Historical Perspectives and the Interpretation of Unemployment
JN THE LAST DECADE, the levels of unemployment in industrialized countries have risen dramatically. Rates now are typically two, and in some cases, three and four times those prevailing in the 1950s and 1960s. The fact that these new higher levels are widely tolerated suggests that our thinking about the meaning and significance of unemployment has changed enormously over the period. Such a change is certainly present in the thinking among professional economists. In the 1960s the standard view was that the unemployed represented unutilized resources; their existence in an economy where the vast majority of people had unsatisifed wants was seen as a major social paradox and the most important unsolved intellectual puzzle of the capitalist economic system. This fed the rationale for Keynesian countercyclical fiscal policy and government deficit spending: The government could reasonably print money in order to hire the unemployed because the resources absorbed in the process were essentially "free goods." Today, a good number of professional economists, certainly in the United States but to a lesser extent throughout the world, have come to view measured unemployment in industrial economies as an artifact in at least three senses. It is a statistical artifact of a measurement process that classifies as unemployed people who are not really available for work. It is an institutional artifact of a system of social insurance and public welfare that encourages an extension of the process of job search. And it is an artifact of the language that uses a term which in everyday parlance means forced idleness for activities that have important productive functions akin to the functions of inventories, information processing, and investment associated with the utilization of capital goods. These interpretations to be sure hardly constitute a consensus about the meaning of unemployment. But they are no more diverse than the range of views that underlay the older orthodoxy. And for policy makers and economic researchers, they carry a single message: There are many more serious problems toward which to direct attention. These new views about unemployment were developed out of a set of ideas originally associated with the Chicago School of economics, where the emphasis-at once positive and normative-was placed on the competitive market as the gover* A Review of Alexander Keyssar, Out of Work: The First Century of Unemployment in Massachusetts. Cambridge: Cambridge University Press, 1986 and Robert Salais, Nicolas Baverez, and B6nedicte Reynaud, L'invention du chomage: Histoire et transformations d'une categorie en France des annees 1890 aux annees 1980. Paris: Presses Universitaires de France, 1986.