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Tracing the roots of progressive views on the duty to work – Part 3

This is the third part in my historical excursion tracing where progressive forces adopted the idea that it was fair and reasonable for individuals who sought income support from the state to contribute to the collective well-being through work if they could. As I noted in Part 1, the series could have easily been sub-titled: How the middle-class Left abandoned the class fundamentals, became obsessed with individualism, and steadily descended into political obscurity, so much so, that the parties they now dominate, are largely unelectable! Somewhere along the way in history, elements of the Left have departed from the collective vision that bound social classes with different interests and education levels into a ‘working class’ force. In this Part, we disabuse readers of the notion that the ‘duty to work’ concept was somehow an artifact of authoritarian regimes like the USSR. In fact, we find well articulated statements in official documents in most Western democracies.

The earlier parts in this series are:

1. Tracing the roots of progressive views on the duty to work – Part 1 (August 4, 2020).

2. Tracing the roots of progressive views on the duty to work – Part 2 (August 11, 2020).

I thought the responses to my first were very illustrative of the modern state of so-called progressive thinking, which is a separate research program in itself.

Regular readers will know that I have long been interested and researching the question as to how the neoliberal paradigm has dominated for so long and why the progressive position in politics has failed to articulate a powerful and successful challenge to it.

Thomas Fazi and I also articulate our ideas on those questions in our book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).

It is clear that the Left side of politics, the traditional social democratic forces, have largely abandoned the contest with conservatives over macroeconomics, and, have instead, sought to differentiate themselves from the conservatives by identifying identity issues, in which they define what they perceive as the modern progressive view.

So questions of ‘right to work’ and the state’s responsibility in ensuring that there are sufficient jobs and the partner expectation, ‘the duty to work’, both of which were the cornerstones of progressive thinking and practice in the Post World War 2, have been abandoned in any meaningful way.

There is no Left commitment to the practicalities of ensuring a ‘right to work’, and, as a consequence of the human damage that has followed the mass unemployment and underemployment that has become the hallmark of the neoliberal period, these politicians get diverted into proposals like basic income guarantees and all sorts of justifications of why we should be relaxed about proposals that allow individuals to receive state income support when they are clearly able to work.

It has become a gospel of progressives that this is somehow a basis for a coherent and connected society. That some people who can work will be able to ‘express themselves’ without having to work but still receive sufficient income, while enjoying the products and services created by others who are working.

The willingness to promote the ‘individual’ over the collective is, of course, another hallmark of the neoliberal era, and progressives, in their willingness to abandon economic class as an vehicle for understanding the social location, have aided that culture of the self over responsibilities to be a societal member.

Further, one of the reasons that this positioning by the traditional progressive political parties have made them largely unelectable (with exceptions) is that the views do not resonate with the mainstream view among workers, who still consider that people who can work should do so.

I am working on a research project at present where we hope to generate the evidence to support that conjecture.

But there is a disjuncture or dislocation between the views found in traditional working class communities and the views that are expressed by educated, urban middle class (I use the term in the social sense) who have largely benefited from globalisation and neoliberalism.

The Brexit vote and the Yellow vest movement are two manifestations of that dislocation.

My earlier parts started with the concept of a duty to work as espoused by Marx in the – Critique of the Gotha Programme 1875 – which was one of Karl Marx’s last important works.

We then followed the historical train to consider how his views had been implemented and as a result we ended up in the USSR, where the concepts of a ‘right to work’ and a ‘duty to work’ were well articulated.

I found it extraordinary how much angst that exercise caused. All the ‘Reds under the Bed’ paranoia came to the fore.

Apparently, I was portraying the Job Guarantee as a path to socialism – then Stalin gulag-style oppression. These claims were pathetic. Sorry.

The fact is that progressive intellectual history is replete with similar debates about the necessity for the state to ensure there is sufficient work for all, and, in return, the citizens had a responsibility to contribute to society, through work, if they were able to.

Otherwise, citizens who were not able to work, would be supported in a material sense by the state.

That sort of duality defined the progressive Post World War 2 period.

It had nothing to do with being an exclusive ‘socialist’ ideal. It was the core ‘bread-and-butter’ social democratic tradition in Western democracies.

That is how we chose to define good societies and these ideals were found in official documents from most nations – such as the nation-building strategies outlined in the – 1945 White Paper on Full Employment – published by the Australian government – and in constitutions of various Western, non-Socialist countries.

The – Preamble to the Constitution of 27 October 1946 – which defined the foundation of the Fourth French Republic (it was the result of a constitutional referendum held on October 13, 1946) is illustrative of Rousseau’s concept of – General Will.

If you study the historical period you will appreciate that France was in turmoil at the end of the War and de Gaulle had a task in normalising France after the disgraceful Vichy period.

There was a huge debate about the way in which a return to constituent government could be accomplished.

Those debates are very interesting but tangential to my objective here.

The historical study by Jon Cowans – French Public Opinion and the Founding of the Fourth Republic – (published in French Historical Studies, Vol 17, No. 1, 62-95 – link is for JSTOR subscribers through your library) – makes it clear that public opinion at the time was definitely in favour of the new constitution.

There was disputes about the role of the presidency etc, but Article 5 reflected the strong public sentiment of the time:

Chacun a le devoir de travailler et le droit d’obtenir un emploi. Nul ne peut être lésé, dans son travail ou son emploi, en raison de ses origines, de ses opinions ou de ses croyances.

Which in English reads:

Each person has the duty to work and the right to employment. No person may suffer prejudice in his work or employment by virtue of his origins, opinions or beliefs.

The Preamble was subsequently incorporated in the – Constitution française du 4 octobre 1958 – which was adopted on October 4, 1958 and became the Constitution of the Fifth Republic (English version)

Further, consistent with the idea that if you were unable to work for any reason, then the state would provide material support, Article 11 reads:

Elle garantit à tous, notamment à l’enfant, à la mère et aux vieux travailleurs, la protection de la santé, la sécurité matérielle, le repos et les loisirs. Tout être humain qui, en raison de son âge, de son état physique ou mental, de la situation économique, se trouve dans l’incapacité de travailler a le droit d’obtenir de la collectivité des moyens convenables d’existence.

English:

It shall guarantee to all, notably to children, mothers and elderly workers, protection of their health, material security, rest and leisure. All people who, by virtue of their age, physical or mental condition, or economic situation, are incapable of working, shall have to the right to receive suitable means of existence from society.

The progressives did not challenge these aspects of the Constitution.

A similar evolution of thinking is embodied in the – La Costituzione – of Italy, which by the way is one of the most progressive of its type (pity it is not followed).

Article 4 defines the ‘right to work’ and the ‘duty to work’ expectations of the Republic:

La Repubblica riconosce a tutti i cittadini il diritto al lavoro e promuove le condizioni che rendano effettivo questo diritto.

Ogni cittadino ha il dovere di svolgere, secondo le proprie possibilità e la propria scelta, un’attività o una funzione che concorra al progresso materiale o spirituale della società.

Which in English reads:

The Republic recognises the right of all citizens to work and promotes those conditions which render this right effective.

Every citizen has the duty, according to personal potential and individual choice, to perform an activity or a function that contributes to the material or spiritual progress of society.

Now the ‘right to work’ is not the same as a ‘duty to work’.

The former reflected the longstanding progressive view that full employment was a legitimate goal for any nation state and that the government should use its capacity to ensure there is work for all.

So, there had to be a buffer of sorts to ensure that fluctuations in ‘market’ work (private sector decision-making) did not compromise the capacity of workers to work.

History tells us that the former has not been respected by the Italian government nor the European Union.

In part, this failure reflects the tension within this neoliberal era between the economic responsibilities of the state to provide sufficient work (the pre-neoliberal construction) and the later views that emphasised the role of government as being limited to making the ‘market’ work better, which we can translate to mean producing the conditions that allow profits to boom, without respect for the labour market consequences.

Despite all the talk in the European Union about ‘social Europe’, the balance has shifted sharply over the last three decades towards the second construction of the role of the state, and as a consequence, the ‘right to work’ lacks any intent or weight.

The second sentence in Article 4 relates to the ‘duty of work’ statement in the Italian Constitution.

The interesting aspect of this clause is that it defines ‘work’ more generally than we would associate with traditional notions of the ‘right to work’.

It is also clear that the evolution of the European Union has made it difficult for the Italian government, even if it had the will, to fulfill its constitutional responsibilities to the Italian people and has split the historical logic that is embodied in Article 4, that being:

1. All citizens should be able to work and the state was historically seen as ensuring there were sufficient jobs.

2. In return, citizens were responsible for contributing effort by way of work, if they could, to advance the commonwealth of the nation.

The neoliberal period compromised the second expectation because it denied the capacity of the state to achieve the first requirement.

It is also clear in the Italian constitution that anyone who could not work would receive adequate material support from the state.

While Article 4 does not really bind the state to guaranteeing sufficient employment, even though that is how such an article has been interpreted, Article 38 does impose direct responsibilities on the state:

Ogni cittadino inabile al lavoro e sprovvisto dei mezzi necessari per vivere ha diritto al mantenimento e all’assistenza sociale.

Which in English reads:

Every citizen unable to work and without the necessary means of subsistence is entitled to welfare support.

Taken together, these articles reflect the overwhelming social democratic consensus that prevailed in the Post World War 2 period.

I could relate many more official statements across many nations to the same effect.

The concept of the ‘right to work’ and the ‘duty to work’ were ground into human aspiration and were very clearly embedded in progressive thinking.

They may be foreign to Americans, which does not provide any specific statement about expectations in this regard, but for most Western democracies, these concepts were unexceptional.

However, the concept of a ‘work ethic’ was not foreign to the Americans.

There is an interesting strand of debate within the philosphical literature about liberty.

So-called ‘defenders of freedom’ abhor the ‘duty to work’ concept even if it provides benefits to society in general.

They claim that it is “artificial rather than natural” and “must be subordinate to the demands of liberty” (see Lawrence Becker provides an excellent discussion of these points in his 1980 journal article – The Obligation to Work – library subscription needed)- published in Ethics (Vol. 91, No. 1, pp.35-49).)

But as Lawrence Becker notes (p.39):

This is a simple non sequitur. It must be granted that nonvoluntary obligations to pay taxes and to do socially useful work are artificial, that is, that their moral basis lies in the ongoing human artifacts known as social institutions rather than in an imaginary state of nature. But it does not follow that their justification is any more difficult than the justification of the (equal) right to liberty or that they must be subordinate to liberty.

That is, the concept of liberty is a ‘social institution’ rather than a state of nature.

And the claim that it is more just for a person to refuse to work when they can, yet live of the work of others, than the requirement that everyone contributes to the commonwealth of society if they can is also spurious.

Conclusion

We will take up that strand of argument in Part 4.

In Part 4, we will discuss the concept of reciprocity, scaling of policy, the concept of the maverick and concepts of justice and coercion.

That is enough for today!

(c) Copyright 2020 William Mitchell. All Rights Reserved.

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    This Post Has 123 Comments
    1. The apparent return to, or reintroduction of, a ‘moral philosophy’ back into the ‘applied science of greed’ of the positivists is certainly admirable, yet the predominant outcome of a job guarantee seems to be maintaining the current social arrangement through state sanctioned order and stability.

      How is that so? The current class and power relationships will not be weakened, but only reinforced through further labor discipline and curtailing potential labor unrest.

      See for example,

      1. “The Pandemic Depression: The Global Economy Will Never Be the Same”
      By Carmen Reinhart and Vincent Reinhart in Foreign Affairs September/October 2020

      “The historian Henry Adams once noted that politics is about the systematic organization of hatreds. Voters who have lost their jobs, have seen their businesses close, and have depleted their savings are angry. There is no guarantee that this anger will be channeled in a productive direction by the current political class—or by the ones to follow if the politicians in power are voted out.”

      2. “Worker Insurgency, Radical Organization, And New Deal Labor Legislation”
      By Michael Goldfield in The American Political Science Review, Vol. 83, No. 4 (Dec., 1989) pp. 1257-1282

      “The virtually unanimous opinion among New Deal Democrats and progressive Republicans (the overwhelming majority in both Houses after the November 1934 elections) was that government regulation was necessary to constrain, limit, and control the increasingly militant labor movement.” (Page 1274)

      Further, a recent study from the University of Chicago suggests that up to 40% of the pandemic related lay offs may become permanent. That is a recipe for social unrest that has not gone unnoticed by all those individuals wishing to preserve current class and power dynamics, i.e., the status quo.

      Additionally, it is presumed that a job guarantee will further reinforce the current social arrangement by serving as a direct means of absorbing surplus production that is already being destroyed. (See for example, “Why fashion brands destroy billions’ worth of their own merchandise every year” by Chavie Lieber in Vox, September 17, 2018.)

      A job guarantee not only increases the consumer class, but still allows a wealth transfer from producers/labor to the owners of capital; thus, further reinforcing current class and power relations.

      Finally, it needs to noted that the goal of consumerism and its applied marketing for the sake of even greater consumerism and consumption is a fool’s errand.

      Note: All source material is freely available online.

    2. Alan @5:33, are you expressing the idea that improvements on the current condition that could reasonably be made now, should not be attempted because they reduce the likelihood of THE revolution that, whenever it might eventually occur, will solve all the problems at once? Because that is my take on what your comment means- that we should suffer in the meantime lest we decide a total revolution is unnecessary. I would just say that I am not willing to suffer now to increase those miniscule (in my opinion) possibilities.

      I would also argue that the Job Guarantee does not “reinforce the current social arrangement” which is that the unemployed are currently used to discipline the labor demands of the lowest paid workers in society. Instead it represents a significant break with the current situation in at least the United States.

    3. “A job guarantee not only increases the consumer class, but still allows a wealth transfer from producers/labor to the owners of capital; thus, further reinforcing current class and power relations.”

      As if increasing the ability of the unemployed to provide for their families is a terrible thing? And current class and power relations would be improved from the point of view of labor if a JG as proposed by Mitchell was in place.

    4. “Finally, it needs to noted that the goal of consumerism and its applied marketing for the sake of even greater consumerism and consumption is a fool’s errand.”

      I can agree with that statement while not agreeing that would be the result of a Job Guarantee.

    5. Alan: “A job guarantee not only increases the consumer class,”
      That’s A VERY GOOD THING. We are all consumers. If we don’t consume, we die. A JG increases the consumption of those who have been robbed of consumption since forever.

      As Bill’s favorite Marxist economist Michal Kalecki said in his favorite paper Political Aspects of Full Employment, promoting government spending for consumption over investment – ” . . . the higher standard of living of the masses. Is not this the purpose of all economic activity?”

      Alan:”Additionally, it is presumed that a job guarantee will further reinforce the current social arrangement by serving as a direct means of absorbing surplus production that is already being destroyed. ”

      Who presumes this? It is the opposite of the truth. The reference to the fashion industry here – why, this is basically the plot of the puffy pirate shirt episode of Seinfeld! Comedy, not social critique. :-)
      It further seems to presume the worship of capitalism and capitalists so prevalent in “Marxist” authors who understand very little Marx. “Socialism” – full employment, the right to work and the Job Guarantee is not about “redistributing” the stuff that only the “capitalists” can magically produce. It is about changing today’s capitalist, privately controlled system of production into something else. And that’s what a revolution is, and was for Marx et al, not some episode of physical violence.

      Alan: “the predominant outcome of a job guarantee seems to be maintaining the current social arrangement through state sanctioned order and stability.”

      “A job guarantee not only increases the consumer class, but still allows a wealth transfer from producers/labor to the owners of capital; thus, further reinforcing current class and power relations.”

      In addition to being refuted by all historical approximations to the Job Guarantee, anybody that thinks that NEEDS TO READ THEIR MARX. And then read Kalecki’s paper as well. And Bill’s former student Victor Quirk on “The Problem of Full Employment”. A JG does the exact opposite. So it might help those at the top – why care! It helps those at the bottom, it helps the working class far, far more. It changes the structure of the economy into one that capitalists cannot tolerate, one that Marx would not call “capitalist”, was not what he was analyzing as capitalism.

      Again, consider Marx’s very important but usually misunderstood words (I misunderstood them at first) -, from The Class Struggles in France, a passage that Engels drew attention to the importance of, almost 50 years later as the first clear expression of “modern working class socialism”.

      “But behind the right to work stands the power over capital; behind the power over capital, the appropriation of the means of production, their subjection to the associated working class, and therefore the abolition of wage labor, of capital, and of their mutual relations.

      Marx writes there as if speaking here as if to a slow student (like me :-) ) – who doesn’t see at first how powerful the Right to Work, the Job Guarantee is. But the plutocracy has never forgotten it for one minute. Trust them. Whatever they’re for – be against it; whatever they’re against – be for it!

    6. Jerry I accept your point that those with a drug addiction that receive some form of income support will likely prioritise the purchase of more of that drug. However if these people don’t purchase food or obtain food from some form of welfare support service they are on the way to oblivion in any case. Further the price of drugs is more than likely to be well beyond any likely level of income support in any case. However I believe it is still worthwhile to offer an unconditional basic level of income support including basic housing and meals if needed as well as healthcare and social support for such people as then they would at least have a realistic path available from their perspective, of escape or at least mitigation which they currently usually do not get (in most countries) or alternatively they can choose to just wither away with less suffering. I suppose my basic point is that an unconditional floor of income support is still warranted in addition to the JG.

    7. “It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, . . . .”

      Kalecki, “Political Aspects OF Full Employment”

      After I grind through the rest of the ‘homework’ (I may be a while.), I will surely come back with further criticism, as I am still of the opinion that a job guarantee will, in the end, only serve to further entrench current class/power dynamics, and maybe even wealth inequality (See the above quote, noting that the world’s first trillionaire is an earthly reality not that far into the future.), as the above implies to me.

      Further, “the higher standard of living of the masses.” only adds to increased pressure on a finite biosphere that is already struggling with the current mass of humanity. How much greater will those same environmental pressures be, as the rest of global humanity catches up to our standard of ‘conspicuous consumption’?

      Sincerely yours

    8. My understanding is that the JG would be effectively ‘self funding’ because firstly currency issuance is the source of the funding and secondly productive capacity is presumed to grow by a commensurate amount to that funding? In other words the extra aggregate demand is matched by a resultant growth in the supply of goods and services so there are no additional imposed inflationary pressures apart from those short term inflationary effects arising from the structural adjustments in the economy? Is this a fair summary?

      The same presumably can be said about other areas of increased net spending by the national government such as on more healthcare, education, infrastructure, fund transfers to state and local governments and even more bombs for example, up to the point that full employment is reached?

      How necessary is it for the jobs provided by a JG to to add to the productive capacity of the economy? Does it suffice if those in the JG are being well trained and that they maintain their work ethic so that they remain employable by the wider economy but are otherwise engaged in activities that do not add to the supply of goods and services? I mention this not as a suggestion to reduce the useful output of a JG which I would certainly not recommend, but to highlight that the argument used by MMT proponents that a UBI does not add to productive capacity and that a JG does add to productive capacity may not be completely fair and accurate. Many of the work proposals I have heard for a JG are social and environmental ‘goods’ that no one currently is able to or wants to pay for and are not that dissimilar from the activities that those receiving a UBI may undertake? I am not advocating a UBI by the way but just want to be better able to understand and advocate for a JG.

      In distilled form the MMT proponents to my mind are revealing to us all that the ‘fiscal gap’ between a national government’s balanced fiscal position – where spending equals taxation, to the level of net spending that would result in full employment, can be utilised for spending on more government services, and/or tax cuts, without exacerbating any existing inflationary pressures or incurring any debt? This ‘fiscal gap’ really is the proverbial money tree or pot of gold or from the other perspective the ‘fiscal gap’ represents the imposition of an unnecessary and destructive ‘currency famine’ that has deprived millions of gainful employment and better government services, and/or tax cuts?

      I think it is also reasonable to conclude that the government’s spending that is below the balanced fiscal position – where spending equals taxation, is effectively met through taxation. I do however realise the government’s spending precedes any taxation and MMT purists may object to the thought that taxation would fund any spending but I would maintain that it still effectively does up to the balanced fiscal position?

      I assume the MMT position is that once the full employment condition is reached the national government should then abstain from further increasing net spending due to the risk of increasing any inflationary pressures? But what if inflation is near to zero an the full employment condition has been attained and the preferred level of inflation is say 2%? Presumably net spending can then be bumped up a little further? I realise a JG provides a self regulating method of adjusting the level of net spending by default through the buffer stock of readily employable workers mechanism, but perhaps the central bank would also need to advise the government of the day to adjust its fiscal settings to try to target the preferred inflation rate as well?

      Also in times of national/global emergency such as major wars, pandemics or impending global ecocide I would suggest it may become mandatory to utilise the full fiscal capacity that may be available to national governments in order to meet those challenges. This means net spending well beyond the full employment point and constraining the associated inflationary pressures by selling bonds to the populace, introducing price controls, actively addressing supply shortfalls wherever possible and through rationing?

      We are there now, not just due to the pandemic but even more so due to the global warming crisis, According to James Hansen and his many collaborators we have less than ten years to get global atmospheric CO2 levels down to 350ppm from the current level of 410ppm and that level is rising at an accelerating rate. The current path of inaction will soon lock in atmospheric CO2 levels that are then well past the point where we have any real hope of reducing them to tolerable levels due to the positive emission feed backs from melting permafrost and melting arctic methane hydrate deposits that will reduce massive quantities of methane as well as a few other feed backs, and due to the limited scope of those methods currently available to remove CO2 from the atmosphere.

      The reason we are not already suffering and dying in a hideous hot house earth with most of our major cities under the sea due to the current greenhouse gas levels, is primarily due to the heat absorption of the oceans which acts to delay but that does not ultimately stop global warming. The sea is delaying the most catastrophic consequences of global warming by decades and up to a century or two. The most effective path still remains to rapidly reduce CO2 and methane emissions to net zero globally, but due to reckless delay it is now also necessary to remove at least 100ppm of CO2 from the atmosphere using expensive and relatively difficult methods such as bio-sequestration and geoengineering on a massive scale. The need for removal of atmospheric CO2 could have been avoided if the world had acted decisively two or three decades when the science was already well understood.

      Cutting our global populations by some undefined means and joining an agricultural commune may help but are not in themselves a solution to the global warming crisis, nor is it necessary to give up the whole concept of a modern economy. The modern economy is potentially compatible with zero net greenhouse gas emissions and is probably now the only means remaining to drive such a needed transition.

    9. Alan the JG could also potentially provide demand (that means the people) driven public/governmental services that could meet many genuine social and environmental needs – in other words demand driven socialism?

      The right kind of people ideally should be in power for an optimal result, but some of the world’s major reforms were put in place by conservatives or traditionalists admittedly after pressure was applied by segments of society – usually lefties. For example when Chancellor Otto von Bismarck in Germany became the first in the world to adopt an old-age social insurance program in 1889. Richard Nixon implemented the EPA and fully unpegging the dollar from gold. The Dixiecrat Lyndon Johnson introduced the Civil Rights Act and other the Great Society social reforms.

      We don’t really have the time for people’s revolutions at the moment and we all need to live with the current plurality of humans. There is more common ground than many realise and some of my best clients are old school conservatives. Filling large pits with non believers provides only temporary relief at best and descends into something even worse more often.

      As for the WORST of the 0.1%, for example those that drive climate change denialism, seek to exploit even more fossil fuels, bribe and co-opt our governments, drive damaging austerity that leads to the premature death and needless suffering of millions and those that seek to impose a form of fascism – let them face fair justice.

    10. Whence is that knocking?
      How is’t with me, when every noise appalls me?
      What hands are here? Hah! They pluck out mine eyes.
      Will all great Neptune’s ocean wash this blood
      Clean from my hand? No; this my hand will rather
      The multitudinous seas incarnadine,
      Making the green one red.

      Macbeth

    11. “In other words the extra aggregate demand is matched by a resultant growth in the supply of goods and services so there are no additional imposed inflationary pressures apart from those short term inflationary effects arising from the structural adjustments in the economy? Is this a fair summary?”

      “The same presumably can be said about other areas of increased net spending by the national government ”

      That cannot be said.

      But it is a common mistake.

      The introduction of the JG is likely to cause a small one off rise in prices, but not wages and thereby a real redistribution towards those on the JG.

      The majority of supply will be covered by the existing output gap, but that is because those on the JG require basic goods and services that are the items best covered by productivity mechanisms. Quantity expansion here is almost certain. Higher level outputs will not be covered and will price shift on a one off basis. (The main concern would likely be housing, which is supply limited at the best of times).

      The reason you don’t get a rise in wages is because of the expectational anchoring of the Job Guarantee – again at the level of output expected by the JG spend.

      That comes about because the JG has a “non compete” clause in its design. The JG labour is not to be used as unfair competition to existing businesses. So you wouldn’t use it to set up a tea shop next to an existing one.

      Unless, of course, that tea shop demonstrated there was insufficient competition by putting up its prices once it has to pay the true cost of labour…

      Given the tea shop knows the JG will do this it will either improve its productivity, or it will close. In the former case profits are restored by serving more covers, in the latter it is replaced by JG labour run by a social enterprise or local council. Or the spend redirects completely if the JG labour is engaged doing something else – which then has the same quantity expand or close choice.

      The higher up the skill level the less the Job Guarantee is able to anchor wages – because with the best will in the world an unemployed labourer is not a substitute for a brain surgeon.

      The more the spend impacts higher skilled operations, the less scope there is for quantity expansion and the more there is for price expansion. And that is where you need to start using taxes to free up real resource space that the government can spend into.

      That’s why “pump priming” spending tends to be inflationary. A lesson we learned after the second world war, and a description of which which forms the preface of the 2nd edition of “Full employment in a Free Society” .

      A lesson we have no wish to relearn – given the 40 year Monetarism hiatus it led to.

      The output of the Job Guarantee is largely a salve. It is requiring people to give up hours so they cannot use them for themselves in exchange for the output of others who are giving up hours and cannot use them themselves. That’s the baseline. And forms the default job of a Job Guarantee system – spending your time obtaining a different Job Guarantee job.

      The better a Job Guarantee’s job design is, the more useful the work is, both personally and socially, the less “dead zone” gap there will be between the Job Guarantee wage and the lowest private sector wage. Economically you want that “transition friction” to be as low as possible so people can move freely between the JG and other work in both directions.

    12. Neil you wrote “The majority of supply will be covered by the existing output gap” re. the JG which is good to hear but the same doesn’t apply more generally to other forms of government spending, why is that? Is this comment of yours the reason?

      “The more the spend impacts higher skilled operations, the less scope there is for quantity expansion and the more there is for price expansion. And that is where you need to start using taxes to free up real resource space that the government can spend into.”

      If the national government decides they want to build 100 extra hospitals within the next five years surely they could also plan for the resources needed to build and staff these hospitals to become available when required so that ‘price expansion’ is minimised? Staging the construction and commissioning of hospitals to avoid high peaks in demand for skills and materials may also help? I should have worked in Gosplan?

      “That’s why “pump priming” spending tends to be inflationary.”

      I don’t think our blog administrator would agree with that if by ‘pump priming’ you mean larger national government deficits, he has written in various posts that the postwar years had close to full employment due to the appropriate use of fiscal policy with little inflation. Inflation only really became a headache due to the Middle East oil embargo and the rapid increase in oil prices which gave little time to adjust. Inflation dropped mainly due to the transition from oil to coal and gas for sections of the economy. Limiting government deficits and breaking the trade unions at the time may have also reduced inflationary pressures but I suspect governments could have gained more by assisting the transition from oil.

    13. “The introduction of the JG is likely to cause a small one off rise in prices, but not wages and thereby a real redistribution towards those on the JG.”

      Neil, I am not sure exactly what you mean here. I understand the one off rise in prices part. And I can understand the real redistribution towards those on the JG. But I would argue that, if the government sets a JG wage in accordance with the guidelines Bill Mitchell has proposed, It would have quite an effect on the wages of currently working wage earners. Just the knowledge that another job is there waiting for them increases their bargaining power. Yes sure, the higher your current wage is ,the less effect that would have- but then brain surgeons’ wages are not primarily arrived at by ‘free market’ mechanisms anyway.

      So I think the median wage in the US is somewhere around 22 dollars an hour- meaning half of all workers make less than whatever the exact number would be. What percent of that half of all wage earners would not experience an increase in their bargaining power? I would say most of them will benefit. Let me guess somewhere around 60 million current workers in the US would benefit along with the many millions of officially unemployed, and many millions more who are not even counted as unemployed currently. So I see the JG as being a greatly effective program that anyone who claims to be interested in workers would support.

    14. “But I would argue that, if the government sets a JG wage in accordance with the guidelines Bill Mitchell has proposed, It would have quite an effect on the wages of currently working wage earners. ”

      Yes that’s what is likely to happen. The distribution curve would skew towards the bottom end as the pie expanded. The least change would be at the profit share end, and there may even be a reduction depending upon how the dice fell.

      It’s essentially a market correction. Too many firms have been getting cheap labour for too long.

    15. “he has written in various posts that the postwar years had close to full employment due to the appropriate use of fiscal policy with little inflation.”

      There is a reason we have a Job Guarantee in MMT, and why it has two sides – one that restrains wages and one that restrains prices.

      That’s because “pump priming” leads to persistent inflation.

      From the Preface to “Full Employment in a Free Society” written in 1960.

      Through its control of money, the Government can on its own authority provide for its citizens the priceless gift of full employment; its duty to provide this is clear. For stable money the Government has no full power today. Its function cannot be put higher than as a duty to ensure in one way or another that the gift of full employment is not misused by some citizens to the damage of others by inflation destroying the value of money

      The State in Britain since World War II has failed till now to keep money stable, because it has tried and failed to obtain free co-operation of the organisations of employees and employers that now settle wages and prices. The rise of prices, following wage demands conceded by employers, has been all but continuous and, to this day, shows no sign of ending

      All this comes from propping up jobs rather than letting market competition eliminate them.

    16. “That’s because “pump priming” leads to persistent inflation.”
      “All this comes from propping up jobs rather than letting market competition eliminate them.”

      Assuming pump priming means Keynesian fiscal stimulus designed to reduce unemployment I do not agree that necessarily leads to persistent inflation. If your reason for the persistent inflation is wages rising faster than productivity then centralised wage arbitration could be applied, or if unions were deemed to be too powerful and militant then legislation could be applied to reduce their bargaining power (that would be a joke in the current era of feeble unions and it’s excessive profits that now need arbitration) or governments could actively facilitate productivity improvements such as the methods adopted by the East Asian’s or Germans.

      If all that is on offer for unemployed workers is ever fewer and worse jobs or perpetual poverty and torment, no wonder some governments were pressured to prop up industries and jobs. With optimal fiscal policy, a generous social support system and even better with a JG as well, unemployment should be low and when businesses fail it is not such a tragedy. Inflation according to our Bill is rarely a problem and he knows the tools to hit it with.

    17. “I do not agree that necessarily leads to persistent inflation.”

      History says otherwise. And those who do not learn from history are doomed to repeat it.

      That’s why you inject via a Job Guarantee (which eliminates unemployment permanently), and you tax and spend when you want “proper” public sector jobs.

      MMT isn’t free money for people to spend on pet projects. There is a real cost that has to be paid. And that means explaining where the physical resources are going to come from to do the proposed tasks.

    18. What counts as Keynesian ‘pump priming’? Recently the US federal government increased their spending by several trillion dollars in response to the pandemic. That would seem to comply with Keynes’s recommendations that the government should spend into the economy to repair aggregate demand when private sector income and employment falls. Have not seen much inflation, persistent or otherwise, nor would I be worried about it if Congress got their act together and doubled that spending given the current situation. One thing history actually does show is that the US government is consistently more worried about inflation than unemployment whenever there is a choice between the two.

    19. Yes, Jerry “pump priming” does not mean that. The phrase comes from Depression USA, where the idea was that deficit spending would only be needed for a short time and then there would be a “normal” economy. A similar modern metaphor would be jump-starting a car. You don’t need to keep doing it once the car is running. Bill has said often enough how this WASN’T applicable during the Great Depression nor at many other times – there might be a need for a not-gigantic but significant deficit to keep things going well. The increasingly exceptional periods are more the “normal economies”, the “Great Moderations”. So pump-priming / jumps-starting and then ending “intervention” if anything causes deflation, not inflation!

      As BIll has noted the neoliberal era has had no better record on inflation than the postwar full employment era preceding it. The oil crises were the only cause of serious inflation. (And that was no worse than the forgotten US post WWII inflation caused by neoliberal policy. ) The top-down “Keynesianism” of the postwar era made economies more susceptible to inflation. A Job Guarantee would have cured that.

      Worrying about inflation or pump priming was inappropriate before the coronavirus and far-fetched now. Tax and spend isn’t simpler or more intuitive than the correct spend and tax order. Tax and spend isn’t straightforward. It is bass-ackward. It’s wrong and insane. One can observe that this and other neoclassical ideas begin to be true in a sorta, kinda way when there is full employment, a JG. But that’s the limit that can be done, and with great care. Using it for exposition, for basic theory is a very bad idea.

      Similar to thinking about people and digestion. Once a sick person is brought back to health, they might excrete and ingest comparable amounts. But it is always ingest, then excrete, not vice versa as the mainstream crackpots have it. Thinking you have to plan your excretions before your ingestions is a psychological disorder not a path to health. Eat right and the other end takes care of itself.

    20. Wasn’t it Keynes who was always mentioning ‘magneto troubles’ as an analogy? Good analogy or not- it is more pleasant to contemplate than the digestive cycle one :) Yeah- different situation- I realize that.

      Obviously I am a big fan of the Job Guarantee. One reason is that it would function as a large ‘automatic stabilizer’ in economic terms. One that was also much better targeted than existing economic stabilizers. But that still does not preclude that additional fiscal policy adjustments, as in ‘Keynesian’ policy, may be necessary depending on the state of the economy. I don’t think that history shows that well suited Keynesian policy always ends up with persistent inflation as a result.

    21. Sorry for the late response.

      Neil you wrote @ Tuesday, August 25, 2020 at 0:49

      “That’s why you inject via a Job Guarantee (which eliminates unemployment permanently), and you tax and spend when you want “proper” public sector jobs.”

      Yes I agree but for completeness it is important to clarify that the size of the ‘deficit spend’ available to the national government is increased by increased net savings, current account deficits and any reductions in net spending by the private sector.

      So MMT informs us that we are not as fiscally constrained as the ‘surpluses are great’ Neoclassical dinosaurs or the ‘balanced budgets over the economic cycle are great’ Keynesian slow learners.

      I suspect you will reply the JG would automatically expand to fill any additional fiscal space made available to the national government arising from increased net savings, current account deficits and any reductions in net spending by the private sector which would be true, at least in my mind. However I visualise implementing a more modest JG that becomes quite small at the peak of any economic cycles but still able to perform the essential ‘price anchoring/buffer stock of employed workers’ functionality in all localities in the nation (with laws limiting excessive speculation also being in place) that would provide a considerable additional one time ‘hit’ of fiscal spending space to national governments, above the current inadequate ‘austerity’ deficits of the neoliberal world (ignoring the complications of the Covid-19 hiccup).

      But as you wrote once the JG is operating as intended we are back to a – “tax and spend when you want more “proper” public sector jobs'” world? I hope this all makes some sense?

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