[...] If wages were sufficiently flexible to clear all labour markets, then all firms would pay the same wage for the same work, and all workers could find work (the definition of market clearing). From a worker's perspective, quitting would be virtually costless. From an employer's perspective, commitment to the employee would be useless because they are all replaceable. This would build an unmanageable instability into capitalism, and--as unfortunately little-known economist Michael Kalecki has pointed out--is patently against capital's interests.

As Kalecki puts it, if the labour market ever worked the way neoclassical theory imagines it--if wages were flexible, Say's Law held, and all willing workers found jobs in some orthodox "full employment" dream--then workers would have no fear of "the sack." [...] Full employment would put the workers in charge [...]

In other words, despite any claims to the contrary, capitalism must have unemployment. It is essential to the system's political stability (by disciplining workers) and productivity (by keeping the prodction process in motion). This only further weakens the edifice of neoclassical "market-clearing" theory, because even if unemployment were not in capital's political economic interest, joblessness would persist. [...]

Kalecki's point is not only that full employment is impossible in capitalism, but that any substantial effort to provide full employment--perhaps through the state, or reduced work-weeks--would be aggressively opposed by employers. [...]