Economics Questions

Re: Political Aspects of Full Employment by Michal Kalecki

Caley McKibbin — Sun, 31 Jul 2011 03:58:24 GMT

Most unions today are pro-business, pro-capitalist bureaucracies. Essentially, they are a business. So I'd agree that they probably want it as well.

Unions now are what they always were: labour cartels. That never has and never will change. All professional vocational organizations are cartels. They go by an assortment of euphemisms, such as: association, society, union. Their first priority is to minimize the number of other people that can work in the same positions. Large employers want a big pool of workers. However, what unions do to cause unemployment restricts the utilization of that pool. Random Business does not benefit from a 100% unemployment pool caused by HR management costs.

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sun, 31 Jul 2011 01:27:53 GMT

Either you are misrepresenting Kalecki or Kalecki is a hack. A business does not "force" someone into unemployment when they choose not to continue to pay them. No property rights are being violated in this scenario.

I didn't say not paying them was a use of force, I said that keeping them from using the means of production constitutes a use of force. They're preventing them from being self-employed. Imagine a "socialist" country where the government "owns" everything. If the government doesn't give people jobs and won't let them use any resources, would you not say that the government is forcing them to be unemployed?

under capitalism violating someone's property rights to keep them unemployed (e.g. destroying factors of production) would be illegal.

Agreed.

Considering how well-defined property is by libertarians, to call it "abstract" is a laughable misuse of the term.

Perhaps I should've said that they aren't following a deontological principle. They aren't following categorical imperatives for the sake of following categorical imperatives. Rather their actions are determined based upon what consequences they wish to achieve in a given case.

Every government across the globe pursues full employment as an ideal. Do you deny that this is the case?

Yes. Most people here seem to believe that minimum wage laws cause unemployment. So it seems that you're in a minority if you think all governments pursue full employment. Additionally, some governments have openly followed monetarist policies, which hypothesize a "natural" unemployment rate.

It's good to know that the fallacious idea of a caste system in capitalism hasn't died out yet. Centuries-old Marxist talking points are always amusing.

This is just a platitude.

Re: Political Aspects of Full Employment by Michal Kalecki

Rcder — Sun, 24 Jul 2011 21:29:57 GMT

But the cause of unemployment in Kalecki's view is not merely people not doing something for the unemployed (a negative). It also entails the (positive) use of force.

Either you are misrepresenting Kalecki or Kalecki is a hack. A business does not "force" someone into unemployment when they choose not to continue to pay them. No property rights are being violated in this scenario.

It seems natural to me that an unemployed person would start working unused resources to employ himself. But when this happens in capitalism, someone else almost invariably uses force to prevent him from working such idle resources. So people are literally forced to be unemployed.

Under corporatism or socialism perhaps, but under capitalism violating someone's property rights to keep them unemployed (e.g. destroying factors of production) would be illegal.

The reason this force is used, IMO, is not due to a merely abstract principle of property,

Considering how well-defined property is by libertarians, to call it "abstract" is a laughable misuse of the term.

The reason this force is used, IMO, is not due to a merely abstract principle of property, but because if it were not, the whole capitalist system would collapse.

Every government across the globe pursues full employment as an ideal. Do you deny that this is the case?

It is a desire for profits, not a desire to abide by a principle.

This is just a platitude.

And this is the ultimate purpose of the state, I think, to maintain capitalism and to increase the profits of the capitalists.

It's good to know that the fallacious idea of a caste system in capitalism hasn't died out yet. Centuries-old Marxist talking points are always amusing.

Re: Political Aspects of Full Employment by Michal Kalecki

Rcder — Sun, 24 Jul 2011 21:17:41 GMT

Uncertainty that employing the labor would be profitable.

So it should be employed regardless? A laborer's wage is a function of his or her discounted marginal value product (DMVP), which in turn is a function of said loberer's marginal productivity and the additional revenue gained by the firm from his or her employment (MPxMR) and the natural rate of interest. It is unprofitable to hire a worker when a laborer demands a wage rate higher than his or her DMVP or when his or her DMVP is below the market wage rate.

Why it is "punishing" workers to not hire them when they will be unproductive and waste scarce resources is totally beyond me.

This is compatible with Kalecki's position where higher employment can lead to higher uncertainty--will I be able to keep my employees in order, will there be a socialist revolution?

There is no praxeological law which states that increased unemployment will or will not cause uncertainty. But we know from experience that during recessions bussinesses have continued to expand and labor has been employed.

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sun, 24 Jul 2011 21:04:34 GMT

Yes, just like non-purchase of any good or service from a would-be seller of that good or service punishes him. This is precisely what "market discipline" means... produce what buyers want at a price they are willing to pay or else no money for you!

But the cause of unemployment in Kalecki's view is not merely people not doing something for the unemployed (a negative). It also entails the (positive) use of force. It seems natural to me that an unemployed person would start working unused resources to employ himself. But when this happens in capitalism, someone else almost invariably uses force to prevent him from working such idle resources. So people are literally forced to be unemployed. The reason this force is used, IMO, is not due to a merely abstract principle of property, but because if it were not, the whole capitalist system would collapse. It is a desire for profits, not a desire to abide by a principle. And this is the ultimate purpose of the state, I think, to maintain capitalism and to increase the profits of the capitalists.

I'll read that later.

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sun, 24 Jul 2011 20:51:55 GMT

Low investment, because of high uncertainty.

Uncertainty that employing the labor would be profitable. This is compatible with Kalecki's position where higher employment can lead to higher uncertainty--will I be able to keep my employees in order, will there be a socialist revolution?

Re: Political Aspects of Full Employment by Michal Kalecki

Clayton — Sun, 24 Jul 2011 09:19:39 GMT

we're talking about businesses preferring unemployment to full employment, not about them preferring to have an employee working at their company rather than at a competitor's.

*sigh - I said I believe my employer would prefer to have me on the payroll even if I do not contribute to their bottom-line in any way because if I wasn't employed there, I myself could be a competitor as an independent contractor, not work for a competitor. In other words, the largest companies have an interest in "soaking up" potential contractors at some relatively modest salary rather than have those people going out into the marketplace, starting their own businesses which could eventually end up as new competitors in the market driving down prices. Anyone who's ever worked a job where it didn't seem like their existence even mattered (to the company) should know what I'm talking about.

In Kalecki's view (as I see it), unemployment serves as a form of punishment for laborers demanding too much.

Yes, just like non-purchase of any good or service from a would-be seller of that good or service punishes him. This is precisely what "market discipline" means... produce what buyers want at a price they are willing to pay or else no money for you!

In a free market of labor, the marketplace can clear reductions in demand for labor just fine. Read this. Keynesianism crashes and burns on this point alone.

Clayton -

Re: Political Aspects of Full Employment by Michal Kalecki

Jonathan M. F. Catalán — Sun, 24 Jul 2011 06:55:34 GMT

So why is there unemployment then? There's labor available, why aren't businesses expanding productivity?

Low investment, because of high uncertainty.

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sat, 23 Jul 2011 21:44:47 GMT

"This is not to say that government does not contribute to unemployment, but rather they intentionally adopt policies that increase unemployment because that's what ~~businesses~~ unions want."

This is now correct.

Most unions today are pro-business, pro-capitalist bureaucracies. Essentially, they are a business. So I'd agree that they probably want it as well.

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sat, 23 Jul 2011 21:41:21 GMT

Fwiw, a business doesn't really have a say in regards to full employment. Businesses are subject to competition. Human labor is the fundamental economic scarcity, and so as long as there labor available there is room for some business to expand productivity.

So why is there unemployment then? There's labor available, why aren't businesses expanding productivity?

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sat, 23 Jul 2011 21:24:25 GMT

Note that big business has an interest in keeping people employed as wage workers to reduce potential competition in the marketplace from entrepreneurial laborers (independent contractors, etc.) I'm pretty sure the company that employs me is happy to pay me even if I did nothing that contributed to their bottom line because they'd rather have me on the payroll at my current salary than as a competitor forcing down their prices.

Clayton -

But we're talking about businesses preferring unemployment to full employment, not about them preferring to have an employee working at their company rather than at a competitor's. In Kalecki's view (as I see it), unemployment serves as a form of punishment for laborers demanding too much. It's similar to the way that a slave owner might punish a slave by putting him in solitary confinement. Obviously, the slave owner would make more profits if the slave is working, but the slave owner is going to have problems if the slaves are constantly going on strike and demanding more. Thus, some form of punishment is necessary. In a society with unemployment, the sack becomes a form of punishment. With full employment, the sack is no longer as menacing. If the economy was at full employment now, I could slack off a ton more. I could leave work at noon. What would they do, fire me? I could easily get another job. Besides, who would they hire to replace me?

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sat, 23 Jul 2011 21:05:39 GMT

Investor: Power to do what exactly?

To go on strike, to negotiate pay raises, to implement profit sharing, to secure benefits, to manage the work place as they see fit, to adopt policies such as environmental protection which might not increase profits or expand the business.

Investor: Wait a minute. I thought you said the problem is that the workers will get more power.

K: No, I changed my mind. The reason is because hiring B isn't profitable.

Investor: Ah, OK. So how does the govt hiring him make it profitable? B isn't profitable means every day B works, the company loses money. He costs more than he produces. And hwo exactly does the govt hiring him make him productive all of a sudden?

K: I knew what I was saying was total baloney, but it fools people, right?

I admitted that I might disagree with Kalecki on this point. However, this doesn't mean that Kalecki is changing his mind (or that I'm changing my mind). Kalecki's view seems to be that businesses would raise prices among increasing wages in order to maintain their profits. This would lead to inflation as well as employees having more power. The US economy did reach near-full employment in the 60's and 70's. I don't think it was a coincidence that this was also a period of social unrest where ordinary people were demanding more power. The people were able to do this in large part due to the relative security of their jobs. Obviously the business community didn't like this period, and we saw the rise of policies to combat it, such as monetarism.

Re: Political Aspects of Full Employment by Michal Kalecki

Fool on the Hill — Sat, 23 Jul 2011 20:32:19 GMT

Slaveholders also maintain full employment. During WWII, most governments were maintaining close to full employment... even if that meant you were running up the beach at Normandy with an M-1 carbine playing the always exciting Can-You-Dodge-A-Thousand-Bullets? game.

Did you read the article? Kalecki talked about this when he discussed how fascism maintained full employment.

Re: Political Aspects of Full Employment by Michal Kalecki

Jonathan M. F. Catalán — Fri, 22 Jul 2011 04:29:27 GMT

Fwiw, a business doesn't really have a say in regards to full employment. Businesses are subject to competition. Human labor is the fundamental economic scarcity, and so as long as there labor available there is room for some business to expand productivity.

Re: Political Aspects of Full Employment by Michal Kalecki

Clayton — Fri, 22 Jul 2011 04:15:07 GMT

Note that big business has an interest in keeping people employed as wage workers to reduce potential competition in the marketplace from entrepreneurial laborers (independent contractors, etc.) I'm pretty sure the company that employs me is happy to pay me even if I did nothing that contributed to their bottom line because they'd rather have me on the payroll at my current salary than as a competitor forcing down their prices.

Clayton -