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Effective Demand, Technological Change, and the Job Guarantee Program

In: The Job Guarantee

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  • Michael J. Murray

Abstract

The goal of this chapter is to study the conditions required for the maintenance of full employment within a growing economy comprised of ongoing structural change. Two conditions are considered: an effective demand condition and a structural change condition (Pasinetti 1981). The effective demand condition is mostly associated with the work of John Maynard Keynes and has become a central focus in post-Keynesian economic analysis. As in Keynes (1964), post-Keynesians have rejected the notion that self-regulating markets bring about conditions to attain full employment, whereby full employment becomes only a special case scenario and unlikely to occur in a laissez faire economy. “Pump priming” stimulus may not be sufficient to bring the economy to full employment as different public policies have different effects on private sector employment. Rather, post-Keynesians have favored a targeted demand approach (Tcherneva 2011). Absent of direct federal job creation, fiscal policy must target job creating sectors, which will be much more effective than traditional aggregate demand stimulus.

Suggested Citation

  • Michael J. Murray, 2013. "Effective Demand, Technological Change, and the Job Guarantee Program," Palgrave Macmillan Books, in: Michael J. Murray & Mathew Forstater (ed.), The Job Guarantee, chapter 5, pages 95-124, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-29799-0_6
    DOI: 10.1057/9781137297990_6
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