Kalecki on full employment

James Devine jdevine at popmail.lmu.edu
Fri Oct 9 17:45:48 PDT 1998


At 05:58 PM 10/9/98 -0400, you wrote:
>Max Sawicky wrote:
>
>>So why does the U.S. tolerate it now at
>>all, with all the current, pervasive weakness
>>of the working class? What's to be afraid of?
>
>Because of the weak organization of the US working class, I think the
>ruling class will tolerate a lower rate of U than it would if the w.c. were
>stronger. But responding to this point: 1) Kalecki said *sustained* full
>employment, not a cyclical peak, and 2) if the world weren't teetering on
>the edge of a meltdown, the Fed would have tightened.

I would add that falling raw material prices and (due to the high dollar) cheaper imports help the US avoid inflation, which is the immediate cause of concern for the rentiers, who don't worry much about industrial discipline.

Further, as Barry Bluestone and Steve Rose argue in a recent Levy Institute working paper, working class insecurity has increased the effective supply of labor-power, so that the 4.5 percent official unemployment rate we had for a few months had the effect of a significantly higher U rate in terms of maintaining industrial discipline. The U rate has more "oomph" than it used to have. For example, until recently, the duration of unemployment spells was much higher than expected given the official U rate.

When I was reading the passages that Doug posted by Kalecki, it made me think of the situation in the US during WW2, when the U rate was _very_ low. In broad strokes, the US instituted (temporary) fascism in order to fight Naziism. Some of that fascistic system continued after WW2 in the form of Truman-McCarthyism.

However, I don't think Kalecki's analysis deals very well with the social-democratic type "deal" that Sweden had for many years. Of course, that kind of deal is impossible in the US unless the working class gets much significantly more organized and class-conscious and capital becomes more centralized and much less mobile internationally.

Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html



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