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In general, the literature on the developmental state studies Asia and Latin America, not Scandinavia. This article examines the developmental character of the state in Sweden, distinguishing it as a specific case, because its institutions and policies combine the simultaneous promotion of industrialization and social equity. The paper analyzes the...
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... The Rehn-Meidner model of wage solidarity is perhaps one of the best-regarded government programs that used industrial policy to, in part, also give unions leading roles in economic transition. Rehn-Meidner was a comprehensive economic and wage policy program in Sweden (Erixon 2021(Erixon ) that started in 1951(Erixon to 1952(Erixon and prevailed until 1983, when some of Sweden's white-collar unions withdrew from the plan (Quintas and Ianoni 2021). It aimed to promote full employment while curbing inflation (Erixon 2021). ...
... It promoted efficiency and tried to improve Sweden's economic performance by combating inflation and compressing wages (Hibbs and Locking 2000). The policy expressly favored capital concentration in large corporate entities that were "highly competitive internationally" (Quintas and Ianoni 2021). Rehn-Meidner thus picked losers and winners. ...
... As described by Felipe Quintas and Marcus Ianoni (2021), two contemporary students of the Rehn-Meidner system: "The [Rehn-Meidner] plan operated an economic policy of artificial selection of companies so that only those that favor accumulation, social welfare and competitiveness in international trade would survive." ...
... In a complementary manner, there was a targeted credit policy for R&D projects based on the fund composed of extraordinary profit taxation. Furthermore, in the late 1960s, the Government also began subsidizing long-term credit for export companies from underdeveloped regions through state credit companies created for this purpose (Quintas and Ianoni 2021). ...
Minsky (1965) has presented the Job Guarantee program as a recommendation in the war against unemployment and poverty. Kalecki (1943), on the other hand, argued that the full employment situation could be technically feasible but politically hard to implement due to the class struggle, resulting in what we will refer to as the "kaleckian dilemma". Based on this contradiction, this paper aims to extract lessons from the Rehn-Meidner Swedish plan, which successfully combined low unemployment rates and creeping inflation for over three decades, as a means to study the chances of a Job Guarantee overcoming the kaleckian dilemma. From these lessons, this piece highlights the importance of a tripartite council bargaining board at the national level to settle the Job Guarantee's wage level. In addition, we highly recommended other desirable features, such as international capital control and taxation on extraordinary profits, to raise the chances of the program successfully dealing with the kaleckian dilemma, just as Rehn-Meidner did.
This study begins by addressing the instability of the capitalist system to examine ways of achieving full employment in terms of distributive conflict viability. Drawing on the theoretical frameworks of Minsky and Kalecki, the focus is on Minsky's proposal of a Job Guarantee Program as the subject of study and the guiding thread throughout three chapters, along with the introduction and conclusion. Each chapter employs different methodologies to investigate how to mitigate escalating conflict at full employment and make it less unstable.
The chapter that follows the introduction is dedicated to studying the risk of the Job Guarantee Program triggering an inflationary spiral through distributive conflict. In this analysis, we draw upon segmented labor market literature to investigate the transmission mechanisms that lead from full employment to inflation. On the one hand, we separate the labor demand by firms in the primary market from those in the secondary market. On the other hand, we differentiate high- and low-skilled labor supply. Based on this segmentation, we identify that the transmission channel from full employment to inflation will be more constrained if the Job Guarantee Program can concentrate labor demand on candidates in the secondary market and low-skilled workers. Thus, by applying this observation to an established inflationary spiral model from the literature, we highlight the potential of the Job Guarantee Program to restrict the mentioned transmission channel.
The third chapter adopts a Stock-Flow Consistent approach to simulate different scenarios of full employment in a peripheral economy. In addition to a conflict-claims inflation model, we incorporate equations that help us understand the impact of the external sector and various institutional agents such as households, firms, banks, the Central Bank, government, and the rest of the world. The simulations compare the same economy being driven to full employment under two different scenarios: traditional demand spurs and the Job Guarantee Program (JG). Based on the parameters used in the simulations, due to the fact that all the fiscal stimulus of a JG goes straight to the labor demand, this Program is capable of employing the entire labor force with less demand effort compared to traditional spurs. As a result, the lower fiscal stimulus leads to lower income growth that attenuates the impact on the balance of payments, exchange rates, inflation, and distributive conflict. The model suggests a trade-off between growth and balance of payment constraints that peripherical countries have to deal with. However, it is also shown that the JG program deals better with this trade-off regarding distributive conflict and external sector constraints under the full employment situation. Therefore, we also evaluate the effects of reducing the degree of financial openness and find results that emphasize the crucial importance of an international capital control policy as a necessary condition for maintaining full employment in these economies within the International Monetary System's periphery.
Finally, in the fourth chapter, we address the political aspects of full employment and examine an economic plan from post-World War II Sweden as a significant laboratory from which institutional lessons can be drawn to consider full employment in the present. At this stage of the thesis, the focus is on the Job Guarantee Program as a "path to full employment," which can partially address the Kaleckian dilemma. This dilemma, considered a paradox in Kalecki's thinking, highlights the political difficulties of implementing and maintaining full employment despite acknowledging no technical barriers to achieving it. In this regard, the chapter provides a review of the main Swedish institutions identified in the studied economic plan and lists which ones could be replicated by the institutions advocated in the current literature on the Job Guarantee Program. Based on this review, we suggest three new institutions to be implemented alongside the Program to reproduce some of the results of the Swedish plan: 1) Wage cooperation policy, 2) taxation on extraordinary profits, and 3) control of capital flow.
In conclusion, this thesis demonstrates that achieving full employment in a peripheral economy is not a trivial task and depends on the adoption of a series of prudent measures outlined throughout the work. The primary contribution lies in the mapping of potential areas of attention to enable economic policy to achieve and maintain full employment in a perihepral economy.
A Teoria do Dinheiro Moderno (MMT) surge para preencher a lacuna deixada por Minsky sobre como financiar um programa de garantia de empregos. O presente trabalho apresentou tal teoria a partir de seus três pilares – moeda cartal, finanças funcionais e programa de garantia de empregos – para não só trazer as críticas heterodoxas à MMT, mas também organizar as respostas apresentadas pela abordagem da MMT aos seus críticos. O objetivo deste trabalho é tanto contribuir para a organização do debate como também delinear o caminho das respostas que a abordagem da MMT ainda precisa pensar, dentre as quais destacamos: as institucionalidades jurídicas fiscalmente funcionais e o desenho de políticas econômicas que amenizem a restrição externa e compatibilizem a manutenção do pleno emprego com a estabilidade da inflação.
