… is from page 271 of F.A. Hayek’s 1950 article “Full Employment, Planning and Inflation,” which is reprinted as chapter 19 in Hayek’s 1967 collection, Studies in Philosophy, Politics, and Economics:
Full employment has come to mean that maximum of employment that can be brought about in the short run by monetary pressure. This may not be the original meaning of the theoretical concept, but it was inevitable that it should have come to mean this in practice. Once it was admitted that the momentary state of employment should form the main guide to monetary policy, it was inevitable that any degree of unemployment which might be removed by monetary pressure should be regarded as sufficient justification for applying such pressure. That in most situations employment can be temporarily increased by monetary expansion has long been known. If this possibility has not always been used, this was because it was thought that by such measures not only other dangers were created, but that long-term stability of employment might itself be endangered by them. What is new about present beliefs is the tit is now widely held that so long as monetary expansion creates additional employment, it is innocuous or at least will cause more benefit than harm.
