In chapter 4, we saw (with the Harrod–Domar model) that full employment of the labor force and full utilization of productive capacity will take place only if natural and warranted growth rates coincide. Achieving this is very difficult, and discrepancies between these two rates would take the economy further away from equilibrium. In chapter 3, I discussed developing Asia's employment record: while some countries have done well and industrialization has led to the creation of employment (e.g., the newly industrialized economies), this is not the case in other countries (e.g., India, the Philippines). In Box 5.1, I argued that growth and structural transformation are related in a circular way: in general, countries become different as they grow, as they produce a different bundle of goods and services, using different inputs and new methods of production. And Marx and Keynes, despite coinciding in various aspects in their analyses of capitalist economies, reached different conclusions about the possibility of achieving full employment ( Mattick  provides an excellent comparative analysis of Marx and Keynes).
In this chapter, I will discuss further obstacles, both political and technical, to the attainment of full employment. Today's developing countries must consider the impact of fast structural transformation—which includes industrialization, substantial reallocation of labor, imbalances across sectors, and technological change (e.g., introduction of new products and services)—if they are to devise sensible policies aimed at eliminating unemployment and underemployment, reducing poverty, and generating more prosperous and inclusive societies (Asian Development Bank 2007b).
I argued in chapter 6 that investment is essential in achieving the full em ployment of labor, and discussed three obstacles to the increase in investment. I argued that a large volume of public investment is needed. However, this solution faces serious political obstacles. Kalecki (1943, 138) asked, “[W]hy do not they [businessmen] accept gladly the ‘synthetic’ boom which the Government is able to offer them?” He argued that “the assumption that a Government will maintain full employment in a capitalist economy if only knows how to do it is fallacious” (1943, 138). Kalecki gave three “reasons for the opposition of the ‘industrial leaders’ to full employment achieved by Government spending” (1943, 139): (i) the opposition against government spending based on a budget deficit and the dislike of government interference in the problems of employment;