Kalecki states that full employment can be gained if the government instigates a programme of "public investment (e.g. builds schools, hospitals, and highways) or subsidizes mass consumption (by family allowances, reduction of indirect taxation, or subsidies to keep down the prices of necessities), and if, moreover, this expenditure is financed by borrowing and not by taxation." Such ideas obviously contradict the mainstream economic opinions being promoted in Europe today (that are leading to spiralling unemployment) and are therefore still highly relevant.
Kalecki is part of a long line of prominent left-wing Polish economists that include Rosa Luxemburg, Włodzimierz Brus, Oskar Lange and more recently Tadeusz Kowalik. These economists have dealt with such things as the realities of early peripheral capitalism in Eastern Europe; the harsh realities of the Great Depression in countries such as Poland; the injustices and imbalances of the Stalinist command economy and the negative effects of the shock-therapy return to capitalism after 1989.
These economists often bridge the traditions of both Marxist and Keynesian economics and attempt to offer concerete and practical solutions to immediate economic problems. Kalecki is famous for having devised many of the ideas of Keynes, before Keynes himself (but was less known in the English speaking world.)He came to these ideas through applying the methodologies of Marxist economics.
Unfortunately many of the ideas of economists such as Kalecki have recently been largely neglected, not least in his native Poland. In light of the present 'Great Recession' in Europe, the Polish left could do a lot worse than return to these works as a way of helping to devise an alternative economic policy for the left.
The article below was written in the perspective of socio-economic life in inter-war Poland. By 1939 around 8m people were unemployed, which equalled a third of the population.
Political Aspects of Full Employment1
by Michal Kalecki
1. A solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme, provided there is in existence adequate plan to employ all existing labour power, and provided adequate supplies of necessary foreign raw-materials may be obtained in exchange for exports.
If the government undertakes public investment (e.g. builds schools, hospitals, and highways) or subsidizes mass consumption (by family allowances, reduction of indirect taxation, or subsidies to keep down the prices of necessities), and if, moreover, this expenditure is financed by borrowing and not by taxation (which could affect adversely private investment and consumption), the effective demand for goods and services may be increased up to a point where full employment is achieved. Such government expenditure increases employment, be it noted, not only directly but indirectly as well, since the higher incomes caused by it result in a secondary increase in demand for consumer and investment goods.