Unemployment in a Just Economy
This paper is based on the ideas of political philosopher John Rawls who suggested that a just society is one which would be created behind a ‘veil of ignorance’, without knowing where one would end up in the society’s distribution of talent and other attributes. Today’s labor market does not meet this criterion since risk averse people would not voluntarily enter it at random, being too concerned about ending up among the excluded, i.e., those without full time jobs which today in the U.S. is still 9.6% of the labor force or some 15 million people. Thus, a just labor market would strive for full employment beyond the implications of the natural rate of unemployment. The latter concept is actually misleading, because most economists and commentators in the media equate it with ‘full employment’. Consequently, endemic and large scale underemployment is accepted as an inevitable attribute of the labor market. This is insidious because the concept assumes that the institutional structure of the labor market is held constant. According to Rawlsian principles the aim should be to bring unemployment down to the minimum feasible rate which in the U.S. is most likely around 1.2%, – the rate which prevailed in 1944 and which probably represents an attainable lower bound. Instead of the prevailing system. The right to work needs to be recognized as a natural right, because the right to life depends upon it. Several ways are proposed to create an inclusive labor market that distributes the available work in a more equitable fashion than the current system and envisions a just economy on Rawlsian principles that risk-averse people would be willing to enter at random.