Full Employment Abandoned: Shifting Sands and Policy Failures
This book by William Mitchell and Joan Muysken is both important and timely. It deals with the issue of the abandonment of full employment as an objective of economic policy in the OECD countries. It argues persuasively that macroeconomic policy has been restrictive over the recent, and not so recent past, and has produced substantial open and disguised unemployment. But the authors show how a job guarantee policy can enable workers, who would otherwise be unemployed, to earn a wage and not depend on welfare support. If such a policy is fully supported by appropriate fiscal and monetary programmes, it can create full employment with price stability, which the authors label as a Non-Accelerating-Inflation-Buffer Employment Ratio (NAIBER). This book is essential reading for any one wishing to understand how we can return to full employment as the normal state of affairs. Philip Arestis, University of Cambridge, UK This book dismantles the arguments used by policy makers to justify the abandonment of full employment as a valid goal of national governments. Bill Mitchell and Joan Muysken trace the theoretical analysis of the nature and causes of unemployment over the last 150 years and argue that the shift from involuntary to natural rate conceptions of unemployment since the 1960s has driven an ideological backlash against Keynesian policy interventions. The authors contend that neo-liberal governments now consider unemployment to be an individual problem rather than a reflection of systemic policy failure and that they are content to use unemployment as a policy instrument to control inflation and coerce the unemployed with work tests and compliance programmes rather than provide sufficient employment. They present a comprehensive theoretical and empirical critique of this policy approach, with a refreshing new framework for understanding modern monetary economies. The authors show that the reinstatement of full employment with price stability is a viable policy goal that can be achieved by activist fiscal policy through the introduction of a Job Guarantee. Full Employment Abandoned will appeal to graduate and postgraduate students and researchers of economics and politics with an interest in macroeconomic policy and the labour market, particularly unemployment and neo-liberal policy frameworks.
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1 The full employment framework and its demise
2 Early views on unemployment and the Phillips curve
3 The Phillips curve and shifting views on unemployment
the hoax that undermined full employment
shifting sands and policy failures
5 The shift to full employability
the new mantra of macroeconomics
7 The neglected role of aggregate demand
aggregate demand analysis argued Australia behaviour Beveridge curve Blanchard buffer stock cent central bank changes Chapter classical concept consider costs cyclical debate disinflation economists economy effects emphasis empirical employment growth equilibrium fiat currency fiscal policy Fisher Friedman full employability framework full employment government spending hysteresis impact income support increase inflation rate inflation targeting inflationary interest rate investment involuntary unemployment JG jobs Keynesian labour demand labour force labour market labour underutilisation macroeconomic macroeconomic policy maintain ment Mitchell modern monetary monetarist monetary policy NAIRU natural rate hypothesis neo-liberal nomic non-government sector notion OECD OECD countries orthodox outcomes output period persistence Phillips curve ployment policy makers price stability private sector productivity programmes public sector rate of unemployment real wage reduce relationship result rise role sacrifice ratio Sawyer shift shocks social Solow structural supply-side theoretical theory trade-off underemployment underpinning unem unemployed unemployment rate UV curve vacancies welfare