How Political Leaders can Increase and Regulate the Number of Full-time Jobs Amidst the Threats Posed by the Future of Work

By Judith Bessant

This article explains why and how political leaders can act to increase and regulate the number of full-time jobs amidst the threats posed by the future of work. By doing this, governments can avert the global warming crisis while securing the legitimacy of liberal capitalism by addressing the growing inequality.

 

We live in a time marked by heightened anxiety about the future of work. It’s a fear driven by increased precarious employment signified by the rise of the ‘Gig economy’ and stagnant wages growth as the expected productivity dividends from new digital technologies since the 1990s failed to eventuate. Experts offer prognoses about the disappearance of jobs across all sectors as a result of increasing AI-based robotic processes. 

Is this the time to ask whether governments should commit to restoring full-employment? Is commitment to full-employment desirable and feasible? What would political leaders do to achieve it? 

Given that for the last half-century, neoliberal governments refused to countenance full-employment policies, even asking these questions can seem an exercise in fantasy. 

From the late 1970s, member-states of Organisation for Economic Co-operation and Development (OECD) consistently disavowed any commitment to full-employment like that outlined in Britain’s 1944 White Paper on Employment Policy, Australia’s 1945 White Paper on Full Employment, or the US Employment Act of 1946. In America, for instance, the government was required to ‘coordinate and utilise all its plans, functions, and resources… ensure ‘useful employment for those able, willing, and seeking to work’ (US Congress 1946:1).

This commitment to employment was largely based on J.M. Keynes demonstration showing why and how states could use macro-economic techniques to manage their economies and  promote full-employment. Although Keynesian economics was generally understood as a response to the scarifying phenomenon of mass unemployment in many western nations between 1928 and 1939, it was actually a policy framework trialled and implemented by governments creating ‘total war economies’ after 1940. What came to be called the Keynesian state was demonstrated to be successful in the face of the existential threat posed by total war. 

Those same macro-economic management techniques were then used after 1945 to help transition away from the economic austerities of ‘total war’. This was less an existential threat, and more about responding to popular political demands that liberal-democratic government at the time could ill-afford to ignore. War-weary people wanted a post-war order that was socially just and provided jobs for all. The full-employment project informed a larger package of domestic and international policies and strategies.  

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Domestically, this included housing programs and urban renewal, building new transport systems, and urban infrastructure. Policies were also adopted to secure ‘a good life’ achieved by tariffs to protect the manufacturing industry able to meet the expanding demand for new leisure and consumer goods. States also used new taxing powers to invest in education, cultural, and leisure resources for more people. Internationally, it entailed the General Agreement on Tariffs and Trade (1947) regulation of financial and currency systems and international investment managed established at Bretton Woods (1944).  

 

Policies were also adopted to secure ‘a good life’ achieved by tariffs to protect the manufacturing industry able to meet the expanding demand for new leisure and consumer goods.

The ‘positive’ results of all this included decades of full-employment, dynamic economic growth, all powered by a manufacturing sector that peaked in the late 1960s, along with a substantial reduction in historic levels of income inequality. 

Yet there were ‘negative’ consequences. Achieving full-employment aroused the anger of the capital. As the economist Kalecki predicted in 1943, owners of capital quickly got tired of losing political control over labour and regulatory restrictions affecting capital growth. From the late 1970s, capital turned to the task of taking back the share of national income they had lost to labour in the 1950s and 1960s. To do this, manufacturing was wounded down and relocated to countries with cheap labour. Capital shifted to the financial sector.  

This financialisation process relied on expanding public and private debt while inventing new and exploitative financial practises like consumer and student debt, the futures market, and a market in financial derivatives. Manufacturing, financial services, and other sectors also began implementing labour-displacing digital technologies. Capital also demanded an end to state policies promoting full employment and urged governments to adopt monetarist (neoliberal) policies and techniques (deregulation and privatisation). Labour, social-democratic, and conservative governments alike willingly undertook this task from the 1980s and 1990s. 

Officially, government support for full employment policies had been dead for some time by 1988 when the OECD outlined its ‘active society’ model. This OECD policy required modern labour markets to be more ‘flexible’, innovative, and efficient while accepting permanent levels of unemployment and underemployment. To avoid legitimation problems, the unemployed and precariously employed were to be kept ‘work-ready’ and disciplined by ‘active, social security’ systems which stigmatised jobless people and created endemic insecurity. 

The question now: in 2019, is full-employment a practical or sensible option for political leaders given the existential threat of global warming, and the political challenges of inequality, technological disruption, and the costs to human welfare of neoliberal policies? If we understand history as a resource, it’s possible to better understand what is happening now as well as the possibilities. 

The neoliberal worldview can no longer promote the common good. Indeed, it is compounding existential threats as profound as those faced by liberal-democracies in the early 1940s. It is doing this while presenting political challenges like those many states faced in 1945. If full-employment policies were a rational response to the threat posed by total war, and they met the political challenges of creating a post-war order, then can they be used to deal with the new challenges. 

In what UN Secretary-General Gutterres described as a ‘wake up call’, the UN Intergovernmental Panel on Climate Change warned governments in late 2018 that immediate action was needed before global warming reached a tipping point. The panel noted even half a degree increase amplified risks of extreme heat, drought, floods, and widespread poverty affecting billions of people.

 

A new full-employment policy can address the existential threat posed by global warming and help transition to a new socio-economic order in which everyone can live  well.

Added to that existential threat are political challenges posed by inequality and the disruption of labour markets. Picketty (2014), Steiglitz (2016), and Atkinson (2014) have documented how massive increases in income and wealth inequality last seen in late 19th century had returned in the 1970s. Even the OECD acknowledged that inequality is bad for growth: rising inequality in the USA between 1990 and 2010 reduced growth in America’s economy by 5%, something paralleled by other OECD member-states.

A bevy of official reports and academic research also point to the looming loss of a third to a half of existing jobs as new technologies displace jobs in all sectors. Other reports including intergenerational audits of future fiscal policy indicate that no state now has the fiscal means to alleviate the need to maintain household incomes affected by growing unemployment, precarious employment, and ageing populations. 

Evidence like this is amplified by popular protest. Since the Global Recession of 2008, we have seen waves of protest, mass mobilisation, and civil unrest. Students and young people generally have been in the forefront of protests about student debt, unregulated access to guns, homelessness, and racist xenophobia encouraged by various conservative movements.  International agencies like the IMF, World Bank, and OECD concede that popular discontent is eroding the legitimacy of the liberal-capitalist political consensus. 

Popular discontent is also evident in a politically significant demographic shift. In the UK, the impact of disenchanted young people reaching the voting age has been seen to shift to ‘left’ Labour Party under Corbyn, also called the ‘youthquake’. In America, 90 million voters born between 1970-2000 now comprise 40% of the electorate who will vote in the 2020 presidential election, many of whom support social-democrat Bernie Sanders. 

The Economist claims young people are being drawn to what is called ‘millennial socialism’. Yet, Sweden’s 15-year-old Greta Thunberg, global leader of ‘Strike 4 Climate Action’ who has helped galvanise millions of students into demanding action on climate change, suggests this is a green and red movement. The rise of Alexandria Ocasio-Cortez in 2019, the youngest woman elected to America’s Congress underscores this point. Ocasio-Cortez is committed to a full-employment policy called the Green New Deal which links labour programs with interventions to avoid environmental catastrophe. 

Like the first full-employment experiment in 1940-1975, the case for governments committing to a policy of full employment is overwhelming for political leaders interested in avoiding natural catastrophe and a socio-political crisis. A new full-employment policy can address the existential threat posed by global warming and help transition to a new socio-economic order in which everyone can live well. This requires substantial investment in employment policies that mitigate global warming and remediate the prevailing extreme wealth and income inequality. 

To do these, political leaders need to take the following action: 

First, governments can pass legislation mandating full-employment and thereby use their sovereignty to direct capital resources to several major environmental and social purposes. This includes setting targets for the creation of meaningful employment over prescribed time frames.

Governments need to direct public investment to employment programs designed to phase out non-renewable energy forms. Germany’s decision to phase-out coal generation by 2025 and to upgrade national grids and renewable energy making existing renewable energy sources the exclusive source of power generation by 2030 is a good model. Employment programs should also support substantial upgrades to existing power grids, along with investment in research and development to promote new kinds of renewable energy and investment in community-owned generating entities.  

Political leaders need to engage in major sustained investment in providing diverse forms of decent housing for all who need it. The prevailing provision of stigmatising welfare-social housing in most countries has failed while the increasing numbers of people with special needs and those on the streets in so many big cities highlights the need for imaginative quality accommodation. 

Investment in new forms of education is required so our schools and universities no longer focus on schooling for an old economy. This calls for good leadership in the education sector and collaborative work with communities. It entails recruiting, training, and employing more teachers and researchers and enabling and supporting them to engage in new forms of creative inquiry and cultural practice. 

 

To increase and regulate full-time meaningly employment, political leaders need to complement these tax reforms with carefully crafted new income and wealth taxes.

To fund Green full-employment program, political leaders need to restore the fiscal capacity of the state to support their full employment goals while creating more egalitarian societies. Added to this is reform of corporate tax along with enforceable laws that ensure corporations can no longer get away with paying zero taxation. Changes to domestic corporate taxation is also required, complemented by international laws prohibiting offshore tax havens and that impose a (Tobin) tax on all financial transactions including high-frequency trading in financial assets and entities. In countries like Australia, where welfare taxation schemes legalise tax loopholes, means taxpayers subsidise corporations and wealthy people to the tune of $A168 billion. Such ‘benefits’ need to be closed. A tax on robots and similar labour-displacing devices is also required.  

To increase and regulate full-time meaningly employment, political leaders need to complement these tax reforms with carefully crafted new income and wealth taxes. This will increase the capital resources available to states, while mitigating gross inequalities that currently characterise the distribution of wealth and incomes. One way of achieving this is through legislation that sets targets (e.g benchmarks and-or agreements about the ratio of top to bottom incomes). 

Finally, to increase full-time meaningly employment, enforceable regulation of the gig economy and precarious employment is critical. Evidence of scandals involving workers receiving no pay or minimal wages has to be outlawed. The misappropriation of categories like ‘self-employed contractors’ and devices like ‘zero-hours contracts’ or ‘unpaid internships’ also need to become illegal, along with the implementation of new standards for employment, wages, and conditions rigorously enforced through effective industrial law.  

While the future is unpredictable, it is the job of political leaders, governments, and indeed, everyone to grasp the magnitude of the changes afoot and to have the imagination, knowledge, and courage to work out how to build a future that involves purposively creating meaningful work in a context shadowed by risks, but rich with promise. 

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Judith Bessant is a Member of the Order of Australia (AM) and a professor at RMIT University, Melbourne, Australia. She publishes in history, policy, sociology, politics, youth studies, and technology and work. Her most recent book is The Great Transformation, Politics, Labour and Learning in the Digital Age, Routledge (2018).

 

 

References

1.Atkinson, A B. (2014). Inequality: What Can Be Done?. Harvard University Press.

2. Kalecki, M. (1943). Political Aspects of Full Employment, Political Quarterly.

3. Picketty, T. (2014). Capital in the Twenty First Century. Harvard University Press.

4. Stiglitz, J. (2015). The Great Divide: Unequal Societies and What We Can Do About Them. New York

5. USA Employment Act Pub. L. 79-304 Congress, ch. 33, 60 Stat. 23 (1946). https://fraser.stlouisfed.org/title/1099