Liberal strategies for combating joblessness in the twentieth century.

Author:Harvey, Philip L.
Position:Papers from the 1999 AFEE Meeting

Most discussions of policy options for combating joblessness focus on the conflict between conservative and liberal proposals.(1) This is both understandable and appropriate, since it is out of the conflict between Right and Left that the nation's actual responses to the problem are forged. There are differences of approach within opposing camps, however, as well as across party lines, and the development of alternative policy preferences among liberals or among conservatives may be just as important in shaping public policy over the long run as the more dramatic evolution of debates between liberals and conservatives.

Conservative policy preferences for combating joblessness have been surprisingly consistent throughout the twentieth century. Indeed, a unified conservative approach to the problem can be traced back to the fourteenth century in Anglo-American employment and social welfare law [Harvey forthcoming]. In contrast, liberal policy preferences have been marked by their diversity. In this article, I will identify three different approaches to combating joblessness that have dominated liberal reform agendas in the United States at different times since the Great Depression. Although not inconsistent with one another, these strategies generally have not been pursued simultaneously. I will argue that this has been a mistake, that the three strategies are complementary, and that a reform program that combines all three would overcome limitations that each of the strategies exhibit when pursued separately.

The first strategy is the one that dominated New Deal responses to the problem of joblessness during the 1930s. I will call this the "New Deal" strategy. It was founded on the belief that the economy was suffering from a job shortage that required both a program of labor market reforms to stimulate consumption and a set of social welfare reforms to meet the needs of jobless individuals for work and/or income. based on this view of the problem, a multifaceted reform agenda was pursued. This reform agenda included the establishment of social insurance programs for persons not expected to work and legislation designed to strengthen the bargaining power of labor; but the foundation of the strategy, as well as its first line of defense against the problem of joblessness, was the establishment of public job creation programs to provide work for the unemployed [Vittoz 1987, 81-82; Rosenof 1975, 39-43; Burns and Williams 1941; National Resources Planning Board 1943].

The second strategy for combating joblessness pursued by liberals during the twentieth century is also based on the view that joblessness is caused by a shortage of jobs. But this strategy has sought a solution to the problem in the application of Keynesian macroeconomic policies, rather than in labor market reforms and direct job creation. Inspired, or at least strongly reinforced, by the publication of Keynes's General Theory, this "Keynesian" strategy became popular within the Roosevelt administration beginning in the late 1930s as a less controversial way of closing the economy's job gap. Fiscal stimulation could be provided through initiatives such as the New Deal's employment programs, if that were politically feasible, but other forms of government spending would serve the purpose just as well. With World War II providing a practical demonstration of the effectiveness of the strategy, Keynesianism quickly supplanted direct job creation as the dominant liberal strategy for combating joblessness [Mucciaroni 1990, 17-32; Weir 1992, 27-60; Stein 1990, 131-961.

The third strategy for combating joblessness pursued by liberals in the twentieth century differed from the first two in that it focused not on reducing the aggregate level of joblessness in the economy, but rather on the redistribution of employment opportunities among population groups. This third approach to the problem of joblessness, which I will call the "structuralist" strategy, dominated the liberal reform agenda of the 1960s. It was predicated on the view that the economy was producing adequate numbers of jobs in the aggregate (or could be made to do so through the application of Keynesian fiscal policies) but that a series of structural barriers existed that disadvantaged certain individuals and groups in their search for work. The barriers attacked were of three general types. The first consisted of geographic barriers that physically isolated certain groups of workers from available jobs - in Appalachia or urban ghettos, for example. The second set of barriers were educational...

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