Contemporary debate has obscured the importance of full employment as a policy goal, as well as misunderstanding the ways in which it can be achieved. I would like to defend the notion that full employment is an important goal for modern society, and to discuss the idea that markets left to themselves cannot guarantee full employment, so that we need a commitment from governments to ensure it.

Last December saw the 58th anniversary of the Universal Declaration of Human Rights. This Covenant of the United Nations was a direct result of the atrocities committed during the two world wars. It has provided the starting point for most discussion of human rights issues from that time. It is a beautiful document, which tells of the dignity of mankind and the conditions necessary to maintain that dignity. Within this context, it is appropriate to be discussing the issue of the right to employment, as, despite the fact that a later Covenant specifically dealt with economic rights, it was deemed sufficiently important to be incorporated in that original covenant, alongside an important right to economic well being:

Article 23: Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. .... Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity and supplemented, if necessary, by other means of social protection.

In other words, the right to work was seen as one of the fundamental rights, incorporated into the document which defined the Human Rights Agenda for the Twentieth Century and beyond. As such it was seen, by the international community, as an essential element of human existence and coexistence, part of what it means to be human.

The importance of these rights was further highlighted by the United Nations Covenant on Economic Social and Cultural Rights which was ratified by Australia in December 1975, and came into force generally the following month, and in Australia on 10 March 1976. The right to work is enshrined in Article 6:

The State Parties to the present Covenant recognize the right to work, which includes the rights of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right.

In other words, the right to work in the form of some commitment to full employment is regarded as one of the most fundamental human and economic rights. This, of course, was acknowledged in most Western countries with the post war consensus built on a belief in full employment. In the United Kingdom and in Australia, these beliefs were manifest in White Papers in 1944 and 1945 respectively, while the United States passed the Employment Act in 1946.

It is important to realize that the significance of employment in modern societies is not limited simply to its role in the being the major source of family income. This loses sight of the role that a person's job gives them in defining their place in society, as well as giving access to resources which influence not only their immediate needs, but also that of their families. In other words, a person's job and the entitlements associated with it help define the range of most choices open to them and to their family. Of vital importance is the link between a large array of socio-economic factors, such as crime, health and education with employment and reasonable income levels. This relates to stress and feelings of social exclusion associated with the state of unemployment. Indeed many other human rights are profoundly influenced by employment considerations. Unemployment leads to poverty and poverty to ill health, and unemployment, per se, has an important causal link with illness particularly mental illness. Also, unemployment causes other ills in society, in addition to those borne by the unemployed and their families. These range from loss of output to an increase in juvenile delinquency and crime

This is quite important, as, when we consider the importance of maintaining full employment, it is vital to distinguish between what we can achieve today, in Australia, and any utopian vision in which we eliminate the necessity of having to work. This vision may occur sometime in the future, a long time in the future, but it is not compatible with capitalist society, and is unlikely to occur in the foreseeable future. In the meantime, in modern society, employment is necessary for membership into society as well as for mental, physical and spiritual health,.

So the next question I want to turn to is, how do we achieve full employment. Here there are two distinct lines of thought . The first has dominated economics and policy discourse for centuries, and that is a belief in lasissez-faire, in the power of markets to guarantee full employment. This orthodoxy was briefly challenged after the great depression by the works of Keynes and Kalecki, which became the dominant view, until the orthodoxy was re-established in the 1970s. According to Keynes and Kalecki, there is no mechanism in a market economy which can generate full employment, so that if it happens, it is a fluke. Rather governments have a role in maintaining employment.

The fundamental difference between the views is what they see as the main determinant of the level of employment. For the orthodoxy, which is nowadays either called the neoliberal view or economic rationalist, the main determinant of employment is the price of labour, namely the wage rate. Labour is like any other commodity, its price ensures that demand equals supply, so as long as wages are free to move, there can be no unemployment. Unemployment is the result of something, preventing wages from moving. Further problems arise because there is nothing to guarantee that the market wage is at a level which allows workers to survive outside poverty. Now, I should point out that despite the dominance of this view, there is no serious economic theory which tells us that actual markets can guarantee fuller employment. The matter is one of belief, or ideology rather than of theory.

The problem is that the story is generalised from the level of the individual firm, where it is clear that if we reduce wages, then the firm can reduce price which, given that the demand for its output remains unchanged, it will enable it to sell more and hence employ more people. However, there is a fallacy of composition in trying to generalise this to the economy as a whole. If we reduce all wages, we cannot assume that demand for output won't change, since wages are people's main source of income, and by reducing them we must reduce demand, so that the effects on employment are not clear.

The second type of explanation for employment, coming from Keynes, emphasises the importance of aggregate demand as the main determinant of employment,. It points out that the reason that employers employ workers is for them to produce more. No matter how much the wage falls, if you cannot sell more you won't employ more workers. According to this view it is demand for final goods and not the wage which is important in determining employment. They also point out that there is no reason for the level of demand to be just right. If anything, there is a strong tendency for it to be insufficient. In this case, we need some external source of demand to generate employment, such as government expenditure, which may have other beneficial effects.

So we are left with a case for the importance of full employment as a policy goal in contemporary society, and a duty of governments to do all they can to fulfil that role!

Peter Kriesler UNSW p.kriesler@unsw.edu.au