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Theory & Strategies for Full Employment. Proceedings of the World Academy of Art & Science Conference on the Global Employment Challenge

3. New Theoretical Perspectives

The problem of unemployment poses a serious challenge to both economic theorists and policy-makers, because it calls into question the efficacy of the market-place as a means for achieving optimal human welfare. Today we face a situation in which high levels of unemployment coexist together with a high level of unmet social needs. Hundreds of millions of people want to work, but are unable to find employment opportunities. At the same time, billions more struggle to survive in dire poverty. There is something seriously amiss with a system that keeps people idle while essential work remains undone, which is akin to letting food rot while people are starving.
Identification of potential or proven employment generating strategies by itself may not be sufficient to bring about their rapid, widespread implementation around the world. Existing economic theory and conventional policy measures are deeply entrenched among academics and policy-makers. Therefore, it is necessary to re-examine the underlying theoretical framework that supports prevailing practices to show that it is both incomplete and insufficient to fully address the employment problem. In a report to the Club of Rome, Orio Giarini and Patrick Liedtke document the insufficiencies in current employment theory.5  It is equally necessary to evolve a more comprehensive theoretical framework that reflects the true role of various parameters in the generation of new employment opportunities.
One basic limitation with existing theory is that it continues to be based on the nation-state as the unit for economy and employment generation at a time when employment markets are becoming increasingly regional and global in nature. The phenomenal four-fold multiplication of world trade since 1990 has largely internationalized the labor market for manufacturing jobs. The rapid development of the internet is having a similar impact on employment in IT, business outsourcing, financial services, publishing and many other fields. Increasing corporate mobility is moving jobs to underutilized, lower priced labor markets. Combined with regional integration and demographic changes arising from an aging population in Europe, as well as large scale migration of technically qualified manpower from developing countries, these factors are reducing the capacity of national level theory and policy to effectively deal with an increasingly globalized issue.
Why can we not devise an economic system in which everyone that is willing to work and capable of productive activity is assured of an opportunity and means to do so? It is not as if all possible human wants are already being met and there is no further work to be done in the world. Since at least half the world’s population is still living in poverty, there is obviously a great deal of work that is not getting done, work that can build houses, produce goods, provide services and raise all human beings to the level of the middle class. Even in the most economically advanced nations, there are a wide range of human needs and aspirations that are only poorly or partially fulfilled by the current system. Human beings everywhere want better healthcare, more and better education, improved housing and public infrastructure, etc. Why is society unable to meet all or a much larger portion of those needs when there are so many people willing and capable, but unable to find opportunities for gainful employment?
These questions point to a still more fundamental deficiency with current theory arising from the fact that it views economy in isolation from the society of which it is a part. At any point in time society taps into only a tiny portion of its creative potential. Society evolves by developing new ideas, organizations, systems, needs and ways of life. Economic growth arises as a natural result of social development and social evolution. Society is a field for interaction between people. Social potential is created by forging new and more effective ways for people to interact. Four social institutions — language, roads, cities and money — formed the basis for the evolution of civilization over thousands of years. Today our capacity for constructive interaction has multiplied a thousand-fold, yet we have only begun to understand how to utilize that greater potential.
The strategies discussed above barely scratch the surface of the potential, much of which is too intangible to quantify but nonetheless very real and powerful. Can we truly assess the social potential created by the fact that 1.7 billion human beings are now connected over the Internet in a single social system that has the potential to deliver world-class education to everyone, or that 350 million of them participate in a single social networking system, Facebook? We need only imagine the constraints we would face if only 5 or 10% of humanity were accessible by roads, mail services or airlines. Imagine the difficulties we would encounter if the world today lacked English as a common language for communication or if it lacked a mechanism for converting money from one national currency into another. We have hardly begun to fathom the social potential generated by linking a very large portion of humanity to a single system for communication, commerce, education, employment, entertainment and other social interactions.6 A more comprehensive and integrated social theory of employment will provide the essential foundation for more comprehensive and effective practices. It is necessary to examine existing perspectives and seek to evolve a more inclusive theoretical framework that more effectively harnesses unutilized social potential to fulfill unmet social needs.

4. Available Tools for Full Employment

The GEC has explored a number of promising strategies that can be adopted individually or in combination to achieve full employment. Each of these strategies needs to be carefully evaluated to document their feasibility for application under a range of different economic conditions and in order to develop a set of best practices applicable at different levels in different parts of the world.

4.1 Job Guarantee Programs

Job guarantee programs range from the temporary Jefes project operated by Argentina to India’s National Rural Employment Guarantee Scheme which presently guarantees 100 days of employment per year to more than 45 million families. Randall Wray7 and Rania Antonopolous8 presented compelling evidence to show that government-sponsored employment guarantee programs of this type are a viable option for addressing unemployment in a wide range of developed and developing countries. Wray also observed that the social costs of high unemployment in terms of loss of human capital, poverty, social isolation, crime, regional deterioration, health issues, family breakdown, school dropouts, social, political and economic instability, violence, ethnic hostility, and even terrorism far outweigh the cost of public jobs programs capable of generating full employment.

4.2 Complementary Currencies

At the height of the Great Depression, an experimental currency introduced in the town of Woergl, Austria wiped out 30% local unemployment in a short time. Today more than 2500 complementary or local currencies are being utilized by communities, NGOs and corporates around the world to compensate for the inadequacies of national money systems, often with remarkable effectiveness. As we write a plethora of non-national money systems are also gaining currency on the Internet. Yet, mainstream economic theory does not adequately account for the capacity of these supplementary systems to harness unutilized resources to provide for unmet social needs. Nor does it help us assess the ultimate potential for creating innovative monetary systems. Bernard Lietaer has described a variety of innovative currency programs that can be adopted by countries, states, regions, municipal governments, companies or NGOs to effectively supplement that role of national currencies.9 The GEC recommended a full examination of these programs to identify those best suited for widespread implementation at different levels and under different economic conditions.


5 Giarini, Orio and Patrick Liedtke, The Employment Dilemma: The Future of Work, Club of Rome, 1997, p. 60-61. http://eng.newwelfare.org/2006/10/21/abstracts-from-the-employment-dilemma-and-the-future-of-work/
6 Jacobs, Garry, “From Newtonian Economics to Full Employment”, the World Academy of Art & Science e-conference on Global Employment Challenge, January 11, 2010, http://www.worldacademy.org/forum/newtonian-economics-full-employment
7 Wray, Randall, “How to Implement True, Full Employment”, the World Academy of Art & Science e-conference on Global Employment Challenge, November 14, 2009, http://www.worldacademy.org/forum/how-implement-true-full-employment-randall-wray and Full Employment and Employment Guarantees, webcast presentation to the World Academy of Art & Science, November 10, 2009, http://www.worldacademy.org/content/gec-webcasts#randall
8 Antonopoulos, Rania, “Impact of Employment Guarantee Programmes on Gender Equality and Pro-Poor Economic Development”, POLICY BRIEF, Case-Study on South Africa, January 2008, http://www.levy.org/pubs/UNDP-Levy/South_Africa/Policy_Brief_EPWP_South_Africa.pdf and Employment Guarantee Policies: Contributing to Pro-Poor Development, Promoting Gender Equality, webcast presentation to the World Academy of Art & Science, February 11, 2010, http://www.worldacademy.org/content/gec-webcasts#rania
9 Lietaer, Bernard, Commercial Credit Circuit (C3): A Financial Innovation to Structurally Address Unemployment, published in collaboration with STRO, November 15, 2009, http://www.worldacademy.org/forum/commercial-credit-circuit-c3 and Innovative Strategies for Financing Full Employment, webcast presentation to the World Academy of Art & Science, November 20, 2009, http://www.worldacademy.org/content/gec-webcasts#bernard


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