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Full employment reloaded. Welfare state and full employment between Constitution and Economics
Full employment reloaded. Welfare state and full employment between Constitution and economics
The paper summarizes the evolution of the welfare state concept and its link to economic growth and full employment, along a complex itinerary running for more than a century, from the work of Adolf Wagner (1878) to James Meade’s proposals (1989, 1995). The overview focuses on the theoretical links of the first experiments of the welfare state with the foundation of welfare economics (Pigou, 1920), the establishment of the concept of human capital (Knight, 1944; Schultz, 1961) and the systematization of the welfare state design offered by Beveridge (1942). In the same years, the full employment goal is affirmed as achievable (Keynes, 1936; Beveridge, 1944; Roosevelt, 1945), meanwhile the Italian Constitution (1948) proposes a major advance, affirming full employment as a substantive freedom. With the end of Bretton Woods (1971) and the oil shocks (1973, 1979) stagflation spreads to developed economies, and both the welfare state and full employment face a setback. Wagner’s law finds a more evolved expression in the Laffer curve (1974), while monetary policy becomes restrictive and full employment has to give way to the Nairu (Modigliani and Papademos, 1975; Tobin, 1980). This is the climate in which Meade proposes a new and vital link between the welfare state and full employment: a proposal in which worker shares combine with topsy-turvy nationalization, and public credit with the social dividend. A proposal out of the box, but worth reflecting on in depth