Can we get back to full employment?

We can get back to full employment if, when the government follows a macroeconomic policy which gradually reflates demand, the share of profits gradually increases, labour-using investment is encouraged, some cyclical and all structural unemployment is gradually absorbed and, despite the rise in profits and fall in unemployment, wage increases remain moderate, that is, not much in excess of the average rate of growth of labour productivity. With present arrangements, the government cannot ensure this happy chain of events. The final link in it is missing, and cannot be forged by the government alone. Macroeconomic policy is inadequate, and still is even when combined with incomes policies of the kind we have tried in the past. Import restrictions will only make matters worse. It may be possible to reduce unemployment by enlarging the public sector, or by job-subsidies (or reductions in job-taxes) of various kinds, but whether this can be done is uncertain. It is quite possible that measures such as these actually increase unemployment when all their indirect effects are taken into account. It is, in any case, likely to be a costly and inefficient route to full employment, supposing it gets us there at all. So, as things are, the government is unable to deliver full employment.