Political Aspects of Full Employment

From the Kalecki 1943 paper, PDF

Indeed, under a regime of permanent full employment "the sack" would cease to play its role as a disciplinary measure. The social position of the boss would be undermined and the self assurance and class consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laisser-faire; and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus affects adversely only the rentier interests. But "discipline in the factories" and "political stability" are more appreciated by the business leaders than profits. Their class instinct tells them that lasting full employment is unsound from their point of view and that unemployment is an integral part of the " normal " capitalist system...

[E]mployment becomes "overfull"; not only is unemployment abolished but an acute scarcity of labour prevails. Bottlenecks arise in every sphere and these must be dealt with by creation of a number of controls. Such an economy has many features of a "planned economy," and is sometimes compared, rather ignorantly, with socialism. However, this type of "planning" is bound to appear whenever an economy puts itself a certain high target of production in a particular sphere, when it becomes a "target economy" of which the "armament economy" is a special case. An "armament economy" involves in particular the curtailment of consumption as compared with what it could have been under full employment.