Must-Read: Michael Kalecki (1943): Political Aspects of Full Employment : “Most economists are now agreed that full employment may be achieved by government spending…

…There is a political background in the opposition to the full employment doctrine, even though the arguments advanced are economic…. The reasons for the opposition of the ‘industrial leaders’ to full employment achieved by government spending… [are]: (i) dislike of government interference in the problem of employment as such; (ii) dislike of… public investment and subsidizing consumption… (iii) dislike of the social and political changes resulting from the maintenance of full employment….

Capitalists [have] a powerful indirect control over government policy: everything which may shake the state of confidence… [might] cause an economic crisis…. The social function of the doctrine of ‘sound finance’ is to make the level of employment dependent on the state of confidence…. The dislike of business leaders for a government spending policy grows even more acute when they come to consider the objects on which the money would be spent…. Public investment… be confined to objects which do not compete with the equipment of private business… suits the businessmen very well. But the scope for public investment of this type is rather narrow….

The maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. The ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow…. ‘Discipline in the factories’ and ‘political stability’ are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system…

http://delong.typepad.com/kalecki43.pdf