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The Effects Of Post-Industrialism On The Political Economy Of Western

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The Effects of Post-Industrialism On the Political Economy of Western


The Decline of Corporatist Bargaining

The sustained, high economic growth in Western Europe during the post-war period until 1973 led to dramatic changes in the

region's political economy. As advances in transportation and communication extended the reach of international trade into new

areas of the world, as technological advances allowed establishment of manufacturing facilities overseas, and as European real

wages climbed to unprecedented heights, the industrial base that had served as the foundation for rapid Western European growth

in the 1950's and 1960's increasingly moved to Western Europe's poorer neighbors. As the industrial base moved, so did the jobs

of a large quantity of unskilled manufacturing workers who populated the assembly lines.

In recent years, the liberalization of international trade has clearly demonstrated that European industry can no longer compete in

traditional, large-scale industrial sectors. European successes have increasingly come from specialized, high value-added industry

and from intelligent, flexible companies able to shift production quickly to capitalize on movements in world demand.

The net result of these changes has been a transition to a post-industrial society, where the stable economic order of mass

employment in large-scale industry has given way to mass unemployment and a breakdown of the political and social consensus

that held sway throughout the post-war period. These changes have fundamentally altered the Western European labor market.

This paper will show how post-industrialism has dramatically reduced the ability of many Western European countries to deliver

full employment, not simply because of changes in employment structure, but more importantly because those structural changes

have undermined the institutional framework that allowed Western European countries to control prices while pursuing full

employment policies, and have left Western Europeans widely dissatisfied with their political system.

Western European countries demonstrated varying abilities to control inflation and unemployment in the 1970's and 1980's.

Cameron argues that two variables explain much of the differences in economic performance: 1) the presence or absence of

corporatist institutions and practices,1 and 2) the role of leftist, Social Democratic political parties in government (Cameron: 144).

Centralization of labor representation facilitates corporatist bargaining. Conversely, fragemented labor representation makes

agreement difficult. The greater the number of parties, the less likely that they will find a solution palatable to all negotiators.

According to measurements of labor organizational unity by the European Yearbook, countries with the most unified labor during

the 1970's and 1980's, Austria, Sweden, Norway, Germany, Denmark and Finland, were all among the best in Europe at

controlling unemployment and inflation, while the countries with the most disunited labor, Italy, France and Spain, were less


The shift to a post-industrial economy has increased the dissolution, fragmentation and differentiation of the Western European labor market. Most countries have suffered high and remarkably stable unemployment. Unemployment rises during economic

downturns, but no longer seems to recover in a boom economy. Many blame post-industrialism for this phenomenon, complaining that technological improvements have led to a 'workerless' economy. While post-industrialism is a cause of higher unemployment,

the explanation is not that it has eliminated jobs, but that jobs have changed. New industrial jobs have increasingly required specialized technical skill, while the service sector has created jobs for skilled, semi-skilled and unskilled workers.

One crucial difference between the old jobs and the new are that traditional unions played a much larger role in the labor market for industrial jobs than in the labor market for post-industrial white collar and service jobs. Some countries, Sweden for example,

have strong public sector unions that include large numbers of non-industrial employees, but private employees in post-industrial sectors (professionals, managers, skilled and semi-skilled service employees) are less likely to belong to unions than their industrial


Unions face large obstacles to organizing these workers. Many of the new jobs are in smaller enterprises, hindering communication between the unions and prospective members. But the most serious problem is the individualization of the labor

market. The post-industrial labor market is more fragmented than the industrial labor market. Workers increasingly organize in functionally specialized unions and collective bargaining has shifted to the local level(Crook, Pakulski & Waters: 98). Accordingly,

interests among those responsible for negotiating on behalf of post-industrial workers increasingly conflict. Price stability, exchange rate policy and competitiveness have become important to large portions of workers in the post-industrial economy,

often leading them to oppose fiscally expansionary full employment policies.

Governments that value price stability face less pressure to deliver full employment in return and fiscal restraints have decreased the political will to spend



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