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The Barricade
- Economy & finance
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This article was originally published on 17 September 2020 at Brave New Europe.
For the first time, all aspects of a job guarantee are brought together in a single work. This allows the enormous scope of the idea to be understood in its entirety, since a job guarantee is not only a work guarantee, but is the red thread that unites all the great struggles of human beings for emancipation.
Pulling on that red thread, one understands first of all the need for monetary sovereignty to dispel “the myth that federal government spending depends on the tax revenue” and that “the rich and powerful […] pay for everything “. A job guarantee, like all public programmes in countries with monetary sovereignty, would be financed by computer keystrokes at the central bank, which is where the money is created. Therefore, only monetarily sovereign nations can, unlike for example the countries of the Euro zone, implement a job guaranteed, as only monetary sovereignty frees governments from any spending restrictions on their own currency.
However, when the red thread is pulled a little further, the job guarantees based on employment buffer stocks come to light. This is one of the great contributions made by modern monetary theory. These schemes enable public spending aimed at achieving full employment to be compatible with price stability. Other strategies to achieve full employment are based on different subsidies and advantages granted to private companies to hire all available workers. This increases public expenditure unnecessarily, which can trigger inflationary pressures and does not guarantee the social usefulness of the work performed. job guarantees based on employment buffer stocks establish a minimum wage and benefits for the entire economy while offering a public service job to anyone who cannot find work in the private sector or in the permanent public sector. These jobs would be funded by the central government, but designed at the local level to be as responsive as possible to the needs of different communities.
Then the red thread leads to full employment without inflation as a substitute for the so-called NAIRU, the Non-Accelerating Inflation Rate of Unemployment. The NAIRU is an infamous neo-liberal invention that wrongly claims that there is a natural level of unemployment below which inflation is generated. This is how prevailing neo-liberalism uses unemployment as a tool to fight inflation. However, this natural rate of unemployment does not exist, and job guarantees based on employment buffer stocks break the false dichotomy between full employment and inflation. Full employment is, like universal healthcare and education, a political decision. Therefore, just as we do not say that “the optimal level of children who wanted to but were unable to receive primary and secondary education was 5 percent; or that there was a natural level of starvation equal to 5 percent of the population; or that 5 percent of people would ideally remain without shelter”, involuntary unemployment must be permanently eliminated from economic cycles. Tcherneva gives Spain as an example of a country where the NAIRU has done the most damage, since “[i]n 2012, the Annual Economic Forecast of the European Commission claimed that the natural rate of unemployment in Spain was 26.6 percent”. Therefore, Spain is one of the countries that most needs the monetary sovereignty and the guaranteed work plans based on the employment stabilization reserves as a substitute for the NAIRU imposed by the European Union and the Euro.
The red thread runs through the business fabric by means of a “new social contract […] establishing a labor standard for good jobs “. Companies which cannot guarantee their workers a decent standard of work and pay comparable to that of guaranteed work would simply disappear. The coercion suffered by workers to accept jobs in deplorable conditions would cease to exist, as workers would always have the option of leaving their jobs and opting for employment under guaranteed work schemes if their employer did not offer labour and wage standards at least as good as state guaranteed job. This is how the job guarantee becomes “a new social contract by establishing a new labor standard, ousting unemployment as a macroeconomic stabilizer, and preventing its social and economic costs”.
This new social contract of guaranteed work means that the red thread leads to a project to which Tcherneva attaches great importance, the Green New Deal. Following the example of Franklin Delano Roosevelt, Tcherneva proposes to re-edit the New Deal of the 1930s but from an environmental perspective, and asks: “What good is a green future in which the dangers of global warming have abated, but families and whole communities continue to experience deaths of despair due to poverty, unemployment, and economic distress?” This is why the author argues that guaranteed work is “the single most crucial aspect of the Green New Deal” and that one makes no sense without the other. This means that the transition to a renewable energy-based economy must be made by ensuring full quality employment and incorporating guaranteed work schemes. This is the only way to achieve a fair and clean economy free from the damage of involuntary unemployment and environmental destruction.
In short, “The Case for a Job Guarantee” is an essential book in which Karl Marx’s idea that human work is the only source of value is reinforced and updated today. In a world where full employment policies have been abandoned and where conservative ideas such as the universal basic income are gaining ground, Pavlina Tcherneva’s book stands as a beacon in the night through which the left is passing. A job guarantee must therefore become a fundamental point of reference for the left. Only in this way can it break out of the quagmire into which it has been led by ideas such as the universal basic income, which claim that the solution to the problems of the workers is that they stop working and start living thanks to the work of others.
Euro delendus est.
