- Title
- Full employment
- Creator
- Mitchell, William; Watts, Martin
- Relation
- The Elgar Companion to Post Keynesian Economics p. 229-236
- Relation
- http://www.e-elgar.com/bookentry_main.lasso?id=14066
- Publisher
- Edward Elgar
- Resource Type
- book chapter
- Date
- 2012
- Description
- The term 'full employment' can be traced back to William Petty's 1662 work, A Treatise on Taxes and Contributions, in which he argued that nonproductive labour could be supported as a consequence of the capacity of producers of consumption goods to generate a surplus over and above their own subsistence. The classical economists did not consider full employment specifically, but Jean-Baptiste Say (1803) denied that a production economy could ever suffer a general glut which would otherwise have led to unemployment. Say's law that 'supply creates its own demand' became the epithet of classical and neoclassical theory, and its underlying reasoning still dominates orthodox macroeconomics today. There was not a denial that unemployment could occur but it was considered to be a manifestation of a temporary disruption, rather than being a generalized tendency of a capitalist production system. A lack of consumption would become by definition an act of investment. Moreover, it was argued that there was a strict separation between output and price theory - the so-called 'classical dichotomy'. So the existence of money posed no special problems. While J.C.L. Simonde de Sismondi and Robert Malthus demurred and argued that generalized gluts could occur even if the savings- investment identity held, their analyses were flawed. It was Karl Marx, in his critique of Malthus, who provided a modern Post Keynesian rationale for generalized gluts. Marx understood that money could be held as a store of value and that this behaviour interrupted the sequence of sale and purchase. He also laid the foundations of multiplier theory by arguing, in Theories of Surplus Value, that, once this unity of sale and purchase was disturbed, the chain of contractual relationships between suppliers became threatened and overproduction, and then bankruptcies and unemployment, became widespread.
- Description
- 2nd ed.
- Subject
- full employment; economic theory; surplus value
- Identifier
- http://hdl.handle.net/1959.13/1049600
- Identifier
- uon:15054
- Identifier
- ISBN:9781849803182
- Language
- eng
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