World System of Job Creation

Earlier I sent a post on "world system of health care". Here is another one
on "world system of job creation".

I distinguish between "world system" (or "world-system" with a hyphen) as an
analytic concept (for analyzing what is or was) and "world system" as a
praxeological concept (for designing and creating what will be or should
be). "World system" as a praxeological concept can be further
differentiated. When designing and/or creating a new world system, one may
think of the entire system with all its dimensions or, alternatively, of a
part of it, which may be called a "sub-system" of the world system. Thus one
can speak of a sub-system of health care or a sub-system of job creation
which are parts of the entire world system. Here I use "world system of job
creation" as a shorthand expression for "sub-system of job creation as part
of an all-encompassing world system-to-be-created" (i.e., I am talking in a
praxeological mode, and not in an analytic mode).

Job creation is traditionally treated as a national problem. Most analysis
and policy prescription is done in a national (macroeconomic) frame of
reference. Very old-fashioned! This does not work very well anymore.
Mitterand in France (1980's) tried something like that but could not pull it
off. In my province in Canada, we had a social-democratic provincial
government a decade ago which tried to protect jobs but could not do it.
These examples underline that those world system scholars are right who
point out that nations are but provinces of the world economy and have
realitvely little national power against the forces of the world economy. It
makes sense, therefore, to think of job creation as a *world-system*
problem, rather than a *national* (macroeconomic) problem.

Post-Keynesian economists like Bill Mitchell/Australia and Warren Mosler/USA
have worked out certain schemes for job creation ("employer of last resort",
"BSE" - buffer stock employment model). These they developed for the
national (macroeconomic) level. In my opinion, such schemes can, and must,
be applied at a global level. The models are conforming to market logic and
can thus be considered as a form of market socialism. The amount of public
finance required for such schemes is astonishingly small -- just a few
percent of GDP.

When we apply those notions at the world level, we would have to think of a
Keynesian-type injection of global money into the world econommy of, say, 2%
of global GDP. Let's say we are looking at a global GDP of US $ 40 trillion.
Two percent of 40 trillion is US$ 0.8 trillion. In other words, an injection
of global money of a miserly 0.8 trillion dollars per year would go a long
way to solve global unemployment problems. According to my calculations of
unequal exchange, the less-than-rich countries of the world lose already
twice that much (namely, 1.8 trillion USD per year) due to unequal exchange.
Thus, if the world economic authorities would compensate the loss of global
demand resulting from unequal exchange by injections of global money, lots
of people could have a job who don't have one right now, both in the rich
and the poor countries. According to my "theory of world income" (in the wsn
archive/working papers section), there is a theoretical "global
Keynes-Prebisch equilibrium". In other worlds, the present state of
unemployment in the world is a man-made disaster (like in the depression of
the 1930s) and the world economy could actually function at a much better
equilibrium level (the theoretical "global Keynes-Prebisch equlibrium"),
which would constitute a win-win situation for all parts of the world
economy (i.e., the people).

According to the financial theories of Mitchell, Mosler and other
post-Keynesians, the required (global) public finance for this world system
of job creation does not have to be borrowed by the (global) public
authorities, but can be *created* by them, given certain precautions against
inflation.

In practice, this could be accomplished if the present neoliberal rearguard
of world history ruling at the IMF etc. could be sent into early retirement
and be replaced by a global-Keynesian (or global market socialist) vanguard.
Such new management could also see to it that the injections of new global
money would be used for advancing environmentally sane economics, in
addition to global job creation.

Hony soit qui mal y pense.

Regards,
Gert Kohler
Oakville, Canada