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Full employment reloaded. Welfare state and full employment between Constitution and Economics

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  • Leonello Tronti

Abstract

The paper summarizes the evolution of the welfare state concept and its link to economic growth and full employment, along a complex itinerary running for more than a century, from the work of Adolf Wagner (1878) to James Meade’s proposals (1989, 1995). The overview focuses on the theoretical links of the first experiments of the welfare state with the foundation of welfare economics (Pigou, 1920), the establishment of the concept of human capital (Knight, 1944; Schultz, 1961) and the systematization of the welfare state design offered by Beveridge (1942). In the same years, the full employment goal is affirmed as achievable (Keynes, 1936; Beveridge, 1944; Roosevelt, 1945), meanwhile the Italian Constitution (1948) proposes a major advance, affirming full employment as a substantive freedom. With the end of Bretton Woods (1971) and the oil shocks (1973, 1979) stagflation spreads to developed economies, and both the welfare state and full employment face a setback. Wagner’s law finds a more evolved expression in the Laffer curve (1974), while monetary policy becomes restrictive and full employment has to give way to the Nairu (Modigliani and Papademos, 1975; Tobin, 1980). This is the climate in which Meade proposes a new and vital link between the welfare state and full employment: a proposal in which worker shares combine with topsy-turvy nationalization, and public credit with the social dividend. A proposal out of the box, but worth reflecting on in depth

Suggested Citation

  • Leonello Tronti, "undated". "Full employment reloaded. Welfare state and full employment between Constitution and Economics," Working Papers 0061, ASTRIL - Associazione Studi e Ricerche Interdisciplinari sul Lavoro.
    • Handle: RePEc:ast:wpaper:0061
    as

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    File URL: https://host.uniroma3.it/associazioni/astril/db/ff0266e2-07a4-48a3-a641-cac952343200.pdf
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    References listed on IDEAS

    as
    1. Meade,James Edward, 1995. "Full Employment Regained?," Cambridge Books, Cambridge University Press, number 9780521556972, January.
    2. John W. Kendrick, 1976. "The Formation and Stocks of Total Capital," NBER Books, National Bureau of Economic Research, Inc, number kend76-1, June.
    3. Franco Modigliani & Lucas Papademos, 1975. "Targets for Monetary Policy in the Coming Year," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(1), pages 141-166.
    4. Martin O'Neill & Stuart White, 2019. "James Meade, public ownership, and the idea of a citizens' trust," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 15(1/2), pages 21-37.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Welfare state; Wagner law; full employment; welfare economics; human capital; substantial freedom; capabilities; stagflation; fiscal crisis; Nairu; Laffer curve; social dividend;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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