Discipline and Labourism: ‘Full Employment’ and the Role of Unions

In 2016, social democratic parties in predominantly Anglophone countries brought back the policy of ‘full employment.’ In the United States’ Democratic Party, both Hillary Rodham Clinton and Bernie Sanders, as candidates in the 2016 presidential election, called for ‘full employment’ or “getting closer to ‘full employment’.” [1] The Democratic Party platform also included—for the first time since 1992—the following statement: “we are committed to doing everything we can to build a full-employment economy, where everyone has a job that pays enough to raise a family and live in dignity with a sense of purpose.” [2] In mid-2016, the Australian Labor Party released a policy which placed ‘full employment’ at the centre of its platform: “When it comes to jobs and the economy,” the statement reads, “our goal should be making sure everyone who can work is able to work to their full capacity. This means putting full employment at the centre of our policy agenda.” [3] Similarly, ‘full employment’—to “guarantee a decent job for all”—is the first of the ‘10-Point Pledges’ of the British Labour Party since Jeremy Corbyn became its leader. [4]

Despite being greeted in some quarters as a break with economic consensus, this is not a new policy for these parties. To the contrary, it represents a return to a very old policy in new circumstances. Various iterations of ‘full employment’ appeared in in Democratic Party platforms between 1944 and 1988; it was encapsulated in a 1945 White Paper by the federal government in Australia during a Labor term in office; and it was proposed in the Fabian Society’s 1918 pamphlet “Labour and the New Social Order,” alongside the proposal for a minimum income and a maximum working week, and was a bipartisan policy in the UK between 1945 and 1976. [5]

Among the circumstances that are unlike those in which the policy of ‘full employment’ emerged at the beginning of the twentieth-century and after the Second World War, the present is marked by significant declines in union membership, pressure on social democratic parties from their Left on incomes and wages policies and from the Right on migration, structural changes in the composition of the relevant economies (a shift from manufacturing to services), the increasing privatisation and subcontracting of welfare and welfare provision and, not least, an increase in ‘non-standard’ or precarious contractual arrangements. The causes of these changes are complex. Yet it is not the case that the parties and affiliated unions were uninvolved in creating these circumstances or responding in ways that exacerbated their downward effects on incomes and union membership, including a failure to distinguish themselves from the Right on migration by challenging the racism and Malthusian cranks in their own ranks and in the leadership of the parties, in bringing about privatization and subcontracting through government policy and, not least, in hastening the decline of union membership as a consequence of a strategic reluctance and incapacity to organise ‘non-standard,’ informal and migrant workers or those outside of large-scale, concentrated sectors.

To be sure, it is not always clear what anyone means by ‘full employment—and one of the arguments I make elsewhere is that the categorical distinction between employment and unemployment has been rendered meaningless by shifts in measures associated with precarious work. [6] I will come back to this, but for the moment let us assume the definition given by proponents of ‘full employment’ policies—that is, of an unemployment rate around three percent. In this respect, the contemporary circumstance that is like that in which the policy first appeared suggests, remarkably, that the policy of ‘full employment’ is at present being revived not in times of high unemployment but when unemployment is nearing ‘full employment’ in the absence of any policy of ‘full employment.’

The policy of ‘full employment’ is not a response to circumstances of high unemployment but, to the contrary, a social democratic response to condition of full or near ‘full employment.’ If it were the case that the policy of ‘full employment’ was linked to higher rates of unemployment, we would expect to see some correlation between either calls to introduce or reinstate the policy and increasing unemployment or, alternatively, we might expect some reciprocal conditioning between the existence of ‘full employment’ as government policy and an unemployment rate around three percent or, conversely, a rise in the rate of unemployment as a consequence of the abandonment of that policy.

Yet no such correlations exist. The existence, abandonment and, perhaps more importantly, the contemporary revival of the policy of ‘full employment’ in these countries and among social democrats cannot be explained by way of the experience of rises (or falls) in unemployment—not in the past and not in the present. The official unemployment rate in the UK in October-December 2017 was 4.4%—a significant decline from peaks of 11% in 1984, 10% in 1992, and 8.4% in 2011. [7] The British Labor Party’s revival of the policy of ‘full employment’ is therefore not a response to circumstances of high unemployment. Much the same can be said about the Australian Labor Party and the Democratic Party in the US. The US unemployment rate is at present around 4%, and has been in sharp decline for almost two decades—in the absence of a ‘full employment’ policy. Australia’s unemployment rate is around 5.5%, a steady decline since it peaked over 10% in the mid-1990s. One could object that a ‘full employment’ policy is a preemptive measure in times of lower unemployment, given that the unemployment rate may increase some time in the future. Yet there are other, far more plausible explanations of unemployment rates below three percent and of fluctuations in the rate of employment, including the Second World War, the post-war trade and investment booms, the collapse of Bretton Woods and its impact on currencies and trade. Moreover, the Fabian Society first proposed the policy as part of a prospectus on trade unionism and the welfare state, and as an alternative to the spread of revolutionary currents at the time.

Briefly, the policy of ‘full employment’ has far less to do with un/employment than it involves the revival of a social democratic understanding of welfare and an undertaking to enact labour and social discipline through unions. It links income to work through a range of measures (from workfare or ‘work-for-the-dole’ to a view of government as an ‘employer of last resort’) and, at the same time but more importantly, puts forward a role for unions in administering any growth of wage and social incomes, or managing ‘non-inflationary’ and ‘effective’ demand. Indeed, the underlying premises of that policy has been constitutive of the politics of labourist and social democratic parties in the early twentieth-century. It speaks of a divergence between social democratic and communist parties, and reflects the view of the former that the right to an income is founded on participation in waged work and that large, centralised unions can only rightfully claim a role in shaping economic policy by promising to be responsible economic managers, or more specifically, in return for managing (dampening) the expectations and demands of their members around wages and social incomes.

This latter point is not a controversial claim. It has been made by proponents of ‘full employment,’ including the British economist John Maynard Keynes who, in 1943, admitted that he did “not doubt … a serious problem will arise as to how wages are to be restrained when we have a combination of collective bargaining and full employment.” In that same year, the Polish-born economist, Michael Kalecki, took a further step in exploring the dilemma that sustaining ‘full employment’ in capitalist circumstances presents. In his essay, “Political Aspects of Full Employment,” Kalecki argued that there are only two ways of maintaining ‘full employment’ in the face of opposition from employers, for whom the value of unemployment was that it substituted for direct coercion: fascism or the integration of unions into government. As he put it: “One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.” The fascist economy brings about ‘full employment’ by first “overcoming of unemployment, [which then] develops into an armament economy of scarcity, and ends inevitably in war.” [8] A combination of higher wages (for ‘Aryan’ men), social incomes for ‘Aryan’ families, and the forced labour others in the concentration camps is how the German National Socialist government ‘resolved’ the dilemma that Kalecki observes.

There is another method of bringing about and maintaining ‘full employment’ that is perhaps less explicit in the writings of Keynes and Kalecki, and which suggests that the distinction Kalecki draws between fascist and social democratic means of sustaining full employment may—along with the organisation of a permanent war economy—not be as clear as it might be comfortable to assume. Moreover, given Kalecki’s suggestion that ‘full employment’ makes distributional conflicts both between workers and between workers and employers more acute it requires consideration given that the categorical definition of employment has changed along with the increasing participation of women in paid work. As such, ‘full employment’ often means that a bargain is struck between some workers and employers, and competition over relatively well-paid (unionised) employment is suspended by the government through displacement and the restoration of racial-gendered boundaries, in which ‘unemployment’ or the distribution of low-waged and forced labour is naturalized for others (or at least brought about by government action).

This has been the deeper implication of various, contemporary proposals for treating the government as the ‘employer of last resort,’ and of introducing a version of the Universal Basic Income in the tech industry—not to mention workfare, work-for-the-dole or similar schemes that have obtained before now. In other words, it is difficult to see how ‘full employment’ may not simply be a means whereby some workers (and unions) erect ‘barriers to competition’ against other workers in partnership with employers—in effect, maintaining low incomes for those workers or excluding them from negotiable and/or paid work altogether. These mechanisms of displacement are not unlikely scenarios but the most likely, given the history of social democratic parties. It was, after all, the same Australian Labor Prime Minister who introduced the automatic detention of undocumented migrants that began his parliamentary career with a speech in which he blamed women’s entry into paid work for increasing the rate of unemployment.

Social democracy is fixed on calibrating the mechanisms of displacement of upside and downside risks of capitalism without abolishing capitalism. More simply put, its political and philosophical premise is that it is possible to reduce inequality through government policies without undermining capitalist accumulation or efficient production. In the case of ‘full employment’ policies, there is the additional assumption that wage contracts can hypothetically represent a ‘fair exchange,’ and therefore that equity is conditional on the contribution of the ‘sweat of one’s brow’—a labour theory of value and right derived from the classical liberalism of John Locke and Christian doctrine (not Marx) that veers into the fatal, coerced productivism of fascism far more than it has been convenient to admit. The split between communist and social democratic movements over nationalism is linked to this because, for the latter, national borders are characterized as ‘barriers to competition’ and therefore something that can be instrumentalized against capital. This is nonsense, both historically and empirically; but that has never meant it has not given rise to material realities.

The point is not that there isn’t some benefit to welfare, wage or financial policies of some kind. It is that slogans—such as ‘full employment’—can obscure a great deal while fostering assumptions that promote increases in inequality and exploitation because they are in truth an argument for mechanisms of displacement. In this sense, measures of employment and unemployment are a poor guide to understanding these dynamics, not least because—as I’ve argued elsewhere on the politics and techniques of ‘precarity’ [9]—such metrics are being overtaken by those concerned with measuring the distribution of risk rather than product. It is not, then, simply a case of denouncing measures as reformist. To the contrary, it is possible to understand the significance and implications of any reforms—including that of ‘full employment’—as mechanisms that displace and distribute the upside and downside risks of capitalism and respond accordingly, circumventing the appeal of slogans whose implications are either avoided or not made explicit in service to attaining government.

In the case of ‘full employment’ policies, it is remarkable that it reappears, today, in circumstances that are close to ‘full employment.’ In the US for instance, it is not trivial that the policy re-appears at a time when the incidence of strikes is on the rise, including wildcat strikes as in the case of the West Virginia teachers’ strike and the campaign for a rise in the minimum wage. Indeed, recently released employment figures suggests a 17-year low in unemployment—recall that the release of those figures precipitated a fall in industrial stock prices. [10]

In other words, the policy has far more to do with the role of unions in relation to the economic policy of administering effective and ‘non-inflationary’ demands. It also, in my view, represents a deepening of the productivist link between social incomes and work contracts (including pensions) and a political claim by large unions over the allocation of social risk, on which their record has been less than adequate since it continues to be shaped by the worst (racial and gendered) understanding of ‘barriers to competition.’ It may also be, and I think it is also likely, despite the causal assumptions promulgated by social democratic parties, that the pursuit of politics and strategies associated with those which have underpinned the policy of ‘full employment’ have played a far greater role in declining union membership and increasing levels of inequality than they care to admit.

Notes