Doug Henwood wrote:
> [I just posted this excerpt from Michal Kalecki's "Political Aspects of
> Full Employment" (1943) to the Post Keynesian Thought list. I'm posting it
> here because I think he's right - and because he shows why there is so
> little fundamental disagreement between rentiers and industrialists over
> employment policy. - Doug]
OK but after reading this I am unclear about what you are saying. The example given is that of full employment in fascist Germany. We do not know what full employment would mean in a capitalist democracy. Are you suggesting that full employment in a democracy would result in fascism?
Marta
>
>
> In should be first stated that, although most economists are now agreed
> that full employment may be achieved by government spending, this was by no
> means the case even in the recent past. Among the opposers of this doctrine
> there were (and still are) prominent so-called ,economic experts' closely
> connected with banking and industry. This suggests that there is a
> political background in the opposition to the full employment doctrine,
> even though the arguments advanced are economic. That is not to say that
> people who advance them do not believe in their economics, poor though this
> is. But obstinate ignorance is usually a manifestation of underlying
> political motives.
>
> There are, however, even more direct indications that a first-class
> political issue is at stake here. in the great depression in the 1930s, big
> business consistently opposed experiments for increasing employment by
> government spending in all countries, except Nazi Germany. This was to be
> clearly seen in the USA (opposition to the New Deal), in France (the Blum
> experiment), and in Germany before Hitler. The attitude is not easy to
> explain. Clearly, higher output and employment benefit not only workers but
> entrepreneurs as well, because the latter's profits rise. And the policy of
> full employment outlined above does not encroach upon profits because it
> does not involve any additional taxation. The entrepreneurs in the slump
> are longing for a boom; why do they not gladly accept the synthetic boom
> which the government is able to offer them? It is this difficult and
> fascinating question with which we intend to deal in this article.
>
> The reasons for the opposition of the 'industrial leaders' to full
> employment achieved by government spending may be subdivided into three
> categories: (i) dislike of government interference in the problem of
> employment as such; (ii) dislike of the direction of government spending
> (public investment and subsidizing consumption); (iii) dislike of the
> social and political changes resulting from the maintenance of full
> employment. We shall examine each of these three categories of objections
> to the government expansion policy in detail.
>
> [...]
>
> 4. We have considered the political reasons for the opposition to the
> policy of creating employment by government spending. But even if this
> opposition were overcome--as it may well be under the pressure of the
> masses-the maintenance of full employment would cause social and political
> changes which would give a new impetus to the opposition of the business
> leaders. Indeed, under a regime of permanent full employment, the 'sack'
> would cease to play its role as a 'disciplinary measure. The social
> position of the boss would be undermined, and the self-assurance and
> class-consciousness of the working class would grow. Strikes for wage
> increases and improvements in conditions of work would create political
> tension. 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, and thus
> adversely affects only the rentier interests. But 'discipline in the
> factories' and 'political stability' are more appreciated than profits by
> business leaders. Their class instinct tells them that lasting full
> employment is unsound from their point of view, and that unemployment is an
> integral part of the 'normal' capitalist system.
>
> 1. One of the important functions of fascism, as typified by the Nazi
> system, was to remove capitalist objections to full employment.
>
> The dislike of government spending policy as such is overcome under fascism
> by the fact that the state machinery is under the direct control of a
> partnership of big business with fascism. The necessity for the myth of
> 'sound finance', which served to prevent the government from offsetting a
> confidence crisis by spending, is removed. In a democracy, one does not
> know what the next government will be like. Under fascism there is no next
> government.
>
> The dislike of government spending, whether on public investment or
> consumption, is overcome by concentrating government expenditure on
> armaments. Finally, 'discipline in the factories' and 'political stability'
> under full employment are maintained by the 'new order', which ranges from
> suppression of the trade unions to the concentration camp. Political
> pressure replaces the economic pressure of unemployment.
>
> 2. The fact that armaments are the backbone of the policy of fascist full
> employment has a profound influence upon that policy's economic character.
> Large-scale armaments are inseparable from the expansion of the armed
> forces and the preparation of plans for a war of conquest. They also induce
> competitive rearmament of other countries. This causes the main aim of
> spending to shift gradually from full employment to securing the maximum
> effect of rearmament. As a result, employment becomes 'over-full'. Not only
> is unemployment abolished, but an acute scarcity of labour prevails.
> Bottlenecks arise in every sphere, and these must be dealt with by the
> creation of a number of controls. Such an economy has many features of a
> planned economy, and is sometimes compared, rather ignorantly, with
> socialism. However, this type of planning is bound to appear whenever an
> economy sets itself a certain high target of production in a particular
> sphere, when it becomes a target economy of which the armament economy is a
> special case. An armament economy involves in particular the curtailment of
> consumption as compared with that which it could have been under full
> employment.4
>
> The fascist system starts from the overcoming of unemployment, develops
> into an armament economy of scarcity, and ends inevitably in war.