In conclusion it needs to be emphasized that economic activity is people producing land or services, exchanging them for medium of exchange and then using the medium of exchange to purchase consumer goods. Purchasing consumer goods puts the the medium of exchange back in the hands of producers and the cycle repeats.
As long as people place themselves on the labor market, there is demand for consumer goods. This demand is simply people deciding that they need land or services that they do not have but need to acquire. Since they are not self-sufficient nor have sufficient assets to sustain themselves, they need to sell what specility labor skills they have to obtain the goods and services they want. Unemployment defined as people willing to work at the market price means that there are serious inefficiencies in the labor market.
This view clearly rejects the ideas that changes to propensity to consume or insufficient investment are the reasons for unemployment, but accepts the idea that sudden increases in unemployment are a monetary phenomenon caused by fractional reserve banking and the series of unsustainable promises that it builds up.
Significant changes in consumer tastes, usually brought about by technical advances also bring about unemployment as the skills to make the items no longer wanted by consumers are no longer in demand. This form of unemployment can usually be handled by retraining and diverting new labor participants to the newly needed skills and people gradually leaving the old production process labor pool due to retirement or finding better paying work. Most people have multiple skills that can be used in a variety of production functions.
The vast array of production functions available, provide a wide range of land and labor combinations that produce similar products and services. It is the role of entrepreneur to pick the ones that provide the most profit for himself and his investors, given the existing configuration of land and labor, and consumer demand. This profit seeking will drive the economy to the highest standard of living possible given the existing state of land, labor and production processes and guide inventors and design professionals to create new production processes that can continue economic progress.
Unemployment needs to be resolved by adjusting wages and land prices to a new set of sustainable promises based on production functions that combine labor and land to produce goods and services now in demand. Clearly modern technology can help bring this process to completion quickly by using the power of automation to provide transparent exchanges for labor, land and production functions.
Public policy should be devoted to protecting the citizens from those who initiate force and fraud, providing sound rapidly enforced contract law fair to all parties and allowing commodity medium of exchange to be contracted for as payment for all debts public and private.
Certain types of insurance for events that have considerable adverse selection characteristics may need to be mandated based on democratic consensus, so that a catastrophic event such as illness or accident doesn't devastate an individual and his or her family, and that individuals provide for their care in old age not becoming a burden on their families and society at large.
Copyright 2014-2019 Richard A. Cornell, PE