On Mon, Aug 3, 2009 at 6:38 PM, Jim Devine<[email protected]> wrote: > I guess I'm one of those nefarious "progressive" economists. There: I > talked about the pachyderm in pen-l. In fact, I wrote a lot of the > Wikipedia entry on types of unemployment. Or maybe I misidentified the > nature of the proboscidean creature infesting our quarters. > > is that enough?
My own inclination is toward Pasinetti's discussion of the issue. Below I'm copying a very condensed summary of it that was presented in a 1994 review of "Structural Economic Dynamics" by Angelo Reati in Review of Radical Political Economics. I hope the greek symbols come through. If not, just ignore them, please: "Moving beyond Keynes’ short-term analysis, Pasinetti provides new foundations for the principle of effective demand by showing the sectoral origin of the macroeconomic condition for full employment. "Starting from the sectoral side, Pasinetti (1993: 52) finds that the evolution of employment in each (final) sector i is the result of the algebraic sum of three rates of change: 1) population growth (g), which produces a general increase of demand, and therefore of employment in all sectors; ii) the specific demand for any commodity i (r1), which has a positive impact on employment in the sector concerned; iii) sectoral productivity (ρ1), which acts in the opposite direction. "Leaving aside the growth of population (which in Western countries is near to zero), we see that the crucial element is the balance between the growth of demand and the increase in productivity. Technological change influences both: it has a direct effect on the second element, since the level and evolution of productivity fundamentally depends on the technological basis of the firm, and it has two effects on the first: a specific effect, via the price of the commodity involved in technological change, and a general effect resulting from the wage increases. The price effect arises because, tendentially, the increase in productivity for any commodity i produces a corresponding decrease in its price and an increase of its demand. The importance of this upward pressure on demand depends on the price elasticity for the commodity in question. The general influence of technological change (income effect) comes from the fact that, if the real wage follows the dynamic of productivity, the increase of the purchasing power of the employees entails: i) an increase of the demand for each commodity they already buy (Engel curve effect), and ii) the appearance of a demand for new commodities. "At the macroeconomic level the condition for full employment is derived from the solution of the system of equations describing the physical flows of commodities produced in the economy. "Total labor supply is simply obtained from total population, by correcting it for the proportion of active to total population (μ) as well as for the proportion of total time to working time (ν). On the global demand side reappear the same factors which are relevant for the single sectors, i.e., the rate of increase of demand for the individual commodities (ri) and the sectoral productivity growth (ρi). "This implies that, at the macroeconomic level, full employment is far from being the automatic outcome of some market mechanism; it is rather a permanent task for public policy. In fact, every r~ is different from the others, and the same applies for the p, (obviously, ri ≠ ρi). Some sectors expand (those for which ri > ρi), others contract, new sectors appear and others disappear. Full employment cannot be reached and maintained without a continuous shift of the labor force from the declining to the expanding sectors; among other things, this will require a permanent retraining and skill development of the population. The government can direct action on this through the education system and can also influence the magnitude of the coefficients μ and ν. In periods of high unemployment, this latter possibility could materialize in measures to reduce the participation rate of the labor force (coefficient μ) and to foster reductions in working time. "It is interesting to note that, in Pasinetti’s view, the macroeconomic condition for full employment implies the boundedness of economic systems because the responsibility of the government to generate full employment exclusively concerns its own citizens. The international migration of labor should thus be subject to some control, to avoid indiscriminate movements of population that would impede the fulfillment of full employment in each country (Pasinetti 1993: 148-150)." -- Sandwichman _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
