An agenda for social democracy

John, really interesting argument, and it fits in with a lot of what I’ve been thinking about in regards to the current status of the social democratic left around the world. I especially like your Jacob Hacker-ish risk framework. However, I think your paper is stronger on what’s wrong with neoliberalism than it is about a social democratic agenda.

I think the major problem that the social democratic left has is that it doesn’t have an answer for the “new social question,” which is one of mass economic insecurity. Bluntly put, I think one can make the case that while the globalized free market has shown itself to be really good at delivering more widgets at a lower cost, it’s not shown itself to be any good at delivering lifetime employment at a living wage and decent benefits to all who want to work.

Therefore, I think the social democratic response to the unemployment question needs to think more deeply about a comment “continued direct employment creation in the public sector” and a larger program of fiscal Keynesianism.

In short, what is needed is a renewed commitment to full employment through a guarantee to a right to a job, with the government acting as the public employer of last resort, in the Swedish tradition. If the market can’t be relied upon to provide full employment, than the government has to – both for reasons of reducing economic insecurity and inequality, and in order to keep economic production and consumption as close to full capacity as possible – which will be needed to produce the economic growth and thus the revenues for an expanded social democratic state.

In a larger sense, ensuring full employment through public employment allows the private sector to do what it does best – focusing ruthlessly on the efficient production of goods, without having to serve as a quasi-welfare state in the business of proving employment assurance – by restoring the public sector to do what it does best – focusing on the long-term issues of the equitable distribution of income and social goods, market failures (especially in regards to the public square), and the under-valuation of labor.

4: This seems like an odd response the current economic crisis to me. Let’s just look at the United States for the moment. Yes, unemployment is going to be quite high for the next 3-5 years, in all likelihood. But if a solid recovery is achieved, why would we not expect unemployment to head back down to the 5-6% range that we have seen for the last 20 years? And if the long term story is typical 5% unemployment with the occaisonal recession (and note that this is generally temporary unemployment), why is public government ensuring full employment the solution? Why not instead provide more generous wellfare and unemployment benefits for those hard times? Sure, you might simply prefer a larger public sector on other grounds, but I don’t see what about our current economic situation suggests that more public employment would be the answer.

John: thanks for the book reference, I’ll check it out. I just think that it should be a more central part of social democratic politics than it has been in recent years.

Mpowell:
My argument would be that 5-6% unemployment is not a good status quo, and indicates long-term weakness in the economy. First, there’s the macroeconomic considerations – 5-6% unemployment means 5-6% less production or consumption than their could be; that’s a huge amount of labor power that could be used to benefit society – and you don’t get any of that labor power back when you prefer a strategy of welfare. Second, there’s the political considerations – more generous welfare/U.I benefits (especially in less social-democratic countries) are open to attacks on the welfare state and create a social politics of tax-payers vs. welfare clients which is exploitable by the right; the provision of public jobs blunts conservative opposition by seizing the rhetorical high ground of the value of labor, gives a positive rationale for taxpayers (I pay my taxes, the unemployed receive them as wages, and I get roads/parks/bridges/hospitals/schools in return, so I get something out of it), and creates a politics that focuses more on the provision of social goods and the de-commodification of society rather than fighting over limited fiscal resources. Third, there’s the impact on the unemployed – wages are generally higher than even generous benefits, the unemployed are integrated into the world of work and don’t feel the social alienation that’s one of the major problems of poverty (consider the impact of being cut out of the social worlds of the commute, the office or factory floor, the friendships and acquaintances that are made, the immediate interest in current affairs, and being instead isolated in residential areas), and they’re empowered through higher political status and the potential to organize into unions.

JoB:
1. As a matter of fact, the provision of full employment through the government provision of jobs has been a major element of Swedish public policy since the 1930s. The Swedish Social Democrastic Party has been committed to public employment (also known as work relief) since 1913, they first implemented the program in 1932 in response to the Great Depression, which Sweden was able to overcome much faster than other economies. This policy was maintained from the 1930s through to the 1990s, and unemployment rates were kept between 1-3% between 1945-1981. Indeed, it was not until 1992 that the Swedish average unemployment rate began to track closer to the U.S average, following the post-1992 liberalizaton.

2. I think you’re dead wrong. The right-wing abhors the idea of full employment through public employment, viewing it as a massive government intervention into the free market, inherently inflationary/inefficient/corrupt/etc. Indeed, from a Marxist perspective, capitalism itself could not exist without the reserve army of the unemployed to keep wages down and the working class divided. The idea of full employment has long been a part of different socialisms – the 1945 Labor Party, the Swedish Labor Party, etc. Indeed, Marx’s own writings don’t suggest that the revolution means the end of work – rather, the future he envisions is one where everyone works for the benefit of all, but only for a few hours a day because people are being rewarded with their surplus labor value, they only need to work enough to satisfy basic needs and their desire for creative activity, they’re not alienated from the means of prdouction and the products of their labor, and so forth. Afterwards, we all go fishing and read Shakespeare, but there is still the idea that non-alienated labor is a good part of the human experience.

3. the free market has produced “more people with more free time to enjoy those widgets,” but it hasn’t given them the income to buy the widgets. Indeed, mass unemployment is a major element of the increasing economic insecurity and volatility that’s been one of the hallmarks of neoliberalism – unemployment has tended to get worse in recent years, recessions have generated more job losses more quickly, and job recoveries have become slower and shallower. Look at the Jacob Hacker stuff that John Quiggan was alluding to.

Steve,

Well thank you for your detailed response. I still don’t agree, though and I don’t think there is anything particularly persuasive about this economic downturn, to advance your position. If anything, it hightlights the real need for a legitimate safety net even if the government is principally committed to full employment. When industrial production in the private sector is falling by 10% or more, unemployment is going to spike, whether you are starting from a 1-2% or a 5-6% level.

Also, I have to question some of your assumptions about unemployment in the American economy. First, that unemployment is generally not permanent. My understanding is that is cyclic where anyone looking for work will usually find it in a 6-12 month time frame. And speaking of efficiency, I’m not sure I can take seriously the claim that we can fix the underproduction a 5% unemployment rate represents through public employment. It is quite unlikely to be the case that you will be able to simply add those 5% to public employment jobs. Rather it seems that you will have to have a substantial portion of the workforce being publicly employed to get to full employment. And you don’t have to be a Republican to be extremely dubious about the efficiency of such an arrangement. Recognizing all the drawbacks of capitalism it is still in my view the policy approach that will most efficiently employ the workforce that we have. You would need to do an enormous amount of work to persuasively demonstrate the economy can be more productive under your model.

Also your political arguments appear to be a transparent bait and switch. In response to my criticism you respond that maintaining a wellfare system will be highly difficult in the face of fierce conservative political opposition. But then in response to JoB to you point out the strong opposition from the right to full employment by the state! So which is it? Either way you have to implement policies anemic to the right, but I would much prefer to advance policies that I can feel comfortable standing behind.

Regarding the alienation of poor adults, I think that once a citizen has grown up in poverty, they are already lost. There is very little chance they will be able to find fullfilling and productive employment because their skills will be lacking. The way to address this problem is to insure that people don’t grow up in poverty. I think you can address that problem through a variety of targetted social wellfare programs without having to compromise the efficiency of your economy by overpaying people who have very little to contribute productivity wise.

mpowell,

I, as you, do not think that more public employment is the answer (in fact – I think it is the best to have less employment but don’t expect anybody to take that seriously for a while). Public employment is the extreme of employment in big companies: it tends to break the individual down in favour of shady old boy networking.

But what interests me in your earlier response is that you seem to say that higher social security and employment benefits are a good temporary solution.

Why only temporary?

Do you agree with the consensus of the last decades that increased security (and hence a decreased necessity to be employed) will drive society into catastrophic collapse?

I’m looking for things that go beyond traditional debates. I’m interested in real future agenda’s for socialism instead of a re-run of the previous century’s debate.

1. I’m arguing for a separation between conservative politicians and national political opinion; conservative politicians don’t like public jobs, but voters generally do. We also had public employment programs in this country and they were a very popular policy, much more than welfare. I am arguing that public employment will be opposed – but that opposition will be weaker and less effective than opposition to welfare.

While it is true that many European welfare states have tended to focus on unemployment insurance, but it’s also the case that many European countries have also had to grapple with persistent unemployment rates, economic inequality, and social alienation. I believe – as did FDR’s advisors on the Committee for Economic Security that designed Social Security – that public employment works in a complementary fashion to a welfare state. The public employment program works to ensure that people who don’t qualify for certain categories of aid – i.e, people who don’t have access to family allowances or disability benefits or old age benefits – have access to “employment assurance,” by keeping them employed, it replenishes the coffers of social insurance programs by ensuring that everyone is working and paying into the system, and it reduces the drain on unemployment insurance to short-term support for people between jobs.

2. Even temporary unemployment has huge effects on people. Among other things, it tends to knock them down in income brackets, because the jobs they get afterward generally have lower pay and less benefits, it chews through existing assets which makes it hard to save for education, homeownership, and retirement, and it’s a major risk factor for homelessness, depression, etc. Moreover, keep in mind that average length is an average – many people go unemployed for longer; furthermore, unemployment rates are not evenly distributed either regionally, by class, by race, etc. I think that public employment would make a huge and positive impact in depressed areas like Detroit, Newark, Youngstown, etc. in a way that income supports wouldn’t.

3. Well, it’s not just my dissertation that notes that capitalism generally doesn’t make full efficient use of the potential labor power of the entire labor force. Many many economists, including John Maynard Keynes and his followers, have noted this and support government intervention to counter-act the business cycle and move towards full employment. There’s plenty of people at the Center for Full Employment and Price Stability (http://www.cfeps.org/) or the Levy Institute (http://www.levy.org/) who’ve done the economics on this – I’m just standing on their shoulders. I know that listing sites is not enough, but I’m working on other sources of data as well.

As for the difference between this and communism, that’s blindingly self-evident. Public employment programs are a progressive/social democratic policy conditioned of the existence of a mixed public-private economy, in which the private sector is the majority of production and unemployment, recognizing that certain inherent factors within capitalist development prevent it from achieving full use of resources (think market failures, spatial mismatch, creative destruction, business cycle, etc). Public employment acts as an automatic stabilizer to make the up the difference between the total available labor force and the total number of jobs created by the private sector, increasing and decreasing counter-cyclically. Public employment tends to focus on complementary but not competing areas of production – namely, the production of public goods, which are generally under-provided in a free market environment (see John Kenneth Galbraith).

Historically speaking, public employment programs show up only in capitalist or social democratic states like the United States and Sweden, which are two honking huge examples. The CWA ran from 1933-1934 and employed 4.26 million people; the WPA ran from 1935-1943 and employed 8 million people over the course of its existence; you can also throw in smaller programs like the CCC, NYA, and CETA. In Sweden, the beredskapsarbete program has been running since the 1930s, and operates through the County Labor Market Boards and funded by the National Labor Market Board or arbetsmarknadsstyrelsen.

In communism, by contrast, the state owns the entire economic process, and employs the entire workforce. Employment and production levels are planned, corresponding to the desires of the planning bureau. Rather than producing and employing in concert with the private sector, state factories focus entirely on the production of the same kinds of widgets that normally are produced by the private sector. The very concept of a public employment program simply doesn’t fit within the context of communist economic organization.

The idea that physical infrastructure is not important or somehow less important than “social infrastructure” is ridiculous – look at the structural bottlenecks placed on the U.S economy by the outdated nature of our power grids, or the lack of high-speed rail, or the lack of alternative energy production facilities. Your analysis is missing a huge factor here, which is the structural characteristics of the economy – the skills of the poor are only considered poor in an economy that focuses on the FIRE and service sectors; in manufacturing, there is a great need for physical skills. Similarly, the job market has been producing an hour-glass pattern of jobs (big at the top and the bottom) increasingly for the last thirty years – this makes the poor look like they have little skills because they are paid poorly, but that’s symptom masquerading as cause. Similarly, the strength of the labor movement has a huge impact on the relative rewards that the bottom end of the labor force are given. All you have to do is look at the gross disparity between productivity and wages for the last thirty or so years to realize that there’s a huge amount of productive work that is being siphoned off as profits.