Prosperity Without Welfare

The economic upswing of the past ten to twelve years has come to an end. Full employment, prevalent for most of this period, is now in jeopardy. Though enjoined by law to maintain full employment, the government has deliberately abetted deflationary policies, despite many indications of a serious downturn. It has been guided essentially by financial considerations, and its policies have strengthened purely financial interests. These policies are bound to undermine the substantial gains which a period of full employment brings to the people.

To be sure, unemployment is not likely to reach the magnitude of the thirties. Defense outlays, now scheduled to rise more rapidly again, will prevent that. But this means of solving the question of joblessness highlights the problem of what full employment means in the “welfare state”: persistent and pervasive insecurity as budget funds are cut or shifted without regard to employment effects; and an increasingly irrational and wasteful allocation of the fruits of productivity.

The first phase of the worldwide economing upswing of the past decade came from the reconstruction and pent-up consumer needs arising from World War II. The second phase, though beginning i...