The Political (and Monetary) Aspects of Full Employment

Luciano Alencar Barros, Antonino Lofaro and Louis-Philippe Rochon

International Journal of Political Economy, 2025, vol. 54, issue 2, 215-230

Abstract: This article seeks to revisit Michal Kalecki’s 80-year-old contribution on the political constraints to full employment and use it to analyze the rise of the current macroeconomic framework and its short-term dynamics, in which the political constraint to full employment occurs more through monetary means (rather than through fiscal means, as in the author’s original contribution). It is argued that the postwar full employment scenario led to political and social changes that resulted in the abandonment of the Keynesian theoretical framework in favor of the current one, based on Monetarism, which prioritizes monetary policy and relegates fiscal policy to a secondary role, constrained by the logic of austerity. This hegemony of monetary policy, synthesized by mechanical rules, has led, in the long run, to lower growth rates and higher unemployment rates than in the previous period and to an unequivocal process of income concentration.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:mes:ijpoec:v:54:y:2025:i:2:p:215-230

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DOI: 10.1080/08911916.2025.2525025

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