemes, as per the WPA in the US in the 1930s. Second, I advocated subsidising those concerned into work with private as well as public sector employers (a characteristic of WP).

    My latest work on the subject, which will be a mile above the heads of most JG advocates, is here:

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