Michal Kalecki, a Polish economist who was a contemporary of
Keynes’ and independently arrived at similar policy conclusions, was
much more skeptical about governments. Time proved him right. In
an article published in 1943, Kalecki argued that even though full
employment would allow business to maximize profits, it would meet
strong political resistance because it would also change the balance
of power in society. First, the need for private investments would
decrease and corporations would become less privileged or influential.
Second, macro-economic management would generate public invest-
ments and enhance the role and prestige of the state. Third, a tight
labor market would improve the bargaining position of workers and
trade unions. In these circumstances, wrote Kalecki, we should expect
less than optimal macro-economic policies, because business and
conservative forces would call for restrictive policies as soon as the
employment level rose, and only in true recessions would workers and
the left succeed in obtaining policies favorable to growth.^30
In the United States, this is precisely what happened after the
Second World War. When he was elected president in 1952, Dwight
D. Eisenhower stressed his belief in private initiative, and made lower
taxes, a balanced budget, and the fight against inflation his utmost
priorities. For eight years, the Republican president pursued these
objectives relentlessly. Even with an inflation rate usually well below
2 percent, Eisenhower privileged restrictive budgetary policies, to the
detriment of employment and economic growth.^31 Expansionary
policies were only implemented after 1961, when the Democrats were
back in strength in the White House and in Congress.^32
The same pattern held in practically every country. Political parties
of the right focused on low taxes, balanced budgets, and low inflation
rates, at the expense of employment, and parties of the left favored
income equality and redistribution, larger government budgets, and
(^30) Michal Kalecki, “Political Aspects of Full Employment,” in Thomas
Ferguson and Joel Rogers (eds.),The Political Economy: Readings in the
Politics and Economics of American Public Policy, New York, M. E. Sharpe,
31 1984, pp. 27–31.
Anne Mari May, “President Eisenhower, Economic Policy, and the 1960
Presidential Election,”Journal of Economic History, vol. 50, no. 2, June 1990,
417–27; Edward R. Tufte,Political Control of the Economy, Princeton
University Press, 1978, pp. 15–18.
(^32) Weir, “Ideas and Politics,” p. 85.
The age of universality (1945–1980) 115