It’s time to rethink both Keynes and Hayek… and fix unemployment

The International Labour Organization (ILO) estimates there are more than 200 million unemployed around the world, representing 5.9 per cent of the labour force on the planet. More than 19 million live in the euro zone, almost two million more than a year ago. And more than one third come from Spain.

According to the ILO, more than 74 million are young unemployed – 3.5 million more than in 2007 and 0.8 million more than in 2011 – more than 1.8 million of them Spanish. In addition, 30% of the global workforce, 910 million people, fall within the definition of “working poor” of the UN, i.e. individuals who, despite having a job, lives on less than a dollar a day for every member of their families.

This is a huge problem that until now nobody seemed willing to tackle. Each country is trying to leave the crisis behind using its own methods, without realising the deep transformations of the labour market will have unprecedented consequences in society.

The debate is open in the EU. Unemployment has become a chronic problem is some countries like Spain, where the OECD has pointed out the unemployment “will surpass 28% before stabilising.”

The Western world and its ideologists are still holding onto Keynes or Hayek, as more than seventy years ago, and some to Friedman, in search of solutions, as if nothing had changed in the world and globalization was not to change the planet.

Austericide is making the employment situation worse but thinking that keynesianism is going to solve the problems is forgetting that the current situation comes also from Keynes. Since 1930’s he has become the apostle of social democracy without nobody daring to dispute his theory that denied the main dogma of economic liberalism: capitalism works better without interference from the State and market forces can take care of of it whenever there is global competition.

In undeniable that Keynes revolutionized the economic science in a moment of history, although his legacy has not to be analyzed exclusively from the point of view of positivism. It also brought many bad things like huge public debts that almost all countries are suffering or the dangerous phenomenon of the hyperinflation.

Since then – 1936 – 74 years have gone by, the Berlin Wall went down, emerging countries mark the pattern of economic growth, and world trade has transformed ethical concepts, China is “threatening” U.S. world hegemony, there has been an unprecedented technological revolution, the Earth population has increased by 3.5, sovereign debt is monstrous, money circulating around the world is in the hands of a chosen few, and the world has nothing to do with that of the great depression’s, even though we are in another similar hole.

Only a shocking fact: the money supply in the world is 19 times the current value of all properties in the planet.

Perhaps it is time to retire or rethink Keynes and also – why not?- Hayek and seek new formulas that allow to find some light in the ends of the crisis tunnel, where all policies are increasing precariousness, when not to labor slavery. This is much worse than Keynes imagined.

About the Author

Carlos Díaz Guell
Editor at and, Carlos began his career in financial journalism as founding member of El País. He's been communications director of Bank of Spain, member of the ECC at the European Central Bank, Institutional Relations director at Iberia and editor at La Economía 16 magazine.

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