Friday, April 13, 2018

Josh Bivens — How do our job creation recommendations stack up against a job guarantee?

Pump-priming Keynesianism versus MMT macroeconomic stabilization.
I think you can replicate these benefits [of the JG] through two recommendations I called for in my recent paper on job creation:
Get macroeconomic policy right by ensuring aggregate demand is at a high enough level to support macroeconomic full employment
Undertake lots of public investment that will create and sustain jobs, as well as providing crucial goods and services that private markets won’t
Fails to consider the primary importance of the replacement of a buffer stock of unemployed with a buffer stock of employed.

Few other than the MMT advocates and their allies seem to get this essential point.

Marxists and Marxians likely get it, of course, since one of the Marx's chief criticisms of capitalism is the need for a reserve army of the destitute to control the labor market with a view of maintaining or raising the profit rate. But their preferred approach is through the class struggle. MMT addresses the issue at the level of the existing system — which can be viewed as a strength and also as a weakness.

The fundamental question is whether capitalism can be administered to work satisfactorily for the social system taken comprehensively, or not.

My view is not. But the question then becomes how to get from here to there. Revolution doesn't have a lot to recommend it historically. It's a lot safer to start from here and work toward the next phase iteratively and incrementally, which system design has shown to be the preferred method of development.

In my view, MMT's approach that combines Godley's stock-flow consistently macro approach to analysis, Lerner's function finance as an approach to fiscal policy, and MMT's upgrade to Minsky's job guarantee is the way to start rather than returning to a Keynesian approach emphasizing aggregate demand rather than effective demand.

But at least the discussion is now returning to the ballpark rather than being out in the boonies.

Economic Policy Institute
How do our job creation recommendations stack up against a job guarantee?
Josh Bivens

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