By: Adam Stromme
It is the job of the economist to explain how the various market and non-market forces at play in the world will affect the lives of everyday people. Academic, or pure theoretical economics, while of importance within the field in discerning the technical interpretation and consequences of policy, should always take a backseat as far as the priorities of practical economic research are concerned. By this interpretation, economists should concern themselves primarily with the well-being of the general population, as made manifest in eminently human aspirations of well-being and security, and not purely matters of efficiency or conceptual harmony.
Unfortunately, precisely the opposite priorities are currently in place within the field, and have been for many decades. Even as far back as the 1920’s, John Dewey lamented the condition of social science research writing:
“Matter and material are words which in the minds of many convey a note of disparagement. They are taken to be the foes of whatever is of ideal value in life, instead of as conditions of its manifestation and sustained being… The most influential form of the divorce is separation between pure and applied science. Since “application” signifies recognized bearing upon human experience and well-being, honor of what is “pure” and contempt for what is “applied” has for its outcome a science which is remote and technical, communicable only to specialists, and a conduct of human affairs which is haphazard, biased, unfair in [its] distribution of values”.
Against this, Dewey stated the somehow unpopular intuition succinctly, concluding: “Science is converted into knowledge in its honorable and emphatic sense only in application”.
There is perhaps nowhere where this failure of communication has been more complete than on the question of full employment. While a few economists maintain the controversial opinion that persistent unemployment is itself a grievous example of market failure, there exists a substantial bulk of the economics profession which, owing in no small part to the worldview they become inundated with over the course of their education, come to sincerely believe that the solution, expressed in a mandate for full employment, is one which amounts to little more than a populist pipe-dream, divorced from the realities of economics.
Since “application” signifies recognized bearing upon human experience and well-being, honor of what is “pure” and contempt for what is “applied” has for its outcome a science which is remote and technical
This is in no small part because of the idealization of the market system which many economists take for granted, and map onto their understanding of the real world. The modern economist, Dewey writes elsewhere, “is completely identified with the gospel current among men of large business and wealth, who have to rationalize their behavior by making themselves believe that it is in the interest of general welfare.” In studying the market system, economists often tend to become market naturalists, seeing any disturbance in its process as “unnatural”, or, in their own jargon “Pareto inefficient”: a obfuscatory term meaning little more than that the distribution inherent in the preexisting system of production would have to be disturbed.
This, of course, would be an unconscionable crime to the acolytes of the idealized “natural order”.
To those of a less extreme persuasion than these fundamentalists, the role of government is strictly a matter of trimming the edges off of the business cycle, and not interfering with its “automatic”, and thereby somehow superior, logic. Without questioning the fundamentalists, and with a corresponding attitude of solemnity, economic “liberals” acknowledge that the unfettered market system can err, and that someone must do something about this, but proceed no further. Despite its flaws, a market system bent in favor of private capital still amounts to a sort of Leibnizian “best of all possible worlds” solution, marred only by the slight inconvenience which the threat of total destitution for huge swathes of the population amounts to should their employment not be deemed “efficient”.
The tragedy involved in such a process, and the means by which human beings can be rendered redundant and destitute by the very same process by which the rest of society enriches itself, is not conceived of as a matter of foundational importance.
The modern economist “is completely identified with the gospel current among men of large business and wealth, who have to rationalize their behavior by making themselves believe that it is in the interest of general welfare.” -John Dewey
Against these two positions, there arose a third. Its history stretches back centuries, and its intuition can be heard in the cries of every society which has adopted the market system. To the above two persuasions, it is a position of utopian aspirations: it does not strictly obey the logic of the market system, and this looseness is the very grounds upon which it is to be invalidated.
It is the position of those that believe that full employment is an unquestionable economic and ethical precondition for accepting the dictates of a market society.
At first glance, this position would strike an individual of ordinary upbringings as quite natural. As opposed to a system of public welfare, vulnerable to attacks by reactionary elements within society as entitling individuals to an unjustified income, the demand for full employment is simply a demand that the prerequisites by which an individual can both be kept in a state of relative prosperity and contribute to society at large be provided as a matter of course. Indeed, in contradistinction to those on the hard-Left, calling for the complete abolition of private ownership of enterprise, such a premise is decidedly moderate, and was held by a large degree of economists in the post-war era as a reasonable goal, with sufficient government involvement and the popular support upon which it could depend for electoral success amongst those that implemented it.
The public intuition is clear: the right of public corporations to claim profits must be moderated by their obligation to contribute to the public welfare. If a society is truly prosperous, and truly dedicated to the public welfare, then allowing for destitution, homelessness, and poverty in the midst of such plenty ought to be a greater affront to its dignity than any corresponding obligation to provide employment or the means of securing it.
[F]ull employment is an unquestionable economic and ethical precondition for accepting the dictates of a market society
To reiterate, what is demanded by the advocates of full employment is not a hand out. It does not simply say “support the idle because it is moral to do so”. Morality, though perhaps the most potent tool, can remain in the toolkit. What is at stake here is practicality. It cannot be efficient to leave idle millions of hands at a time. If morality is taken into account, then it can be neither efficient nor moral to both subject the unemployed to such an utterly helpless status on the one hand, nor to terrorize the employed with such a fate on the basis of redundancy or malice on the other.
There is perhaps one counter-claim worthy of note here. It comes from the fundamentalists, and is whispered more softly by the liberals, and arises from the rather circular nature of their understanding of economics. In such a world where the market is not only separate, but above, the normal workings and injunctions of society, these fundamentalists would charge that such a system could scarce be sustainable. They would argue that the very same profit motive by which firms operate would renege against any such system.
As opposed to a system of public welfare, vulnerable to attacks by reactionary elements within society as entitling individuals to an unjustified income, the demand for full employment is simply the demand for the prerequisites by which an individual can both be kept in a state of relative prosperity and contribute to society at large to be provided as a matter of course.
That such an oversimplification as is implied in such a retort reflects both their belief in both the right and the capacity of firms to reject the demands of the rest of society, as well as the assumed symmetry of their interests with the wider interests of the public, is to be taken as given from fundamentalists arguments such as these. Often, in leveling such retorts, they are confounded by the fact that those arguing for policies which are not in harmony with the concentrated private power which dominates the market system do so not out of an ignorance of the imperatives of the market system but a rejection of their otherwise hegemonic status in social affairs. In any case, it would not do to close our investigation without addressing this crucial question.
It must be admitted that an attack on the concept of full employment on these grounds is broadly correct with respect to the “idealized” operation of the market system. But one should be suspicious of an argument that would tell us that it is socially inefficient to interfere with a market system in which millions of people cannot gain access to gainful employment. Furthermore, one should be conscious of the fact that employment solely undertaken by private actors is a reflection of their personal interests, and that these interests are neither immutable, nor necessarily neatly aggregate to form the public interest. The maximization of greed, given flashy names like “utility” and “social welfare”, which is anything but social, is a sacred tenet of economics, but not necessarily an absolute imperative society should unquestionably subject itself to.
But there is also the question of imposing the obligation to help provide full employment. That such a program could very well result in a better trained and more productive workforce in the long run, fully making use of its productive resources, is hardly an aspiration which could be ridiculed as inefficient. Even so, if corporations are to be taken as profit maximizing, then they will of course evade the necessary measures as much as is possible.
The evasion of corporate and upper-decile income taxes, particularly in the developed world, has been estimated by the economist Gabriel Zucman to amount to at least 10% of global GDP, while some NGO’s plausibly estimate figures two or even three times higher. The prevailing incentive reflects both the incentive of individuals and firms to squirrel away profit on the one hand, as well as the incentive of the newly-bailed out banking system to aid in the evasion of taxes, the better to be able to take that very same repatriated income and lend it back to the now deficit-stricken governments at interest, dictating terms and lecturing them about their profligate ways all the while.
If morality is taken into account, then it can be neither efficient nor moral to both subject the unemployed to such an utterly helpless status on the one hand, nor to terrorize the employed with such a fate on the basis of redundancy or malice
But it would be insufficient to consider this problem in purely economic terms. Indeed, to do so with social relations as a whole is precisely what makes market fundamentalists so fundamentalist on the one hand, and accounts for the schizophrenia of slightly more socially literate liberals on the other. What should be considered in this whole conversation is the role of political initiative. In our day and age, popular movements, both Left and Right, despite the racialized social animus motivating the latter, are broadly powered by the same perception of injustice endemic to the present economic order, with their main dividing attribute being a matter of sincerity in the capacity of their policies to reduce, rather than merely exacerbate, the problems enumerated.
To this state of affairs, our ultimate recourse must be to the source of all social, political, and economic power: public opinion. In standing in defense of both the efficiency as well as the morality of a system of full employment, one both advocates a position which many would agree reflects precisely what people demand of their economic system, while also appealing to those economic elites who would very much like to maintain their social prestige. In an era of breathtaking inequality and increasingly strident calls for radical change, should a challenge to their power prove credible, prudence, and not morality, would eventually force their hand to defend full employment.
Centuries ago, individuals defied both church and state and demanded their right to political expression. In so doing, they paved the way for their own political emancipation, by demanding representation be provided as a matter of course. In order that this cherished opportunity is not turned into a hallow proclamation, it is time they do so with respect to their economic rights as well.