It is necessary here to repeat a point made or implied earlier, that the level and rate of change of economic activity and the level of unemployment are to a large extent independent of one another. Not totally independent of course, each is one determinant of the other. But it is possible, depending on whether and to what extent and in what sense ratio distortion exists, to have full employment at a time of falling throughput, or high unemployment at a time of steady or rising throughput.
This denies the current idea that endless economic “growth”, i.e., Throughput Increase, TI, is a sine qua non of full employment, and conversely that the answer to unemployment is always to achieve a higher TI rate no matter by what means or for how short a time.
So advocates of the view that economic activity cannot endlessly increase against limited global resources need not feel that their view condemns ever more millions to unemployment. Full employment can be maintained under a “steady state” economic regime, that is, one where the throughput rate of all resources is no greater than their renewal rate. The human economy would be in dynamic equilibrium with the world environment.
Thus the steady state, as well as being the only way for the human economy to survive and be healthy in the future, need not be “static” and “growthless” as has been claimed by those who feel threatened by anything new. It would be full of change, and vibrant activity, and growth would be available in ways defined in earlier posts; but it would also be self-sustaining and self-enhancing, instead of self-destructive as is the present system.
As already mentioned it is not possible forever to have rising material living standards and full employment together. They occurred together for a minority of the world’s people for a few decades and this was an exceptional piece of luck rather than the norm. The norm is that we have to choose between one and the other, and as a matter of social justice and practical politics we must choose full employment, and hold to that choice no matter what.
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Posts in this Series
- Review of 1988 edition of Economics for a Round Earth
- Ends and Means
- Evolution Not Revolution
- Notes on Evolution Not Revolution
- Concepts and Terms – What is ‘wealth’?
- The Throughput Chain
- The Derivatives of Wealth
- Global Inequalities in Wealth
- Economic Growth Redefined
- Misconceptions in Practice
- Borrowing to Invest to Get Rich
- Environment versus Economic Progress
- Digression: Pollution Red Herrings
- Digression: Depletion and Inflation
- Value Inflation – the Trigger, not the Bullet
- Living Standard and Quality of Life
- Digression: Resource Consumption, Jobs, and Hands Off
- When the Boom comes
- The Effect of People’s Expectations
- Hard Work – Virtue or Vice?
- Who needs the Snail Darter?
- More Dollars for Conservation?
- Non-renewable Resources – Leave Them in the Ground?
- Digression: Fast Breeder Nuclear Fission Reactors
- Minerals in National Parks – Leave Them in the Ground?
- Population and Wealth
- Left, Right and The Environment
- Digression: “So Long As We Profit, Costs Elsewhere Aren’t Our Problem”?
- Limits to Growth?
- Solar Energy – a Special Case
- The Solar-Powered Car
- Money Supply, Throughput and Inflation
- Real and Money Wages: Living Standards
- Digression: Caution about “Increases” and “Decreases”
- The Idea of Proportionate Flows Applied to Wages: the Great Depression
- Deficit Financing
- The Optimum Proportionate Flow Condition
- Digression: Thrift versus Spendthrift
- Digression: the Private Motor Car – a Basic Necessity?
- The Idea of Proportionate Flows Applied to Wages – the Stagflation of the 1970’s and 80’s
- Excessive Wages Can Cost Jobs
- Fight Unemployment or Inflation First?
- Digression: Work and Jobs
- Other “Job Creation” Schemes
- Visual and Noise Pollution
- Digression: Renewal and Recycling of Resources; Wages and Jobs
- Ratio Distortion and Consumption
- Aggregate Demand – Components and Internal Ratio
- The Slave Economy
- Employment and the Steady State
- Consumer-Led Recovery
- Interest Rates and Ratio Distortion
- Demographic Trends and Living Standards
- Digression: Bad Economics Good for Conservation?
- Coping with Aging Populations
- Stabilising the Human Population
- Costs – What Really Costs Us and What Doesn’t?
- Digression: Other Comments on Statements in UN Report
- Discussion of Costs Resumed
- Budget Balancing Methods – Cost or Gain?
- Digression: Government Expenditure – Government Employees
- Expenditure on Weapons