Full Employment: The Ethical Foundation of a Stable Market
For Hyman Minsky, tight full employment is not merely a technical parameter, but a condition for the moral legitimacy of capitalism. A system that systematically denies work to those capable of it loses its claim to normative validity. This article analyzes the concept of the Employer of Last Resort (ELR) as a tool that transforms labor into a medium for dignity and social stability. You will learn how a reorientation of economic policy can permanently eliminate poverty by building a system resilient to financial shocks.
The Logic of Work and the ELR Mechanism: Bottom-Up Demand and Local Needs
Minsky clearly distinguishes the logic of work from the logic of transfer. While welfare benefits only mitigate the effects of poverty, the ELR program strikes at its causes. It is a mechanism for generating bottom-up demand: the state employs low-skilled individuals, causing income to "bubble up," stimulating the real economy instead of speculative booms. Persistent unemployment leads to the degradation of dignity and human capital; therefore, ELR offers three mechanisms for poverty reduction: direct employment, raising the wage floor, and increasing the number of earners per household.
To avoid bureaucracy, the decentralization of ELR is crucial. Projects must respond to local needs, creating real social utility. Consequently, the three pillars of ELR—wages, inclusion, and income stabilization—transform the labor market from a realm of "employer's grace" into a sphere of substantive civil rights.
Demand-Side Keynesianism, the NIT Paradox, and the Role of the Minimum Wage
Traditional demand-side Keynesianism often falls into the trap of inflation and inequality because it fails to correct the structure of employment. Minsky exposes concepts such as the natural rate of unemployment, viewing them as an ideological whip against wages and an institutionalized lack of imagination. In this context, the NIT paradox (Negative Income Tax) shows that cash transfers alone fuel inflation without increasing the supply of goods, which erodes the real value of the assistance.
The minimum wage becomes the foundation of stability. In the ELR program, it serves as an anchor—setting the lower threshold for purchasing power and forcing the private sector to compete for workers through the quality of working conditions. It is the minimum wage, rather than a reserve army of the unemployed, that is meant to ensure price stability and social justice.
Flexicurity, Ordoliberalism, and Funding the Green New Deal
An analysis of European models reveals their limitations. Scandinavian flexicurity focuses on security through activation, while German ordoliberalism emphasizes fiscal discipline; however, both models permit the existence of the "working poor." Minsky proposes a new civilizational compromise, in which the ELR funds the Green New Deal and the care sector. Work in climate adaptation or elderly care creates value that the private market is unable to price.
The condition for success is rigorous bank regulation. Financial stability must act as a shield against speculation, ensuring that the income growth of the poorest is not wiped out by debt crises. The central bank should therefore abandon its fetish for inflation targeting in favor of maximizing the stability of the entire system and supporting full employment.
Summary: Automation and Three Paths of Evolution
In the face of automation and the climate crisis, we are confronted with three scenarios: the logic of fragmented social prosthetics, a technocratic universal basic income, or the Minskyan Job Guarantee. This latter vision restores work to its status as a tool for liberation and agency. Are we ready to define human value through one's contribution to the common good, or will we remain with a system that generates superfluous populations? Minsky's vision is not just about economics—it is a project to reclaim the meaning of social life.
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