Review of Political Economy at 35

The lead article in the first issue of the Review of Political Economy, published 35 years ago, in 1989, was ‘How to Reduce Unemployment’, by 1969 Nobel Laureate, Jan Tinbergen. The decision to lead with this topic says a lot about the emerging journal and its editor and founder, John Pheby. Then, as now, unemployment was one of the fundamental problems of our capitalist system, as was its inability to provide for those most in need. Indeed, Pressman (2013) expressed this sentiment when commemorating the 25th anniversary of the journal: ‘The first article published was by Jan Tinbergen on how to reduce unemployment, something that remains topical even a quarter century later’ (p. 356) Indeed, the problem of unemployment and how to solve it remains with us in 2023, and it is at the heart of post-Keynesian and heterodox traditions. There is perhaps no worse economic scourge than the inability to work and to contribute to the social project and the community, let alone the inability to eat and have shelter. In fact, post-Keynesians go to great lengths to distinguish markets for commodities from the labour market, as the latter deals with human beings and all their needs. In referring to Alfred Eichner, one of the founders of post-Keynesian economics (see Rochon, this issue), Lavoie (2014, p. 275) remarks: ‘A further difference between the market for peanuts or broccoli and the market for labour is that the former deals with things whereas the latter deals with human beings. This is why Eichner (1986, ch. 4) calls the post-Keynesian approach an anthropogenic approach to labour’ (emphasis added). Contrasting this approach with the mainstream, where unemployment is often treated as a completely flexible adjustment mechanism and thereby often ignored or taken lightly. After all, the mainstream approach to inflation, for instance, recognizes that ‘some pain’ is necessary to fight inflation, as the chairman of the Federal Reserve Board recently acknowledged (see Powell 2022). Its model is predicated on the idea that some or a lot of unemployment is necessary — and even acceptable — in order to bring inflation back to its target of, say, 2 per cent. The model is based on the notion of stability and convergence, leaving very little room for credible and relevant policies. For heterodox economists, however, the deliberate creation of unemployment is never an acceptable policy solution. Economics is much more than simply a study of convergence to equilibrium positions. In fact, we believe in full employment policies, and never accept fiscal or monetary austerity as possible policy options. The real world is not characterized by convergence and stability but, rather, by instability and fragility, suggesting a whole new set of policies. And as Galbraith (2021, p. 67)