Towards a Structural Solution to Unemployment

Chronic unemployment is a flaw in modern capitalism that calls for reform. Unlike expansionary demand‐management programmes, public works will be non‐inflationary if they put back into the economy in government spending no more than the dollar value taken from the economy in taxes. The spending should be labour intensive while all associated taxing should target sectors and products that are capital intensive. This economic approach is not expansionary/ inflationary but structural: the reforms would shift production in a labour‐using as opposed to a labour‐saving direction, so that it would take more hours of work to produce the same GNP. The pool of workers who are under‐employed and unemployed would supply the required extra hours. First, examines the problems associated with fiscal and monetary approaches to unemployment. Then details the proposed reforms, looks at technical aspects, diagrams and macro‐economic implications, and considers the probable effects on the US balance of trade. The final section considers the critics′ view that an automation tax would be a neo‐Luddite attack on technological progress.