The Difficulty, and yet the Necessity, of aiming at Full Employment: a Comment on Nina Shapiro's Note

The Author responds to the criticism made by Nina Shapiro regarding the business cycles in capitalist economies and identifies the origin of some misunderstandings which he then dispels. The main misunderstanding is linked to not noticing that the Author undertakes two levels of analysis: the conditions that must be satisfied in order that an economic system may move through time with full employment of the labor force and full utilization of the productive capacities, and on the other side, exploring the difficulties that prevent capitalist economies from expanding steadily, compelling them into an alternating succession of booms and depressions. Nothing in the Author’s analysis denies or contradicts Shapiro’s conviction that in an advanced capitalist economy, innovations may take the form of the introduction of new goods, which will stimulate new demand and therefore induce the undertaking of new investments. The Author states explicitly that the development of new goods is certainly one important way to counteract the depressive tendencies set in by the saturation of demand for old goods. But one can never be sure that this will always happen. The question is : if the full employment path is in practice never to be reached, why then should we keep it as our reference path. The failure of market forces to reach efficient positions does not justify our failure to pursue them by other means. It is the desirability of the full employment path, and the misery and social injustice of unemployment, that makes it a necessity for industrial societies to put the full employment path among the basic aims of economic policy.