The Neglect of Employment in the International Economic Order

Abstract

The post-World War II international economic order obliged the nation-states to conduct their foreign economic policies according to binding rules. As employment continued to be a purely national responsibility of the individual countries, international obligations turned into serious constraints on the pursuit of national employment policies. International agreement should provide the possibility that countries disengage themselves from the restrictive influence of foreign obligations. In addition, international employment policies would be desirable. They should focus on a common commitment to the goal of full employment rather than on concrete policy measures. But broad international strategies, such as the assumption of locomotive functions by strong economies or massive financial support for Third World development, can—depending on various conditions—also be positive.

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References

1. On the question of the transfer mechanism, see Gerhard Graf , “Hypothesen zur internationalen Konjunkturtransmission,” Weltwirtschaftliches Archiv, 111(3):529-563 (1975).

2. In this context it is interesting to note the review of Sir William Beveridge's book Full Employment in a Free Society written by the English economist Austin Robinson in 1945. After discussing Beveridge's various proposals on employment policy, Robinson wrote, “They [the proposals] are not so very different from, nor so very much greater than those with which we failed to defeat unemployment in the 'thirties that one can feel absolutely confident of success. But what, more than anything else was lacking in the 'thirties was an overwhelming national determination to defeat unemployment.”Economic Journal, 55:76 (Apr. 1945).

3. International Labor Organization, Proposals for the Formulations and Implementation of an Asian Manpower Plan, Report 4 (Geneva: International Labor Organization, 1968).

idem, Employment, Growth and Basic Needs: A One-World Problem (Geneva: International Labor Organization, 1977).

5. See François Vandamme , “The Revised European Social Fund and Action to Combat Unemployment in the European Community,” International Labour Review, 123(2): 167-181 (Mar.-Apr. 1984).

6. The best example is the United States, which, because of its import propensity and size, has a profound impact on the activity of other countries. The theoretical discussion of the relationship between size, savings, and import propensity can be found in Martin Bronfenbrenner , “On the Locomotive Theory in International Macroeconomics,” Weltwirtschaftsliches Archiv, 115(1):38-50 (1979).

7. There is a similar problem today with the competition between countries in the provision of large subsidies and tax concessions to attract multinational companies. This results in the multinationals' making big profits, in fiscal problems for the countries involved, and in a shifting of employment from one country to another. It is doubtful that the net effect for the international economy is positive.

8. North-South: A Programme for Survival (London: Independent Commission on International Development Issues, 1980); see esp. chap. 3.