Thursday, May 21, 2015

#tbt Michał Kalecki 1943 Political Aspects of Full Employment

In the 72 years since its publication, Michał Kalecki's Political Aspects of Full Employment has received little in the way of faithful formalization. The currency it has found has been mostly in grave departures from its premises and conclusions. For the most part, the paper has been treated as if it were a theory of the business cycle. Perhaps the most notable of these endeavors was William Nordhaus' 1975 paper, although a nod to this direction was recognized by Joan Robinson in her 1972 speech at Cambridge. This view generally sees Kalecki's theory as saying that political power determines macroeconomic outcomes.

To be sure, the theory does derive from the realization of a consequence of part of what may be considered the business cycle – widespread unemployment. However, the meat of Kalecki's argument is not (necessarily) about what causes economic downturns per se so much as the curious way in which large business interests react to them.

In my reading, the curiosity motivating Kalecki is not one of what causes widespread unemployment, but rather why businesses would have an interest in seeing it persist. In this model, Kalecki takes rampant unemployment as a prior condition to his model, and is interested in why business interests would oppose a full employment program even when such a program is to their own benefit.

What Kalecki argues instead is that the very fact of full employment itself gives workers the leverage to bargain for higher wages. For Kalecki, lack of job security acts as a discipline device. With a larger pool of unemployed, workers are easily replaced, and they know it. Thus, any attempt to bargain for higher wages, better working conditions, etc. can be easily remedied by businesses with the sack. Thus, any attempt to take this discipline tool from the capitalist class is viciously opposed in spite of the fact that they stand to make higher profits.

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2 comments:

  1. Hi Mike,

    Welcome to the blogging community.

    For my own reasons, I've been reading and re-reading Kalecki's essay lately.

    It's true, like you said, that

    "In my reading, the curiosity motivating Kalecki is not one of what causes widespread unemployment, but rather why businesses would have an interest in seeing it persist. In this model, Kalecki takes rampant unemployment as a prior condition to his model, and is interested in why business interests would oppose a full employment program even when such a program is to their own benefit".

    But, in my opinion, for what it is worth, he offers a lot more than that.

    For one, he explains that not all stabilization policies were created equal in the eyes of the capitalists.

    Additionally, he made a prediction of sorts (and he didn't seem optimistic about the future):

    "This state of affairs is perhaps symptomatic of the future economic regime of capitalist democracies. In the slump, either under the pressure of the masses, or even without it, public investment financed by borrowing will be undertaken to prevent large-scale unemployment. But if attempts are made to apply this method in order to maintain the high level of employment reached in the subsequent boom, strong opposition by business leaders is likely to be encountered. As has already been argued, lasting full employment is not at all to their liking."

    Cheers.

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