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SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR RELATIONS IN DECO CDUNTRIES : FROH TIE FORDIST •GOLDEN AGE• TD CDNTRASTED NATIONAL TRA1ECTDRIES Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations", J. SCHOR Ed •• , This paper has beneffted from the comments gathered durfng the seminar held in Harvard University on March 11-12, 1989.

SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

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Page 1: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

SEPTEMBER 1990

N- 9020

TIE CAPITAL LABOR RELATIONS IN DECO CDUNTRIES :

FROH TIE FORDIST •GOLDEN AGE•

TD CDNTRASTED NATIONAL TRA1ECTDRIES

Robert BOYER

CEPREMAP, CNRS, E.H.E.S.S.

142 Rue du Chevaleret 75013 Paris (France)

Contribution to the WIDER project on "Capital Labor Relations", J. SCHOR Ed •• , This paper has beneffted from the comments gathered durfng the seminar held in Harvard University on March 11-12, 1989.

Page 2: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

TIE CAPITAL LABOR RELATIONS IN OECD. COI.MTRIES : ·FROH TIE FORDIST .GOLDEN AGE• TO CONTRASTED NATIONAL TRAJECTORIES

·Robert BOYER

ABSTRACT This paper reviews the transformations of capital labor relations from the

f1ft1es to the early Nfnetfes for e1ght OECD countr1es : Austrfa, France, Italy, Japan,

Sweden, United Kfngdom, United States and \lest Germany. In most countries a genuine

fordist compromise took place : workers accepted mechanfsatfon and labor division

against a new wage formula and the implementation of a welfare system. This specific

capital labor played a major role in the golden age, and has promoted a hfgh and rather

stable growth. Nevertheless, various national configurations, with significant

differences in work organization and industrfal relations were observed. This

international and natonal growth regime seems to have broken down after the Seventies,

and this demise of the fordist capital labor relations has trigged drastic changes on

labor organizations, work process, wage formation, welfare. It is argued that these

transformations are very likely to be structural and far reaching for social

integration and economic dynamics. The contours of alternative capital labor relations

are then presented: toyotist, kalmarist, Saturnian •••• Basically two strategic choice

are opened. First will the information technologies be used in order to control workers

or on the contrary will their committment and skills enhance these technological

opportunities? Second, at what level will wage bargaining take place: within the

firms, the sectors, the whole economy? Each country seems to followadifferent path.

Instead of one best way, very contrasted nat iona 1 strategies, a long long run

trajectories, seems to be competing fn spi te of the deepening of international links via

trade, production and finance. Converging economic pressures do not mean necessary the

convergence towards a unique capital labor relation.

LE RAPPORT SALARIAL DANS LES PAYS DEL 'OCDE : llJ FORDISHE A LA COEXISTENCE DE TRAJECTOIRES NATIONALES CONTRASTEES.

Robert BOYER

RESUHE L'article ·passe en revue les transformations du rapport salarial depuis les

années cinquante jusqu'au début des années quatre-vingt pour huit pays de l'OCDE :

l'Autriche, la France, l'Italie, le Japon, la Suède, le Royaume-Uni, les Etats-Unis et

l'Allemagne. Fondamentalement, intervint un compromis original : les salariés

acceptaient division du travail et mécanisation en contrepartie d'une

contractualisation des salaires et de la constitution de la Sécurité Sociale. Ce

rapport salarial semble avoir joué un rôle déterminant dans la rapidité et la relative

stabilité de la croissance de l'après guerre. Néanmoins on observait dès les années

soixante de notables différences nationales en matière d'organisation du travail et de

relations professionnelles. Cette symbiose entre le rapport salarial fordiste et le

modèle de croissance a été remise en cause, à partir des années soixante-dix, du fait

d'une série de changements structurels affectant l'économie internationale, la

finance, la technologie. En conséquence, l'organisation du travail, la formation des

salaires, la couverture sociale se sont progressivement transformées, au point de

désigner un changement structurel et durable du rapport salarial. Il est alors passé en

revue une série d'alternatives au rapport salarial fordiste : toyotiste, kalmariste,

Saturnien, •••• Entreprises, gouvernements et syndicats font face à deux choix majeurs.

D'une part, faut-il utiliser les nouvelles technologies, en particulier de

l'information, pour continuer la logique antérieure de division du travail ou au

contraire le relèvement des qualifications et l'implication des salariés constftuent­

ils le préliminaire à l'efficacité des nouvelles technologies ? D'autre part, à quel

niveau devraient se négocier les nouveaux compromis : la firme, la branche ou l"économie

toute enitère ? Il ressort que les divers pays ont donné des réponses différentes à ces

deux questions de sorte qu'ils explorent une série de trajectoires nationales

contrastées. Aussi, en dépit de la globalisation financière et de

l'internationalisation des marchés et de la production, il n'est pas évident que les

pays de l'OCDE convergent vers une seule et même configuration du rapport salarial •

KEYtlORDS : -Capital Labor Relation, Fordism, \lage formation, Labor market deregulation,

Collective Bargaining, Unions. HOTS CLES : Rapport Salarial, Fordisme, Formation des Salaires, Négociations

collectives, Syndicats, Crise. J.E.L. CLASSIFICATION SYSTEH: 110 - 120 - 820 - 830

Page 3: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

iHE CAPITAL LABDR RELATIONS IN DECO COUNTRIES : ·FIDf TIE FORDlST .GOI.ŒN ASE. ·10 .CONTRASTED NATIONAL TRAJECTŒIES

Robert BOYER

SUHHARY

1 - A CRUCIAL ISSUE FOR THE NINETIES •••••••••••••••••••••••••••••••••• 1

II - THE CAPITAL LABOR AND THE GOLDEN AGE IN RETROSPECT ••••••••••••••• 4 1. The Fordist compromise in historical perspective •••••••••••••• 4 2. The four pilars of the capital labor nexus •••••••••••••••••••• 7 3. One model, many national brands ••••••••••••••••••••••••••••••• 13

III - THE BREAKING OOWN OF THE SEVENTIES : EVIDENCES AND INTERPRE-TATIONS. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 18 1. A brief priodisation: four acts drama ••••••••••••••••••••••• 18 2. Quite all the components of the Fordist Capital Labor are

a 1 tered. • • . . • • . • • • • • . • • • . • • • • • • • • • • • • • • . • • • • • • • • . • • • • • • • • • • • • 23 3. The consequence of adverse and converging pressures~········· 31 4. Micro and macro-corporatisms fare better than other

industrial relations ••••••••••••••••••••••••••••••••••••••••• 35 S. Slow but far reaching structural changes ••••••••••••••••••••• 38

IV - NEW CONFIGURATIONS FOR THE NINETIES •••••••••••••••••••••••••••••• 43 1. A typology for alternative Capital Labor Relations •••••••••••• 43 2. Two strategic choices ••••••••••••••••••••••••••••••••••••••••• 47 3. Four national trajectories •••••••••••••••••••••••••••••••••••• 51 4. European hybrid system: France, ltaly, United Kingdom

V - CONVERGENCE THEORY REVISITED •••••••••••••••••••••••••••••••••••••• 36

REFERENCES ••••••••••••••••••••••••••••••••••••••••••••••••••• , • • • • • • • • 47

Page 4: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

1

I - A CIUIAL ISSUE FOR TIE NINETIES

During the Eight ies, many observers have been convinced that an

exceptional era was over and that firms, unions andgovernments were groping

in the search of new organizational forms. The previous research by WIDER CS.

MARGLIN and J. SCHOR Eds (1990)) has convincingly argued that the arrangement

built after second world war are now challenged, due to a converging series of

pressures originating from the international system, the impact of product

and process innovations, the sharpening competition and shift in economic

po 1 fc ies.

More precisely ft turned out that the post World War Il capital labor

relation had generated rising difficulties in gettfng productivity

increases, whereas a close full employment had strengthened the bargaining

power of unions, bath at the level of the firrns and of government econornic

polfcies. A macroeconomic .oriented analysis has shown the likelihood of a

structural crisis of the very accumulation regime built on this specific

capital labor relations, labelled as Fordist. The present paper follows up

these resu 1 ts and invest igates more close ly the ma in f eatures of these

original institutionnal arrangements, try to characterize the basic

transformations occuring during the last fifteen years, and finally delineate

not one but several alternatives to post World War Il capital labor

relations.

This fs first a very necessary, even if dffficult, task. Prev1ous long

run historical studies have evidenced that the capital labor relation ts a

very basic instftutionnal forms withfn capftalist economies. Basfcally, ft

integrates workers wtthin society, whereas it brings constraints, incentives

and therefore regulatftfes into ffrms strategies. Consequently, the capital

labor relation links decisions at the micro- leve 1 with key features of the.·

accumulation regime at the aggregate level. Each area of capftalfst hfstory

has relied upon a specific configuration of the productive process and the

life style of workers. 'If such a statement stfll hold for modern economies,

then investigating post Fordist labor institutions constitutes an essential

Page 5: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

2

part of any prospective view. A previous international comparison has already

tried such an exercise for EEC countries and got some propective scenarii CR.

BOYER Ed. (1988b>>.

Can such an anlysis be carried meaningfully at the level of OECD

countries ? Opposed answers can be put forward. On one side, this

geographical area 1s indeed congen1al to the surge and demise of Fordism : 1t

was 1nvented and progessively implemented -not without contradictions and

major unbalances- 1n the United States, since \l\11 ; after 1945, quite

consciously in most cases, the Fordist model was exported to Europe and

Japan, and spread all over OECD countries. Consequently, a rather large

homogeneity was created due to the adoption of the same production and

consumpt1on norms and the adhes1on to the international order created under

Pax Americana. Seen ,rwm out6Lde, for instance Latin America, South Asia or

Africa, striking similarities emerge among large or medium size OECD

countries. This legitimates the wr1ting of a paper covering at least e1ght

advanced economies : Austria, France, Italy, Japan, Sweden, United Kfngdom,

United States, \lest Germany. Another chapter of the present book is devoted

to the Japanese capital labor relations, with some comparisons with the

Ameritan and the British cases (8. LAZONICK ( 1990)).

On the other si de, 6een ,riom wLthLn a.d.va.n.ced ca.pLtalL6t cou.n.th.i.e6,

many important differences and possibly diverging patterns emerge. Given the

rising number of comparative case stud1es, the unicity of Fordist capital

labor relation can no more be maintained. Clearly, the work organizationand

collective barga1ning are not at all the same in the United States and Japan :

the discoverer of Fordism has been imitated by a brillant followerwho seems

to have superseded American standards and invented a new configuration for

scientffic management. This might explain why Japan is analysed with more

details by a special chapter (8. LAZONICK (1990)). Similarly, German and

French trajectories which used to look so similar during the golden age, now

appear as rather contrasted, as far as capital labor organizat1on ·1s

concerned. A comparison of Italy w1th UK suggests that beneath rather close

macroeconomic achievements, quite different industrial and labor

organization are operating. Finally, even within the so-called social

democratic countries, Sweden and Austr1a exhibit rather distinctive features

Page 6: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

J

in industrial restructuring and labor market functionning and. policies.

According to this kind of evidence, dealing OECD countries as a whole, would

be basically erroneous.

This paper attempts a very uncertain compromise between these two

conflicting views. Instead of aggregating OECO within the group of advanced

capitalist countries, 1t provides an analysis upon eight significant national

examples, according to a common set of questions, hypothesis, and methods :

the variety of national strategies reveals the diversity of new capital labor

configurations which could replace the Fordist compromise. Simultaneously,

the analysis will run from understanding the past towards englighting some

possible future recompositions.

In a first step, the typical Fordist compromise and its four major

components are presented, but the existence of various nat iona 1 arrangements

will be stressed upon CIi). Then 1t is argued that these institutionnal

arrangements have been challenged, circumvened, destroyed or significantly

altered during the last two decades. These changes are more structural and

far reaching than short run and transitory : an impressive serfes of

pressures are shapen1ng aga in a 11 the components of Fordist capita 1 labor

nexus CI II>. Contrary to that suggests many bestsellers in the management

literature, these transformations do not take place a long a broad and clearly

designed avenue: the very succession of managerial fads, the alternance of

opposite strategies from firms to governments suggest that this process is

multiform, difficult to grasp with, contradictory arid uncertain.

Consequently, any relevant analysis has to carefully sort out between basic

and far reaching innovations, backward looking and somehow archaîc strategies

and finally continuities and hysterisis phenomena. In fact, comb1n1ng these

contradictory factors deliver a series of major configurations for present

and probably future capital labor relations CIV). To investigate the factors

shaping contrasted national trajectories 1s a challenging task for further

investigations CV).

Page 7: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

II - TIE CAPITAL LABDR NIJ TIE GOLDEN >DE IN RETROSPECT.

Such a productive roundabout fs necessary, even 1f ft makes the paper

somehow longer and apparently dfstract us from the main concern about the

future of the capital labor relation nexus. Gofng back to the foundation of

the golden age helps in understanding the orfgina lity of the Eight fes­

Nfnet ies, while this fntroduces a very important notion, that of national

trajectories a long the same basic Fordist model. In order to fnvestigate thfs

issue, it was out of the scope of the present paper to study a 11 OECD

countries. Instead, for all empfrical purpose, eight have been selected for

their diversity: four EEC countrfes CITALY, France, Germany, UK) Japan, US

and two social democratic countries CAustrfa, Sweden).

1. THE FOROIST COMPROMISE IN HISTORICAL PERSPECTIVE.

Of course long run trends seem to rule the capital labor relation

CCLRL Ffrst, the wage-earners tend to have a larger and larger share among

the workfng population. Nevertheless, during structural crises, for example

the interwar period, self-employment appears agafn as an alternative to

dep~ndant labor. Second, the struggle for the control over labor process and

the stimulus of compet it ion urge capf ta l ists to mechanf ze and replace

individual know-how by machinery or control procedures within the firm. But

there are exceptions, for example fn Japan and West Germany and they wfll play

a role in the discussion of post fordist trajectories. Third, recurrently,

workers and their collective organizatfons are fighting for gettfng better

wages and working conditions. Therefore, for each epoch, prevails a form or

another of tacft or explfcit compromises upon the rules governing the CLR.

For some authors CR. BRENNER ( 1988), M. BERNSTEIN ( 1988)) such a steady

evolutfon fn technologies and institutions would induce an economfc dynamic:

ftself continuous.

The "régulation" approach has challenged this conception, since long

run economi c laws are far from evident and st 111 more because even apparent 1y

Page 8: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

slow alterations m1ght finally induce major changes in the accumulation

regime or regulation mode. For example, catastroph theory and non linear

dynamical systems conv1ncingly argue that small changes in initial conditions

might unfold diverging dynamical patterns. The argument is still reinforced

for social and economic systems in which innovations and conscious or

unintended institution building induce new collective and individual

behaviours as well as macroeconomic regularities. This seems to have been the

case after WII : major transformations 1n the world system, monetary and

state management, and changes in the forms of competition and CLR have

launched a brand new avenue for advanced capitalist countries CM. AGLIETTA

(1982), R. BOYER, J. MISTRAL (1978), A. LIPIETZ (1983)).

The catastrophic evolutions of the Thirties, the large distrust

towards pure laisser-faire strategies, the major transformations of

technology, social organizations and State interventions occuring during the

war put on top of the agenda the design and implementation of a genuine CLR.

An unprecedented conjunction of political and social forces led to this new

order. In spite of unescapable and sometimes violent conflicts, all political

parties and social groups did accept building again or modernizing the

national economies. New managers replaced old malthus1an entrepreneurs, more

open to social and technological innovations. In some key sectors,

nationalized firms have been playing an important role in this paradigm

shift. From the side of labor, the aggiornamento is impressive too: de facto

if not de jure, the unions and the1r · constituents accept Scientific

Management methods, which they previously used to fight in ordèr to black. ln

ex change, they demanded and got the pr 1 ne i p 1 e tha t wage-earners wou ld benef 1 t

from such a New Productive Deal, via direct wage increases. ln this process

the State took a major place 1n foster1ng these Fordist agreements, whereas

it helped in capital accumulation via adequate public infrastructures

spend i ng, a perm i ss 1 ve cred i t and mone tary po 11 cy and of course a new

counter-cyclical economic polie.Y, legitim1zed by keynesian theory CR. BOYER

C1990b)). Finally, the collective side of labor force reproduction in fully

deve l oped cap i ta 11 st envi ronment was recogn i zed by a k 1 nd of Beveridge

Welfare State CCh. ANDRE, R. DELORME (1983)).

Page 9: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

TABLE 1 THE FOUR PILARS OF THE FORDIST CAPITAL LABDR RELATION CFCLRJ

COUNTRIES UNITED UNITED WEST-

COMPONENTS AUSTRIA FRANCE ITALY JAPAN SWEDEN KINGDOM STATES GERMANY

OF CAPITAL _LABOR RELATION ..

1. MECHANIZATION OF MANUFACTU-RING: 1969-1973

(1) Labo~ pr?duc\1ï1ty > - 6, 1 4,0 6,8 - 4,0 3,3 4,0 per our var a 1on 1n i

(11) ?utput capital )at1o - 0,3 - 2,0 - 3,8 - - 0,6 1 ,0 - 2,0 · var1at1on 1n i

2. THE DIVIDEND OF PROGRESS FOR LABOR A WAGE ELASTICITY w.r. to : ( 1) Pr1ce 0,97 0,94 0,96 0,93 n.a. 0,99 1, 01 0,99 (11) Product1v1ty n.a. 0,4 0,33 0,25 n.a 0, 1 0,30 1,20

< 1 ,2} (3,5} ( 1 ,2) < 1 ,5) (3,8) (6,2) 0-,

3. CONNECTIVE BARGAINING \l~ge rate d1spprs1on ( oeff1cfent o yar1at1on

fn percent 21 12 8 29 8 17 22 12

4. THE WELFARE AND KEYNESIAN STATE Share of collective red1s- 41,3 38,3 37,8 22,4. 44,7 40,6 30,6 41,5 tr1but1on fn GNP (j}

fn 1973

Sources : Une 1 : A. GLYN (1989} "Prodyct1v1ty and the cr1sfs of Ford1sm" M1meograph Barcelone, June 1988. ·. Tables A2 to A7.

Une 2 : < 1> OECD < 19~6) "Fl9><1b111Jl f"d La~our M11rket" p. 17. . (11) J. LE Dt~ ~~l~P!'J~·M ~T~ÂE t1988~0RET (19é6J, p. 24, P. ARTUS (1983}, M. JUILLARD (1988),

L1ne 3: B. RO\lTHORN (1990}, Table 1.

Page 10: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

7

The CLR was an essent 1a 1 part, but a part on ly, of th.lb foll.d.lbt

Beue~ld.ge-Keyn.ebla.n. comp'1.0ffll6e. Basically the bargain could be presented as

f o 11 ows : on one s ide , managers and fi rms ho 1 ders were recogn i zed the 1 ead 1 ng

role and initiative in organizing the productive process and making the

strategtc choices about markets and 1nvestments. On the other side, the

unions were struggling for getting the major share of the productivity

increases, associated with the diffusion and maturation of Fordist production

methods and consumption and life styles (Figure 1). It can be shown that a

rather coherent accumulation regime has been built upon this genu1ne social

compromise <M. AGLIETTA (1982), H. BERTRAND (1983), R. BOYER C1988a)).

The general acceptance of scientific management, associated with the

backlog due to WI generally enhanced a tremendous increase labor

productivity. Collective agreements usually set wage increases according to

expected productivity achievements, whereas labor conflicts focus upon wage

demands • Consequen t ly, rea 1 wage speeds up and a 11 ows typ ica 1 wage earners to

buy and benefit from mass produced goods (cars, home appliances, homes ••• ).

In turn this .spurs consumpt ion goods production, which cal ls for new and

modern equipments. Therefore a virtuous spiral of cumulative growth, once

init 1ated tends to perpetuate from per1od to period, provided that the

1ndexing of wage with respect to productivity is neither too low nor too high

<R. BOYER Ed. C1988b)). The 1mplicit compromise upon income shar1ng allows

stable and high profits, a basic condition, along with buoyant demand for

accumulation to be sustained.

2. THE FOUR PILARS OF THE CAPITAL LABOR NEXUS.

In retrospect, the main features of Fordist capital labor relation

CFCLR) are c lear enough. Just by contrast with the Eight 1es, the roaring

Sixties have been built upon four major founding princ1ples <Table 1).

• A d.eepenln.g ln la.bo~ dlulblon has been a distinctive feature of post WII

era. On one side, a clear distinction between conception and execution,

production and sa 1 es, marketing and finance and so on ••• a 11 ows an un

precedented technical and social division of tasks, within the original

Page 11: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

FIGURE 1 : THE FORDIST HYPOTHESIS IN A NUTSHELL

THE FORDISH CAPlTALILABOR RB.ATlON CFCLRJ

Large division or labor

- Specialized Equipment - Mass Production of Slandardized

goods ..

Rather strong Unions

,

H

..

~ Strong

~

accumulation

-

- Large -

The disputes fucus on wages

product1vily gains

Hlgh profil level

~ Real wage increases

per111l

~ Cànsu11pltoh

sector dynàmbm

Need for Eqtit1>11ent

Cl,

Cap 1ta 1 good Seclor dyna11is•

Page 12: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

land of Fordtsm, i.e. the manufacturtng sector, but in all the related

tertiary sectors. Within the plant, specialized equipment are designed in

order to embody the larger technical knowledge possible, the assembly tasks

requiring a very low grade of education ànd skilling. Basically, the

Fordist pr1nc1ple of mass production of very standardized good sets the

pace in industrial organization.

This is the modern method for reaping increasing returns to scale in

Adam SMITH tradition, given the technical opportunities and the social

·compromise of the post WII era. Therefore, labor productiv1ty experiences

an unprecedented rate of growth, in most OECD countries, with the exception

of US, for which a large continuity prevails over a century (A. MADDISON

( 1982)). During the 1969-1973 last Fordist boom, even United Kingdom

exhibited very high productivity and growth rates {Table ·1, item 1). But

this achievement has a cost : in most countries, capital deepening is such

as to propel a decline in the output capital ratio <A. GLYN (1988)).

• A comprtamLH a.bout prtOdu.ctLuLty 6hah.Ln.g is guiding wage formation, at odds

with previous compet1tive mechanisms accordingwhich labor scarcitywas the

major factor for real wage dynamic. First, the pressure by unions and

workers in order to get an indexation with respect to consumer prices is

actually taken into account, either by explicit clauses within collective

agreements, or by the formation of expectations about an inflation which is

now a permenent feature of Fordist growth (J.P. BENASSY, R. BOYER, R.M.

GELP I . ( 1979)) • Conceptua 1 ly, af ter W. W. II wage i s no more a pure market

variable sfnce it takes int.o account a minimum standard of living. Second

and s t 111 more th 1 s wage i s then var i ed accord i ng to the genera 1 advances in

productivity. During the golden years, most government officials-even the

most conservat ive- have promoted that they ca lled a 6hah.Ln.g the dLuLden.d. o&

ph.Ogtte.66.

The surprise is precisely that this broad vision of the world did

inspired actual wage policies by firms <Table 1, item 2). With uneven lags,

quite all countries exhibit a perfect indexation with respect to consumer

prices, and this was far from a fact of nature : in the Nineteen century the

corresponding elasticity was about 0.1 - 0.2 (R. BOYER (1979)).

Page 13: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

GRAPH 1 : A LARGER STAB1LITY OF THE tlAGE SHARE AFTER tlORLD tlAR 11

Share of wage 1n value added, after correction for the 1ncreasing share of wage earners in total working population

"''''•''''• 1eo- . , , ' ' 1 ' ' ' , 1 ' ' , , 1 ' , ' , 1 , ,,,,,, .. , i,, .• ,,,,,,,,,,,,,, 110

I , ••• ,,,,,,,,,,,,,,,,,,,

140

130

120

110

100

90

IO

70

eo

IO

40

30

,_ .. ,__ __ , ____ .,

• ,~ ' 1 1 ' • 1 , 1 • 1 1 • 1 1 1 •• 1 • 1900 1101 1910 1911

• '

• '·-·, ----~ ,-- ,,, .... ., -- - '

• • • • • • -- - - -·-·-· .. ++++++

France R.F.A. Un 1 ted K tngdom United States Japan

'" ~-..... ·-' " . ·- ,.. ·-·- ·-· ·-· . ~. . ., .-~ . . " ~-· '' __ .,. ' •

" .. " .. ... ... . "' ..,.-+• .... .,

""----, - ·- ..--..

' • ' 1 1 ,l,111111 .,, ... 1l1111l111,l1 ,,,1,, 1 ' 1 • • ' , i' 1 1 ' i 1 1 '

1920 1925 1930 1935 1940 1945 1950 1955 1980 1985 1970 1975

Source : BASLE M., MAZIER J., VIDAL J.F. (1984), p. 105.

~ 0

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Productivity shartng is a ltttle more complex to prove. The best evidence

relies upon the noticable constancy of distributive share Ccorrected from

the shift towards salaried activities) in the medium run. The changes

occuring after World War II clearly point towards this rough stabilityfor

France, US and United Kingdom, and possibly Germany CGraph 1).

Nevertheless, signif1cant fluctuations of 1ncome shares still exist 1n

Japan, which mtght tmply a genuine form for wage formation. Long run

econometric studies for wage formation in United States seem to confirm

these transformations towards more sluggfsh adjustments and a decl1ning

impact of unemployment fluctuations CJ. SACHS (1978)). This is a typical

pattern for most OECO countrf es CJ. SCHOR C 1985)). For the contemporary

perfod, other econometric studies seem to confirm productivfty shar1ng,

either fnstantaneous CGermany, Japan) or over amultiperiod labor contract

CUS, probably France) «MIMOSA C 1990), R. BOYER C 1990a)).

• Ccm.n.ectLve baJt.G4LnLng is creatfng strong complementarities 1n wage

increases which start from the leading h1ghly unionized sectors and

.progressively spread to. the secondary sectors and finally to the public

civil servants CM. PIORE (1986), B. CORIAT (1985),(1990)). The innovation

with respect to the previous century or even the interwar period is far

reaching: labor struggles used to create wage dffferentfals between skills,

sectors or regions; within FCLR, successful wage demands are setting the

pace for average nomina 1 wage i ncreases • Three me chan i sms a t 1 eas t

contribute to this spreading the rather large centralization of

co 11 ec t ive barga f n 1 ng usua lly negoc fa ted a t the sec tor or even the national

economy levels, the mobility of workers moving towards best paid job and

finally minimum wage policy by government when it exists.

Most indexes for wage dispersion confirm the lait.Ge 6UbLlLtw a, r.oa.ge

dL,,e11.en.tL4l6 under Fordism (Table 1, item 3), a feature which partially

resists to contemporary crisis (OECO C 1985), Chapter 5). Neverthe less

withfn this new historical configuration, some national specificities âre .·

observed: the conventfonal opposition between primary and secondary jobs

CP.B. DOERINGER, M. PIORE (1971)), and a remaining competitive wage

formation legacy exp la in why in United States wage differentials stfll play

arole after WII. Similarly, wage dispersion seems to be the highest in

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12

Japan, whfch suggests agatn a genuine and decentralized process in

1ndustr1al relations. On the contrary, most European countries experience a

low dispersion in sectoral wage. The more equalitartan configuration is

observed 1 n Sweden, probab 1 y due to so 11 dari st 1 c wage po 11 ci es , and 1 n

Ita 1y, where the comp lete indexing with respect to price seem to have

significantly reduced wage d1fferent1als CB. ROWTHORN (1990)).

• Fourth pilar of FCLR, the basic social compromise and new conception about

the role of the State induce and leg1t1mate an 1mpressive redistribution of

i ncome v 1 a the k'.eyn.e.6.La.n. and coe.e,a11.e Sta.te. I nterpersona 1 and

intergenerational solidarities which used to operate through family ties,

have now to be fulfilled by more collective and horizontal institutions.

The welfare system is therefore a key component of thfs new deal between

citizens and the State. The recognition of social wage, general access to

health, basic education, the provision of pension funds for the poorer, of

unemployment benefits explain the surge of redistribution mechanisms by the

State or by collective agreements.

Again, this 1ntroduces a · far reaching innovation in the CLR and

consequently upon wage and productivity dynamfcs. On one side, the

disciplinary role of firings and unemployment becomes less evident (with

possible adverse impact upon productivity), whereas real wage increases are

now more stable, smoothing the cycle. On the other side, the variety of

public entitlements induce built-in stab111zers, given the taxandwelfare

financing systems. Nevertheless, this Keynesian-Beveridge State 1s

unequaly developing among advanced capita11st countries (Table 1, 1tem4>.

Just before the 1973 oil shock, the share of collective redistribution was

the higher in social democratfc countr1es such as Sweden, Austria. EEC

countries were exper1enc1ng a s1m1lar redistribution, even 1f generally

lower for example in Italy. The lowest size for welfare is observed for

United States and st111 more Japan, where fam1ly solidarity and private

pension funds constitute alternative to public welfare. Clearly, for most

components of the CLR, Japan is quite original indeed <B. LAZONICK (1990)).

To summarize, Fordism manifests itself through common features all

accross advanced capitalism countries. Nevertheless, the previous

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13

description suggest that the precise configuration of this model may vary

from country to country.

3. OOE rmEL, MANY NATIONAL BRANOS.

Let us now adopt a more qualitative and institutionnal view about

these cross country differences. Each of the components of CLR exhibits clear

national specificities (Table 2).

• Th.e cooh.k pn.oce66 is typically Fordist in US, which is not at all surpris1ng,

but in France too : a high division between blue and white collars,

engineers and rank and file workers is common whereas managers rely upon

me chan i za t ion for sol v i ng techn i ca 1 and even soc i a 1 prob lems CO. NOBLE

C 1984), BRIE < 1987)). But in other countries, a craftmansh.ip tradition and

an explicit organtzation of professional markets CD.·MARSDEN (1988)) do

moderate the Fordism principle of maximum division of labor and blue collar

deskill1ng. With contrasted results, Germany, Japan and Sweden belong of

this mitigated or hybrid Fordism. Contrary to genuine sc1entific management

which constantly seeks to take the skills off the shop floor, in these

countr1es "the employers have put the skills on the shop floor and invested

in the capabilities of shop floor workers" CB. LAZONICK (1990)). The

Br 1t i sh CLR i s another en 11 ght i ng case : the ver y constitution of the

bargaining power of workers used to rely upon very precise craft boundaries

and work rules, which might operate as barriers to t"he continuous

rationalization process intrinsic to the Taylorsit principle. Somehow

loose ly, these contrasted configurations are not wi thout exp la in ing

productivity differentials (Table 1).

• L4bo~ mobLtLtw is necessary for coping with the permanent changes brought

by capital accumulation, competition and the search for innovation and the

une.scapab 1 e dec 1 i ne of some obso 1 ete industries. Aga in, each economy seems

to have built original mobility itineraries. In United States, workers move

from firms to firms, reg1ons to reg1ons. ln France, regional mob111ty 1s

usually lower, whereas most the adjustments used to take place in small or

medium size firms. ln ltaly, the disequilibrium between the South and the

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14

TABLE 2 TIE NATIONAL VARINITS FOR FORDIST COHPROHISE : A TENTATIVE TYPOLDGY FOR TIE GOLDEN ASE.

COUNTRIES UNITED UNITED VEST-COMPONENTS AUSTRIA FRANCE ITALY JAPAN S\ilEDEN

KINGDa1 STATES GERMANY OF CAPITAL LABOR RELATION

1. ORGANIZATiON OF THE \ilORK Not very Taylor1st H1ghly Tpam work Early Balkan1- fyp1ca 11r Profer

PROCESS taylorist karge gap taylor1st o poly- attempts ze~ v11 a.Y.loris s1ona &

etween 1n large valent to mu }1P e fna craft Îoncep-d 1rms workers feplace cra ts & ord1st markets

ion an morÎ than ay orism work TorÎ thar execution tay orist rules ay oris1

-·-2. STRATIFICATION OF SKILLS Average Larr & Large Moderate Moderate Precise H1gh Moderate

ins 1tr bounda-t1onna 1- ries zed

3. LABOUR MOBILITY H1gh Low Rpg1onal Average Average/ Average H1gh Average

io~Î~ to H1gh

orth) Average

4. \ilAGl FORMATION (1) n~ex1ng w1th respect to

RathÎr Cpmplete FullÎ Complete • r1ce \ilorld · Slow bt Partial Slow and comp ete 1 not 1nst tr more than comple e and/or P.frtial

perm1tted t1onna 1- consumer slow ( orbid-zed pr1ces den)

• Product 1v1ty Not clear lmpl1c1t Not Expl1c1t ln the Not clear ImÎ11c1t Rather expl1c1t via export bu strong

bonuses sector ex1st1ng

( 11> Influence of unemploy- S1gn1f1- Moderate Rather High Sign1f1- Low Average ~prent-ment . cant h1gh cant ly ow

(111) In~1rect wage and H1gh H1gh H1gh Very low H1gh ~ow (\,lel- Low Average w? are (as prÎportion are Îax-o direct wage based

5. LIFE STYLE AND CONSUMPTION ln1t1ally Closing ln1t1ally F'st Mo~ern Mo\ern 1,.argel.Y. ~aP.id

NORMS agging gap agg1ng c os1ng 11 h w1 h commocli- oè:terni-

gap arr we fare t1zed" zat1on wel are

GLOBAL FEATURES OF FORDISM CORPORA- STATE LAGGING HYBRID DEMOCRA- FLA\ilED GENUINE FLEX-TIST PUSHED AND IN- FORDISM TIC FORDISM FORDISM FORDISM

FORDISM PERFECTLY FORDISM INSTITU-

· TIONNALI-ZED

Sources for f1111& the rows of F1gµ_rt 2: L1nes 1 ID 2.~ Maioly M. CArl" NOS-DUBERNET and GRANDO J.M. <!988>. M. AOKI (1988>. B. STRAH (1988).

Of ~tructural AdJus ments and.Economie Performance.

L1ne 3: OECD (1986) ·r1ex1b111ty and labor markets", p. 63, Table II.3 for 1971, or p. 66, Table II.4.

Line 4 : ldi p. 17 J Jable I .2. 1, and (11 For the 1ndex1ng w1th respect to product1v1ty P. PORET (1986), Table 7, p. 24.

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15

North explains most of the features of workers behavior and expectations.

ln Germany, active local or regional markets allow the shift of sk1lled

workers from- f irms to f irms. In Japan on the contrary, a quasi tenured

employment in large firms is not necessary counterbalanced by a higher

mobility within the subcontractors (K. KOIKE (1988)). These contemporary

strategies of the Japanese large firms are not so different from the

american mass producers in the 1900's and 1920's (8. LAZONICK (1990)), but

might have been implemented more systematically (R. BOYER, A. ORLEAN

(1990)). Finally, in social democratic countries (Sweden, Austria), the

adaptation to changing economic outlook seem largely centralized and

operating via public organizat1on, regional or national (8. STRAH (1988),

J.O. ANDERSSON, L. MJOSET (1987), G. STANDING (1988)).

• The IAKl.ge cornph.Oml6e is more or less formalized into collective agreements

and labor contracts. For the indexing with respect to priées, the spectrum

ranges from a complete, quasi instantaneous and contractual clause (lta11an

scala mobile) to a legal interdiction (Germany, France ••• ). These

configurations seem to affect mainly short run adjustments, since in the

long run the indexing is complete (Table 1>~ The same observation is to be

made for- indexing with respect to productivity. Quasi explicit in Japan,

via the high variability of bonusses, implicit but strong in Germany,

operating in the medium run in US and France, integrated in official wage

policy in Scandinavian countries. Nevertheless, most of the researches on

wage formation do not focus upon the core of Fordist mechanisms (roughly

speaking, wage = consumer prices + productivity) but on thesmall residual

part of compet 1t ive me chan i sms, as convent i ona 1 Phi 111 ps curves do. For the

whole sample of OECD countries (H. THOULUC (1988)), the moderating impact

. of unemployment on wage cornes out as modest since the corresponding

elasticity is estimated around 0,4. But the mechanism is somehow unstable

1n the short run and 1t 1s hard and risky to relate the various elast1cities

to national specificities. For example, given the statistical methods for

measuring unemployment in Japan, the labor market seems extremèly:

competitive (J. LE OEM (1987), J.H. CHAN LEE l Alii (1987)).

• Wa.ge ea.M.eh.6 1.i,e .6tyte.6 exhibit a large variety of lags with respect to the

American way of life, another image for Fordist consumption norms. The gap

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16

has been vanfshfng quite quickly in France and Italy, along with the

decline of the agricultural sector. ln United Kingdom, Sweden, Austria,

collective consumptfon has played a significant role in shaping consumption

patterns and habits. At one extreme (US), Fordism has been synonimous for

commoditization of prfvate consumption and life style ; at another

CSweden), 1t has been associated with quite a-Fordist uses, generall.Y

collectively organized Chealth, education, training and retraining ••• ). In

closing the macro model representative of post WIJ growth, this is a

feature to be 1ncluded : the coherence between the spreading of fordist

production and the transformations in consumption helped in stabilizing the

growth pattern. A contrario, any divergence between them may trigger a

structural cri sis. For

example, the 1981 French reflatfon was rapidly blocked by the large import

increases of modern equipment and consumer goods not produced in country

CR. BOYER Cl 987)) • In United States too, the demi se of 'the FCLR i s not

without relation with the preference of American consumers for forefgn

durable goods.

Even if the characterization is somehow impressionnistic, a

national flaveur for each of OECD countries can be diagnosed. United States

and France seem to explore typLca..t forid.Ll,m, since the.Y experience a clear

distinction between engineers and technicians on one side, blue-collars and

low skilled workers on the other side. Nevertheless, genuine US Fordism is

market drfven, whereas in France State has played a proeminent role in

promoting and implementing it via labor laws, nationalized industries,

numerous incentfves by economic policy. At the opposite, the British case

shows that Fordism is not always a fatality which imposes itself due to fts

superior economfc efficiency. A strong labor movement, defending precise

skills tasks and job rules, can block most of the productive potentials

as soc i a ted w i th modern management me thods • This can be ca 11 ed ,.eawed Forid.L 6m.

Sfmilarly, Italy gives a suggestive example of possible discrepancies between

fordism as production techniques and its outside work aspects. \.lhen the . ·

struggles of the hot Autumn 1969 led to new labor laws, they simultaneously

recognized the principle of productivity sharing and the control of workers

upon plant organizatfon at the shop floor level. The system was potentially

explosive and did break-down at the end of the Seventies CE. \.IOLLEB ( 1988), M.

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17

MARUANI & Alii Eds C1989)). In this ml6'1ntch.ed forul.l6m, political and social

struggles contradict the maturation of mass production.

A quite different configuration prevails in Germany : there

manufacturing industries as well as the educational and vocatfonal systems

never tried to implement completely the Fordist logic. High skilling and

workers' invo lvement were searched for by the manager, whereas fina 1 products

were more differentiated than standardized CW. STREECK C1989a,b}).

Similarly, collective agreements and bargaining within the firms partially

integrate new technologies and work organization. Finally wage formation is

much more linked to actual performances than in most other countries. One

might label this configuration as ,tex-Forul.L6m. Japan is still another case,

since high skills and a significant polyvalence allow to shift more quickly

from one production to another : products can both be mass produced and

somehow differentiated CR. BOYER C 1989)). This is an h.11bta.Ld. ,orul.i.6m, which

may announce an alternative to genuine fordism both in work organisation CH.

JACOT C1990d)), and management CM. AOKI (1990)).

Clearly the degree of centralization/decentralization is an open

variable in the Fordist model CB. RO\ITHORN C1990), L. CALMFORS, J. DRIFFILL

C1988), S. BO\ILES, R. BOYER C1990)). The Scandinavian countries and Austria

give a striking example of an industrial modernization which largely takes

place in a small open economy and nevertheless allows a very centralized

capital labor compromise, emerging from the interactions between firms, a

strong union and State civil servants CB. BOSWORTH, A. RIVLIN Eds C1987)).

Interestingly enough even within a cota.pol\4tl6t ota.6oclaldemoc'14tlc Forul.L6m,

the macroeconomic performances might be rather different indeed: Austriaand

Sweden do not exact ly f o llow the same trajectory, as far as macroeconomic

outcomes are concerned Csee later Table 7).

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III - TIE BREAKING omtN OF THE SEVENTIES · EVIDENCES AND INTERPRETATIONS.

This genufne and symbiotic interactions between industrial relations

and macro dynamics seemed to deliver an infinite prosperity (8. LUTZ

(1990)) ••• at least according to most contemporary views. Since then, various

social crises, two oil shocks, a globalisation of competition at the world

level, a wave of technological innovations and of course a drastic revision

fn economic policies have induced a significant alteration in the fordist

capital labor relation. After a short chronology, the major instftutional

changes will be investigated. It will be argued that the capital labor

relation is experfencfng a great transition from the old FCLR towards various

alternatives.

1. A BRIEF PERIOOISATION: A FOUR ACTS DRAMA.

To understand how such an happy fordist regime has ended into a sharp

criticism of the rigidities and inner limits of fordist industrial relations,

a short retrospectfve mfght be englfghtening. Basically, thfs begfn as a

comedy, pass by a dramatic episod and might end like a tragic comedy 1

• Act 7 starts from the end of the Sixties and stops before the second oil

shock of 1979. The social unrest associated with the hot May 1968 or the

Italian Autumn 1969 was challenging indeed fordist division of labor and

excessive deskilling and mechanization. But unions, business associations

and governments usually interpreted this episod as an inducement to

complete the fordist agenda. Minimum wage was generally significantly

increased and the welfare state extended to new areas, training for

example. A second major challenge was associated with the first oil shock :

it was interpreted as a benchmark, but then only for energymanagement and,

finance. ConseQuentl,Y, Quite all the governments, including the most

conservative, have been extending unemployment benefits, and training and

g i v i ng subs id i es to the fi rms in order to curb down the job redue t ions wh i ch

took p 1 ace w i th in the manuf actur 1 ng sector. In France for examp 1 e, the

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'19

CHIRAC's government extended the severance payments and inst1tuted a

control over firing by Ministry of Labour. S1milarly, keynesian

countercyclical measures helped in lim1t1ng the rtse of unemployment. By

symmetry with respect to the statement by President NIXON : "Now we are all

keynesians I", eueriycm.e cm.6 &oh.d.L6t but somewere ignoring it. The FCLRwas

so pervastve that tt used to be considered as "natural", i.e. part of the

social compromise between citizens and the state, wage earners and

business. OPEP's monopoly had created energy scarcfty and major

international financial unbalances and was the culprit, not the fordist

capital labor relation.

• Act 11 begins after 1979 and lasts approximately until the mid-Eighties. In

fact the previous strategy had led to a persisttng inflation even durtng

recessions, ·a worsening of public deficits, without necessarily fighting

effictently agafnst an upward unemployment trend. Similarly keynes1an

therapies, when applied at the national or even international level, had

not provided the expected results. Then came the mcm.et4'1.(la.n.d.ccm.6e~ua.tLue

ba.c'2.ta.6h. On one side, monetary stability had to be kept at any cost in term

of unemployment : most of the central banks following Federal Reserve

Board, tben adopted rather restrictive monetary poltcies. The related

increases tn real 1nterest rates have levelled off the firms profits, and

pushing them into either bankrupcies, or massive firings and concession

bargatntngs. On the other side, came out the idea that labor market

institutions were restricting mobility, employment and wage adjustments.

I f such large unemp l oymen t ra tes pers i s ted over a de cade·, c 1 ear l y the

monopoltstic or oltgopoltst1.c character of labor markets was to be blamed.

In France for example, after 1976 the Prime Minfster Raymond BARRE set up a

new economic policy, based upon both prices and wages freezes, the search

for a better matching of vacancies and unemployment, and a restrictive

money supply. During this period, most governements try to promote a

disindexing of nominal wage w1th respect to past consumer prices. More a~d

more, the FCLR is, first implicitly and then explicitly, questioned. Of

course, the conservative counter-revolution fs clearer in United Kingdom

and United States than in West Germany or France, but similar conceptions

and strategies are spreading all accross OECD countries. Nevertheless,

social democratic countries remain largely specific.

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• Act 111 actually puts forwards an ideal for capital labor relationat odds

w f th the f ord f s t one • F f rs t , European . .governmen ts rea 11 ze tha t the

smoothing of unemployment has been paid by a strong decl1ne in profit

margfns and therefore a sluggish investment. Here cornes the famous Elmut

SCHMIDT's theorem : "Today wage austerity provides tomorrow profit, i.e.

the day after tomorrow investment and consequently future job creations".

This macroeconomic vision is quite the opposite to the fordist virtuous

circ le Csee previous Figure 1). Second, the pre-keynesfan conceptions

concerning the self adjusting of pure and perfect labor markets tend to

challenge the f ordist fnst f tut ions and compromises. Consequent ly, by

reducing the legal power of unions (specially in UIO by decreasing

unemployment beneffts, by legalfzfng atypical labor constracts and of

course promoting the transparency of employment offers and demands, most

governments have been dreaming to implement a competLtLve c4pLtal l4boh

hel4tlon.. Third, the keynesian principles are strongly under attack because

they overemphasfze demand factors and frequently forget the supply side of

the economy. Both the so-called and mysterious LAFFER's curve and the

impressfve come-back of neo-schumpeterian fdeas about the role of

enterpreneurs and innovations in the process of capitalist development do

challenge the fordfst-beveridgian and keynesfan model. Ouring the mid­

Eighties, few governements dare to stick to the old capital labor

compromise ••• w 1 th the poss 1 b le exception of the soc i al democra tic

countries. During the same period, many official reports call for a drastic

flexibilisation of labor contracts, wages, and a scaling down of the

welfare state COECD C 1986)). As far as the ideas are concerned, fordism was

ac tua l ly dead l

• Act IV begins at the end of the Eight 1es, after the surprisingly long

recovery starting after 1983 in United States and whfch diffuses itself to

Japan and Europe. A partial restoration of profit shares, a slackening of

mon~tary policy in order to prevent the recurring ffnancfal crises ·to

unwind a cumulative depression, the opportunities opened by innovations

concernfng finan.ce as well as information technologies, all these factors

promote more optimist1c long run views, which generate a boom in productive

fnvestments and even public infrastructures, specia l ly in Europe <ECONOMIE

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21

EUROPEENNE ( 1989)). The rigidit 1es of the labor markets become less evident

in this context of renewed job creation. Labour mobility and specially quit

rates vary procyc lica 11.Y and therefore ~ncrease endegenous 1y wi th the

lasting boom <R. BOYER (1990c)). Similarl.v, the consequences of previous

conservative strategies can be assessed and comparedwithmore cooperative

social democrat alternatives CD. LEBORGNE, A. LIPIETZ (1989)). Therefore

the objective of adapting to international competition and new

techno 1 og 1 cal opportun 1t 1 es has been searched for by contrasted and somehow

conflicting strateg1es. For simplicity sake, two diverging transformations

can be opposed (Table 3) :

- oe,en6Lue 6buttegle6 combine a kind of fordist nostalgiawith the belief

that market mechanisms should take in charge the whole process of CLR

restructuring. Work organization should be only marginal.Y transformed;

for example information technologies should be used in order to reinforce

controls over blue collar workers. Wage formation should be kept aside

from any co 1 lect ive agreement and left to market adjustment or micro

bargaining at the more decentralized level. Consequenl.Y, connective

bargaining would break-down and relative wage would become an important

variable in labor market adjustments. Finally, the beveridge and

keynesian welfare state should be reduced and replaced by private

insurances, whereas conventional public expenditures should be kept

minimum. United States and United Kingdom provide good examples for this

vision.

- O"endue 6th.4tegle6 are bui 1t upon a long term view : some short run

unbalances are to be accepted in order to invest into training and

retraining workers, to elaborate sophisticated wage systems in order to

manufacture workers'consent and committment, and finally preserve some

solidaristic mechanisms which enhance the acceptation of restructuring,

and therefore help in getting long run efficiency. According to this

second vision, fordist hierarchical controls have to be replaced by more

subtle incentives in order to obtain workers committment. A compromise

about the sharing of the dividends of progress is still necessary, even

if possibly quite different from of the fordist one. In turn, this

compromise .enhances p~oduct and process innovations and proyides long run __ ~ .. . .

competitlveness of the firm or the nation. Public policies should

Page 25: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

TABLE 3

1. WORK ORGANIZATION

' i

2. WAGE FORMATION

3. CONNECTIVE BARGAINING

4. WELFARE AND KEYNESIAN STATE

TtiO STRATEGIES FOR ADAPTING THE CAPITAL LABOR RELATtON

DEFENSIVE STARTEGY

• Exporting old fordist methods

• Reinforcing controls via new technologies

• Marginally inproving ForcHsm

• Two tiers contracts • Desindexing of wage

• Weakening of unions

• Decentralization of bargaining

• Make iage more sensitive to in ividual financiat situa ion .

• Relative wages are adjusting variables

• Reduçtion in employment benetit

• Budget cuts

OFFENSIVE STRATEGY

• Modernizing even mature industries

• Enhanç~ workers' committment

• Use infprmijtion techno logies to find an alterna-to Fordism .

• Homogenous Labor contract • Genuine w~g~ fprmula

(t.e. profit sharing) • Joint bargain1ng Îf wage,

emplorment and we fare by firms or nationa unions

• Possible centralization

. Solidaristic wage po icies

• Rather ,table wage hierarchy

• Intensive training programs

• Investm~nt in infrastruc­ture Ceducation, transpor­tation, communication)

• Ideal of private insurancel • 6:\l~~=l~f:t~on of

j...J 1\)

Page 26: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

23

precfsely provide the collective fngredfents of such a strategy : good

infrastructures, efficient educational system, incentives to

innovations ••• and so on. Sweden, Germany and Japan provide good examples of

these strategies, quite different indeed in many other respects Cdegree of

centralization, importance of unions, size of the welfare state).

During the mid-Eighties, the defensive strategies were generally

consfdered as highly required and efficient. Now, after a decade, the

offensive strategies seem to be as good as, or even better than the former.

Sfgnificantly enough, influentfal OECD reports have changed thefr emphasis

from defensive to offensive flexibility COECD (1986), C1988c)). This is not

necessarily an happy end for the fordfst legacy. Qufte on the contrary, all

these episodes have significant ly a ltered most of the features fnherited from

WII.

2. QUITE ALL THE COMPONENTS OF FCLR ARE ALTERED.

Has thfs paradfgmftic shift fn the realm of fdeas fmplfed equivalent

transformations into the fordist labor regime ? Many international

comparative researches allow a provfsfonal description of the major changes

ac tua l ly observed w f th in the management of fi rms C OCDE C 1985) , C 1988a) ,

C 1988c > , . R. BOYER C 1988b > , C 1990a > , B • RO\JTHORN C 1990 > , R • BRUNE TT A, C.

Dell'ARINGA Eds (1990)). The four basic features of·· fordism have

sfgnfffcantly changed.

• A4 a. pn.oductlve devi.ce, ,on.di.4m toouti tiome, L' not a.tt, a, Lt4 e"Lci.encM.

After 1973, labor productivfty signfffcantly slowed down for qui te all OECO

countries CTable 4, Item 1). Capital productiv1ty too continues to decl1ne,

whfch explafns why total factor productivfty has so much decelerated wfth

respect to the Sixties. Such a decline still represents a puzzle, even for.·

the most sophfsticated stat1st1cal and econometric studies COECD (1989)).

Cl ear ly the o 1 d methods for reap f ng i ncreas i ng returns to sca 1 e by

standardizfng products and mechanf zing are no more efficient. A lot of

managerial and economfc studies overwhelmingly confirm that quality and

Page 27: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

TABLE 4 CHANGING PATTERN IN FCLR

COUNTRIES UNITED UNITED \IEST-

COMPONENTS AUSTRIA FRANCE ITALY JAPAN S\IEDEN GERMANY KINGDOM STATES

OF CAPITAL LABOR RELATION

I.FORDISM BECOMES LESS PRODUCTIV Product1v1ty rate (l) per year (1) Before 1973 5,4 4,4 5,0 8,2 2,8 3,3 0,9 4,4 ( 1 f) After 1973 2, 1 2,3 1, 7 2,9 1,0 1,5 0,4 2, 1

2.BREAKING 00\IN OF THE FORDIST \IAGE FORMULA ' . (1) Inst1tut1onnal pressures Extst1ng State rron~ at Some bÏt Some but rrong at ~ess~C~A Nr very dr1ven he Î rms m1tfga ed gen~1nr he rl1- ew o - f rong eve vfa prÎ uc 1- 1ca lect ve lex-

btmuses v1 y eve agrr..; y~d1sm shar1ng mens (11) styn1{1cance of a fh1ft Yes Yes Uncerta1n Yes No L1kely Yes Possibly

tn o he wage equa ton

3.MORE ATOMISTIC BARGAINING ~ (1) Instttutfonnal ev1dence Pressures Yes Yes · Not clear Some pres Alf~ady Yes Not clear

{or decen "Economto sures for ra er ra11za- sommersa iece~tra- iece~ ra-ion fza fon 1ze (11) 5volutfon 1n wage rates ~l 1ght Dec11ne Oecl1ne Rfse Dec11ne Dec11ne R1se ~t~~,~ 1spers1on fse an~ then and

tse fncrease

4.RATIONALIZATION OF THE KEYNE-SIAN \IELFARE STATE

(f) t~t~~~ 1,~aJ,of fts share 51,9 51,8 50,5 Jj, 1 63,5 46,2 36,9 46,6

(11) Break1ny 1n prev1ous Not clear Slow1ng Slow1ng Decrea,5 Oecreaf' Decrea'J Yes ~uar Decrea,, upward rend down down sl~i~o 5l~5~1 sl~i~0 cons an sl~~~8 s1nce 8

Sources Lfnes 1 (1) and (2) : Computed from OCDE, December 1988, p. 195.

L1ne 2 : (11> J.H. CHr-hi~tR2i:_ ~?ijé8~: :~vvf~-ftf~7>, Table 8, p. 157, Y. TSURU (1988), E. KREMP &

L1ne 2 (1) and 3 <1> lT8iC?i~i3y~>ll~ttV§~~Ç~l AdJustment and Economie Performance" Chapter 3,

1 4n .. 'l I 4 4 \ • C' 11'1 Ali an~ A MTTTC'I C:TAnT I tODt:. \ - At:. t&.-- C A-.t r "'-,,' &ftWUI'& 1 ...... ,.,..,.,.. -

Page 28: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

25

di f f eren t i a t ion of consumer and equ i pmen t goods are crue i a 1 in the new

international compet1tion (M. PORTER (1990)), P. KRUGMAN (1989)). If under

fordism "big was beautiful", 1t has been argued that smaller plants and

runs for each product would prevail 1n the future (M. PIORE, Ch. SABEL

(1984)). But this view can be mitigated : scope and scale economies are not

excluding one another (A. CHANDLER ( 1990)) and mass production in modern

information technologies is not over I Nevertheless, the correlation

between productivity increases and demand growth has steadilydeclinedall

a long the Sevent tes <R. BOYER, P. PETIT ( 1990)). In other words, both

quantitat ively and qua litat ively, one of the basic pilar of the fordist

regime is challenged. Consequently, this relative productive failure put a

stress upon the viability of the capital labor compromise.

• The ,atid.L.t,t co.e.eectL ve a.grieemen.t6 C1l1.e n.o morte rwlLn.g mge ,attma.tLon.. An

impressive amount of evidence suggest that in many OECD countries, two of

the basic fordist indexing mechanisms have been challenged, and consequenly

transformed (Table 4, Item 2).

- First, many governments have promoted the b~e4kLn.g d.own. a, a.rLfl exptLcLt

Ln.d.exLn.g mech.a.n.L6m of nominal wage with respect to past consumer prices.

For example in France and Italy, Ministry of Finance or/and the central

bank have played a determinant role in implementing such a strategy. In

other countries, the very weakening of unions and the rise in

unemployment have indirectly al lowed such a disindexing. Some

econometric studies actually confirm that such a shift has affected the

dynamics of average nominal wage in quite all OECO countries (Table 5).

More precisely, during the Eighties, the elasticity of wage with respect

to consumer prices has been reduced in Austria, France, Italy, United

Kingdom, United States and Germany (Graph 2). More sophiticated

investigations confirm this desindexing process, specially for France :

the process is more sluggish and the medium run elasticity is no more one

<P. RALLE & Alii (1989)).

Page 29: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

26 GRAPH 2 : -A GENERAL DISINDEXING OF NOHINAL #AGE 111TH RESPECT TD CONSUHE~ PRICE

EVOLUTION OF ELASTICITIES DERIVED FROM RECURSIVE ESTIMATES FROM 1978 TO 1988 ... ..

PARAMETER a OF THE EQUATION \IN = a. p + b. Log U + c • p + d

1

:~:~ • , 1

0.65 ~ 1 1 1 1

a.sa L : AUSTRIA

Î 1

1 • 1

1 1 0.85 r 1

1 1 1

0.8 : -1 1 1

0.75 : r-1 1 1 1 • FRANCE •

0.70 "-• 1 1 1 • 1 1

-,·=t . 1 -

0.95 •~i;

0.90 t 0.85 1 .. :

1 0.80 r ITALY

1

1

1 .. 1

~

1 .. -, i -- ·:r

1 ---· .... , _,..__......,_,__.~_.____.___,....__. 1

0.15 L

0.55

0.35'

0.15' --..

JAPNI.

1972 74 76 78 80 82 84 86 88

C r ; 1

0.6 L 1 StiEDEN 1

0.4 r . 1

0.2 1 1 ---·-.. 1 1 1 1 1

1 0 1 1 -1

1 1 1 • .-· . :- 0.2 • ___ ....... ~ _ __,__...__ ____ _

1.17 Î 1.16 r

1 1.15 ~

1.14 ~ 1

1 1 • 13 1- UNITED KINGDOH

1 .

1 1.12 ~

1 1

1.11t-1.10 ~

: • 1.09 • =-::::±:=:=::=:;;:::!:=;::'!:!:=====~· ' - . .;....i ' j 1

1.25 r 1·

1 •. 15 t . 1.05 ï 1

0.95 + 0.85 t O. 75 r LIIITED STATES : 0.65 ...

i 0.55

·3_5

2.8

2.1

1.4

0.7 --- - --- -IIEST GERHANY :

0 ---.. -- - - .. 1972.74 76 78 80

• -· 1 •

82 84 86 88

Page 30: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

27

- Second, managers and governements have searched for marie competLtLve

mecha.n.L6ffl6 for wage formation. E i ther they have been promot i ng more

deèentralized wage bargafnfng, or they have fmplemented wage norms or

guide lines which implied a quasi-constancy of average real wage (I.L.O.

( 1984)). The impact of these strateg ies shou ld be captured by an 1ncrease

in the parameter which measures the influence of unemployment upon wage

evolution. The related estfmates do confirm such a mechanism for Italy

and Germany, but the evidence is opposite or mixed for most other OECD

countrf es (Graph 3). In fact, est fmates over a longer µerfod seem to

conffrm a stronger unemployment impact for United States (E. KREMP, J. MISTRAL ( 1988)) and for Japan (T. TSURU ( 1988)). Nevertheless the shifts

in estimated parameters are smaller than would be expected simply by

takfng for granted all the statements from firms, experts and ministers

about the need for flexibilisation. In fact, a very large inertia

charac ter i zes even the trans f t ion per i ods from one growth reg i me to

another. This is a major finding for any prospective assessement.

• Vecen.truilLza.tLan a, ba.h.ga.LnLn.g a.nd. rt.eHgmen.ta.tLon a, la.bon. ma.ttket have

a 1 tered the s tab i li ty of wage h f erarchy. Under f ord i sm, na t f onw ide or

seêtora 1 key collective agreements used to set up the pace and the norm for

wage formation in other sectors. Still more strong unions using the parity

and equity arguments and quasi full employment were two efficient ways for

a noticeable wage hierarchy stability. Most of these conditions have

van i shed dur 1 ng the Se vent i es. \Ji th the exception of Sweden and Austr i a

(See later Table 7, Item 1), union density and initiatives· have steadfly

declined, whereas intense job destructions in the manufacturing sectors,

the rise of smaller firms wfth fewer union opportunitfes and of course a

persisting long run unemployment, have made wage formation more dependent

from competition (Table 3, Item 3). Since job destructions and creations

are highly sensitive to the sector and the product, the management style

a~d regional localisation, the intensity of foreign competiti~~,

conn.ectL ve ba.h.ga.Ln.Ln.g ha..6 b11.0'2en. dOUJ11.. Accord i ng to a trick 1 e down ·.

strategy, the wf.denfng of income dffferentials has frequently be assumed as

a condition for job creations, specially in United States CS. BOWLES, O.

GORDON, Th • \IE I SSKOPF ( 1983}) and Un i ted Ki ngdom. \Jage di spers ion has

indeed increased, between sectors, regions, nations, and widened the

Page 31: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

28

GRAPH 3 : AN AHBIGUOUS EVOLUTION OF THE IMPACT OF LJNEHPLDYHENT UPDN HAGE .

EVOLUTION OF THE SEMI-ELASTICITY DERIVED FROM RECURSIVE ESTIMATES FROM 1978 TO 1988 .. • PARAMETER b OF THE EQUATION WN = a. p + b. Log U + c • p + d

C r

-3.0r i -4.5' 1

··6. 0 r AUSTRIA '

-7.5~ 1

-9.0..-1 -&..-~-+-,-.1--:&...-L.---L__;_L-...:!

3.51 • 1

1 ' ' i 4.5 I"" ' ' ' ' ' i 1 FRANCE 1

l :,, s.;--· ______ :....-__ __.__.__ ....

1

: : t i

-9 .~l ITALY Il 1

-12

j 1 • t . :-. ---lL--...i----1..__,.1-..a----'----

-20 r·

· JAPAN

-30 ,, .--1 ---iL....-.J---'----'-~:....s--11..---

1972 74 76 78 80 82 84 86 88

1

1

1 - 1 Sr-

1 ' : ---1 ' ! SHEDEN ' i ' i

- 2s! ---------'---'--'----'-----= i

-1.2~ I · i

-1.9~ !UNITED KINGDDH

::::f - ~ • .u----...___.__J._..L.._,-L-L-....!

1

! , r 1

- 0.5!-

- 2.

- 3. UNITED STATES

- S. d~--L---'----'--'----L-.J•1.-...:

1.

0

- 1

- 2 1

IIESTGERHANY

- 3 __ _..,_-..&,_...___._--1._.J_~-f

1972 74 76 78 80 82 84 86 88

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29

distance between the well paid and the poorer at least in decentra lized

industrial systems ce. RO\ITHORN C 1990)). No country more than United States

exhibit such -a breaking down of the ideal of joint increases in standard of

livings CM. JUILLARD C 1990)). In the long ruri, this is the evidence for the

dismante ling of the fordist growth regime : a cumulative different iat ion of

life-styles between the yuppies and the poorest minorities would induce a

dualistic society ••• and still has done so CB. STEINBERG (1985)) a puts new

demands upon governments CM. PIORE (1989)). France does not define any

ex cep t ion . : even under a mil d soc i a lis t governmen t , i ncome i nequa 11 t i es

have slightled since the mid Eighties CCERC (1989)). Again, a third pilar

of FCLR is slowly decaying.

• The coe.e,Cl/1.e and '2eyn.e6La.n. Sta.te Lli LtH.e, u.n.deri. pti.euu.h.e from business

associations and conservative governments. During the first phase of the

fordist crisis CActs I and Il), State interventions and welfare

entitlements have cushioned the adverse effects both for households

Cunemployment benefits, health, retraining, ••• ) and firms (subsidies and

tax credit). Consequently, a persisting public deficit has been observed

during almost a decade, whereas the share of public spending and welfare

transfers have continuously risen until the end of the Seventies. But after

1979, a constant worry of governments has been to reduce tata 1 pub 1 i c

interventions. Cutting public expenditures and reducing taxes have not been

so easy as was contemplated by free marketers. Nevertheless the previous

surge has been stopped in quite every country ••• including social­

democratic one such as Sweden CTable 4, Item 4>. As far as the capital labor

relations are concerned, minimum wage has been moved much more carefuly and

of ten imp 1 ici t ly reduced 1 n order to promo te young workers' emp loyment.

Unemp 1 oymen t bene f 1 ts , when they were generous , have oc cas i ona 11 y been

reduced, but g 1 oba 1 budget for unemp 1 oyment relief has genera lly i ncreased.

Similarly, many specific measures have been designed in order to curb down

long term unemployment: special subsidies, tax cuts, public retraining and

so on. Therefore, the management by the State of the FCLR has been amended_.

at the margin and somehow rationalized, more than revolutionarized. For

example, private insurance schemes have not truly developed outside the

promizing but limited market of yuppies and upper middle classes.

Nevertheless, the breaking down of the fordist engine has made welfare

Page 33: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

TABLE 5 : CHANGING NOMINAL NAGE FORHATION : SOHE STABILITY TESTS FOR THE PERIOD 1972-1988

• • • • Est1mated equation: WN = a.p + a . p + blog U + c • p + d c ·· -1 c-1 r

COUNTRIES UNITED UNITED WEST-AUSTRIA FRANCE ITALY JAPAN SWEDEN

KINGDOM STATES GERMANY VARIABLES •

• Price : p cY:~~ cR:9~ <~ :.~Y c~:~1 011 d:l~ c3:~~> c8:Y~, C • (1: )

• Price (-1) : p c-1 cY:~~ c~:aj - c8 :R~> c8:31 c8:~R> -c8:~J <~:~~ cY:l~,

• Log Unemployment : U - ctYj -c~:t~ -c~:ij -B:g> - ~ 5 -cA:~~> - 4 J4 -ci:Bj • ( : 9) c2: > • Product1v1ty : p -c8:~1 - 0 14 - 0 39 c8:8~, c8:~1, c8:~Y <~:~j cYjJ r co:J0> CO: 9) • Constant 7 3~ <4:o <~:~> î~:~> l1:~, l~:~, c~:8, c~:8, cR:Y,

SER 1 , 3 1 , 0 1 , 6 1 ,8 2,8 2,8 0,8 0,9

DW 0,99 1, 00 2,96 0,90 1,67 2,67 1, 98 2,03

rl 0,85 0,96 0,92 0,93 0,42 0,80 0,87 0,90

STABILITY TESTS ..

CUSUM2

CUSUM X X Chow's test XC77,78j 79,8

XC77 j78, 79

XC77j78, 79

XC79)

NOTE : The figures w1th1n brackets give the estimates for the t-student stat1st1cs. Computed from: OECD statistics data bank, normalized unemployment rates - least squares estimates.

t.l 0

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31

state financial problem more accute, and consequently exacerbated the

previous problems.

Clearly, FCLR has been under numerous and severe pressures during the

last two decades. The issue is now the following: are these changes purely

transi tory or do they de 11 nea te a 1 ong run structural a 1 terat 1 on in the

capital labor relation? Even if such a prognosis is difficult, let us risk

some prospective views.

3. THE CONSEQUENCE OF ADVERSE AND CONVERGING PRESSURES.

The first hypothesis be contemplated is simple enough: the FCLR must

have been the more severe ly cha llenged in countries where the adverse trends

have been the more acute. Our i ng the Sevent i es, three major reversa l s have

been observed.

• Expansionary keynesian policies have been replaced by ttebth.LctLve and

conbetwa.tLve 6.th.a.tegLeb, in most OECD countries. The main objective has

been to stop any danger of acce lerat ing inflation, via binding monetary

norms i mposed by the central banks. Ac tua lly, the fi rst part of the

E 1 gh t i es has exh i b i ted an i mpress ive and somehow unexpec ted dec li ne in

inflation rate <Table 6, Item 1). Even the surge in inflation during the

last few years of the Eighties has been rather moderate with respect to the

Seve nt i es. In f act even af ter the stock market crashes, most monetary

policies have been careful enough under that respect. An u.n.pttecedented

l.evel. &oh. ri.e<Ll. Ln.tettetit 114.teb has ac tua l ly checked cred i t and monetary

supply <Table 6, Item 2). Still more, therise in interestratepaymentsby

the non-financial sectors has exerted strong distributive pressures. It has

been convincingly argued that the central banks have themselves reacted not

on.ly to inflation and external deficit but to social unrest CEPSTEIN G.,

SCHOR J.B. C 1988)). Conversely, the surge in real interest rate has been

used by firm in order to curb down wage demand and more generally to

question the viability of the past fordist compromise. Note that in Italy

the shift in monetary policy has been the premise for revising downwards

Page 35: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

J2

COUNTRIES COMPONENTS AUSTRIA FRANCE ITALY

OF CAP 1T AL LABOR RELATION

1. THE SHin TQIARDS PRICE STABILITY

. fy3~01~tlf~~y9 rate (1) 6.8 13.6 21. 1

. Peak minus 1987 rate (1) - S.4 - 10.5 - 16.S

2. RISE OF REAL INTEREST RATES

, TfB~~~> n.a, - 1 8 (76.: 0) - <7~.:9s>

• Pfak n.a. 4.3 <8Î.:~4) · Date> (81-84)

3. ADVERSE EVOLUTION OF PROFIT RATE

• p?Bk ate> n.a. !9j~ -

• TrBuîh n.a. (,~ï -< a e)

4. INTERNATIONAL.IZATION OF.

TRADE Import Îenetration for manufac uring • 1970 27,5 16.2 16.3

• 1979 34.1 22, 1 28.7

• 198S 36.4 27.4 31.3

4. QUALITY OF INTERNATIONAL. SPECIALIZATION • Employment in low f~owth

sectors Cshare in n.a. 43.9 48.4

• Sens1Î1veness to fore1gn Average H1,h Average co111pe 1tion 118 nly

Îr1ce aker

Source: L1ne 1 : OECD (198) ·Econ01111c Outlook·, p. 190.

Line 2: P. ATKINSON, J.C. CHOURAQUI C198S), p. 6.

Line 3: J.H. CHAN-LEE & Al11 (1987>, p. 11.

line 4: C. BERTHET-BONOET, D. BLADES (1988), p. 11.

Line S: tlEYER-ZU-SCHLOCHTERN <1988), p. 12-14.

UNITED UNITED VEST-JAPAN SVEDEN

KINGO<l1 STATES GEIUW

8.0 13.7 18.0 13.S 6.3

- 8,2 - 9.S - 13.8 - 9,8 - 6.1

---

- 2 ' - 2 ; - 4 9 - 0.7

(61.:l <71.: S> (71.: S) (71.: S) (76-80)

4,i (81- 4) 3.9

(81-84) c01.:L> 6.a (81- 4) c01.:,

1,ô~ 8.2 7.6 ms~ 14.2 (74) (64) (66)

l9s~ - ~ 9 (7 j cl.\~ (,41 (;5~

4.7 28.3 14.2 s.s 19.S

S.6 36.6 24.8 9.0 29.4 S.3 41.4 33.2 12.9 3S.8

3S.6 46.3 38.2 30.4 38.2

Low Averag1 Average Average \OW partia ly argely pr1ce pr1ce 11aker maker

Page 36: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

the 1ndexing mechanisms CE. WOLLEB (1988)). Similarly, in United Kingdom,

the monetarist management has not been without influence upon the weakening

of unions and workers (A. GLYN (1989)).

• The cred 1 t crunch has been the more cha 11 eng 1 ng , the l ower the 1 eve l reached

by the profit rate. In the Sixties, non financial firms used to benefit from

a leverage effect : a slightly negative real interest rate added to the rate

of return to invested capital. All along the Eighties, the same leverage

effect vanished or even was reversed, because the monetary policy and the

p11.0,Lt 11qu.eeze generated by the 1968-1973 boom then played into the

opposite direction. Accordtng to a X-efficiency theory, the firms should

have been induced to revise their labor contracts in order to scale down

their unit costs. Consequently the ford1st compromise breaking down should

be the more severe, the larger the profit rate decline (Table 6, Item 3).

But this does not seem to have been a purely cyclical phenomena, since the

two recessions generated by the oil shocks have not triggered an

endogeneous recovery of .profit share. The case has been well documented for

US : the non reproductive cycles of the Seventies likely delineate a

downwards kondra t i e f depress ion <S. BOWLES, D • GORDON, Th • \IE I SSKOPF

<1983)), i.e. a structural crisis since the given institutions do not

deliver any endogeneous recovery.

• The 11tCMLn.g dCMn. and u.ttce'1.ta.Ln.tLe11 o, the c.oott.ed econ.omy destab 111 ze the

prevtous configuration for competition, whereas they largely open the

fordist national virtuous circle. This has a direct tmpact upon the

previous links between productivity-real wage-consumption and investment.

Firstly, the national manufacturing sectors likely become more price taker

than pr1ce maker. Consequent ly, the conflict upon income distribution

becomes more acute : wage 1ncreases, if they can no more be passed into

nominal prices, directly reduce the profit rate, i.e. capital accumulation

and finally either job creat1on or standards of living. Therefore, wage

becomes a cost which is detrimental to external competitiveness, and not.·

that much a component in aggregate demand, as it was in the fordist

regulation mode. Such pressures upon the FCLR should be the more acute, the

more open the national economy 1s or has become. Actually, contrary to the

interwar period, a creeping protect 1onnism has not prevented externa l trade

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34

FIGURE 2 · · THO CONFIGURATIONS FOR CAPITAL LABOR RESTRUCTURING

Weak unions

A - THE DILEHHA OF THE DECENTRALIZED STRATEGIES

• Concession

Bargaining · ,

Lower wage

lndividualistic

Startegies

Job deruct ion

Pressures upon previous

Collective agreements

B - THE PERSISTING VIRTUOUS CIRCLE OF SOCIAL DEHDCRATIC SYSTEHS

/Solidaristic wage

Centralized ' Strong unions __ ...., __ _

Bargaining

Rough

viability of

industrial relations

'Active employment po l icy

t High

Employment

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to represent an increasing share of national production (Table 6, Item 4).

A priori the challenge would be more important for the larger economies,

which were not so used to maintain a long run structural competitiveness:

may be the French and the Amer1can 1ndustr1al relations are the more

challenged by this continuing internationalisation. lncidentalb, labor

intensive industries, often price taker, must suffer a lot from such a

world competition (Table 6, Item 5). Of course, organisational and

technological innovations can compensate such a feature, by shifting

employment from low value added sectors and firms to more efficient. Sweden

is a good example of such an offensive strategy. Clearly, in the long run,

any advanced capital labor relation can only be sustainedviaa continuous

inducement to innovation.

4. MICRO AND MACRO-CORPORATISMS FARE BETTER THAN OTHER INDUSTRIAL RELATIONS.

The Swedish evo lut ion puts at the forefront the issue of workers

bargaining power and their .relations with political strategies and reforms.

In the Sixties, the unions and the grass root workers generally had the

initiative in labor conflicts. Most managers were ready to significant

concessions in order to buy social peace. In other words, labor used to have a

large or significant bargaining power over wages, labor organisation and

welfare ••• even under rather conservative governments. But the last two

decades have sharpened some major differences between two broad

configurations (figure 2).

• ln. hi.ahtw decen.ttuili.zed a.n.d. a.dueti6aJ\.i.al 6Y6tem6, the initiative and

bargaining power has drastically shifted to business. The surge of

unemployment has disciplined workers (Table 7, Item 3). On one side, the

segmented and dualistic labor markets have implied a wage moderation, at

least in the secondary sectors. On the other side, job preservation has

been considered as important, along with wage increases ; consequentJy ..

unions have frequently be constrained to concession bargaining. United

States 1s a clear example of such a reversal (Ch. REHMUS <1986), S.

ROSENBERG (1988)). Once initiated, this process has been cumulative (figure

2.A) : the threat of job delocalisation or bankrupcy has weakened unions

Page 39: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

TABLE 7 THE FACTORS AFFECTING THE HORKERS'BARGAINING PONER

COUNTRIES UNITED UNITED WEST-COMPONENTS AUSTRIA FRANCE ITALY JAPAN SWEDEN

KINGDOM STATES GERMANY OF CAP IT Al LABOR RELATION

1. UNION DENSITY <I> 1970 64 22 39 , 35 79 51 31 37 1979 59 28 St 32 89 58 25 42 1984/5 61 28 45 29 95 52 te 42

-------------------------------- --------- --------- --------- --------- --------- --------- --------- ~--------Pattern of evolut1on 811~ht R1se, His, and ste,dy ~lear HisÎ and ~teady & R1se and

' ' ec 1ne ~tagna- ec 1ne ec 1ne 1se ec 1ne tr1ng n~ftna-; 1on and ec 1ne dec l 1ne

2. DAYS OF STRIKE (evolut1on 1)

From 1970 to 1979 - 66 + 182 151 237 - 82 268 - 70 - 79 From 1979 to 1985 + 250 - 77 - 86 - 72 1762 - 78 - 65 - 93

-----~-------------------------- ~-------- --------- --------- --------- --------- --------- ~-------- 1----------P~ttern of evolut1on Dec11ne Surge Su~ge Surge Decl 1ne Surge ste,dy Ste,dy and 3nd and and 3nd dec 1ne dec 1ne surge ecl 1ne 3~cl 1ne decl1ne surge ecl1ne

3. U~EMPLOYMENT RATES Cl> 1970 1 , 1 2,5 5,0 1 ,2 1,2 2,4 5,0 0,6 1979 1,7 6,0 7,2 2, 1 1 ,7 4,5 5,8 3,3 1989 3,4 9,5 12, 1 2,3 1 ,4 6,2 5,3 5,5

~----~-------------------------- --------- --------- ~--------.._ ________

--------- ---------· ~-------- 1----------P~ttern of evolut1on ilow Cont1- Cont1- row Slow rise ~T~~ rise rr1ng Continu-1se Ruous Ruous 1s, and and yc 1cal ou~ r1se 1se and 1se ec ine ecl1ne ecl1ne omponent an

~ ow recÎnt ecline dec 1ne

Sources : L1ne 1 National so~rces for France i~PlY. ft strgoa dec11ne of union den~1ty djro g the Eight1e~. For çomparative purposes, Richara • FREEMN figures have been kept, R1c~ard B. FREEMAN (1988), p. 6~. Une 2 Annual St~tfstfcs BIT vprfous years 1972l 1982, 1986. If th~ cprrespond1ng year was except1ona1 the variation rate has been computed wi{n the average around the correspondlng year.

t.l 0"'

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J7

position, and ultimately the attractiveness of membership. Union density

has continuously decl1ned, therefore reducing their impact upon wage

differentials <Table 7, Item 1 >. \lorkers mil itancy has itself been severely

disc1pl1ned by unemployment and uncertain prospects. ln these countries,

the strike activity has been drastically reduced all along the Eighties

(Table 7, Item 2). Under some respect, most European countries share these

general trends. The only difference is that the unemployment crisis has

first stimulated unions memberships and strike activity ••• but the

persistance of long run unemployment and the failure of dfvided unions to

find out a new viable strategy has led to the same vicious circle.

• Ca~paMtibt ln.du.bt~ia.f rie.ea.tlonb suggest that this is not the unique path

for restructuring the FCLR and facfng international competition. In social

democratic countries, such as Sweden and Austria, this perverse spiral is

stopped at the very begfnnfng. A clear committment of governments to

maintain quasi-full employment is part of the founding compromise CG.

THERBORN C 1986)) : in this model, job opportunit1es are more important

than wage increases, since strong unions can accept a short run decline in

workers income, provided that new Jobs are created and intensive retraining

policies are pursued CB. ROWTHORN (1990), L. CAL.MFORS, J. DRIFFILL (1988),

M. BRUNO, J. SACHS (1985)). Avery deep and long lasting insertion into the

political elites and even mànagerial decisions give a proeminent role to a

unified union, who can bargain at the macro economic level and take into

account possible feedback effects upon external competitfveness and job

creation CS. 80\ILES, R. BOYER (1990)). Given this favourable context,

strikes did explode during the Eighties, some of them challenging the

official union's strategies. Nevertheless, the constrast with

decentralized and adversarial industrial relations is striking (Items 1, 2

and 3, Table 7 for Austria and Sweden). Consequently, given the same

international uncertainties, high interest rates and sluggish markets,

these societies have found in their institutional forms tools for

sustaining the previous social democratic compromise (figure 2.8).

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J8

The international crisis makes apparent major differences which were

partially hidden when growth was stable and. fast. In retrospect, the capital

labor compromise is far different between the two industrial systems : more

than a simple prefix to be added to the FCLR, such diverging path might

delineate different models, even in the very long run. This is an evidence for

the structural character in the transformations of the capital labor

relations inherited from WII.

5. SLOW BUT FAR REACHING STRUCTURAL CHANGES.

The future of industrial relations is nowadays characterized by the

opposition of two conflicting hypotheses.

• For many North American scolars, concession bargaining, resegmentation of

labor markets, flexibilisation of wage and welfare rationalisation were

only the consequence of the most severe recession of the post WII era

CCh.REHMUS (1986)). If economic trends were reversed, then most of the

capita 1 relation would turn ba.c#l to the ph.evLou.1, con.,i.gUILCl.t.Lon., may be

altered at the margin. In other words, the changes in the capital labor

relations would be totally reversible. Most macroeconometric models do

share the same hypothesis.

• For others, the innovations linked to information technologies, as well as

new trends in life styles and international competition, would definitely

rule out any capital labor compromise for implying too much rigidities in a

world of fierce competition where flexibilfty is decisive in survival.

Still more, archaic unions would slowly decay in their unability to cope

with the individualistic expectation of new generations. The two decades

would be the starting point of an i.Meve,u,.Lbte p11.oceu. One finds for

example such a vision in the "New Industrial Divide" : both unions and'the_.

keynesian state would undergo an irreversible decay CM. PIORE, Ch. SABEL

C 1984)).

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39

A third vision is adopted here: after the destruction or reform of

most of the component of the FCLR, every nation would grope in the search for

a new capital labor which would make national political and cultural

inheritage, coherent with the new trends in life style, technology,

finance •••• Two symmetrical evidences can be given against the two too

simplistic views. The revers1bility hypothesis is first contradicted by the

very observation of American industrial relations : concession bargaining and

innovations in order to fi nd new labor contracts are st il l frequent even

after the seventh year of the longest boom in American history (ETUI ( 1990)).

Clearly, the economic recovery has not be suff1cient to curb down the

previous transformations in FCLR. Similarly in Europe at the end of the

Eighties, atypical labor contracts still continues to be the major component

of job creation, the conventional fordist agreements are exceptional COECD

(1990)). But, the complete breaking down of labor legislation and collective

agreements do not necessarily define an irreversible and unescapable

scenario. The social-democratic nations do prove the resilience of a capital

labor compromise, 1f adequate i.e. coherent with innovation and long run

competitiveness. But paradoxically, the social- democratic model is

challenged in the early Nineties : may be the Swedish wild strikes and wage

explosions are expressing the very success of this model in maintening full

employment. Still more, the decentralized industrial systems, such as United

States and United Kingdom, experience too a large wage drift and consequently

inflationary pressures, fueled by an easy monetary polie.Y COECD (1990)).

All the prev1ous arguments in favour of the transition towards a new

CLR can be complemented by more structural factors (Table 8).

• 1n.tettn.a.tLon.alL6a.tLon now concerns trade, finance, but also production and

even innovation. Consequently, any CLR mode has to build into its inner

organisational forms the competitiveness objective. Very small open

economies are used to such a challenge since half a century at least. For ,,

other l arger countr i es, be 1 ong i ng to European Commun i ty or even United ..

States, not to speak of Eastern Europe, a significant redesign of their

capital labor compromise has to take place.

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TABLE B CHANGES IN LABOR CONTRACTS AND CATEGORIES OF tiORKERS INVOLVED

COUNTRIES UNITED UNITED COMPONENTS AUSTRIA FRANCE ITALY JAPAN SIIEDEN

OF CAPITAL LABOR RELATION KINGDOH STATES

1. FEMINIZATION OF LABOR FORCE

Yt1J!tJa9 îf9,~!l~Jir rate • Male c: Y:j, - 7 i (- 2: )

- 3 6 <- 2:s> - 1 8

<- 0:0, c: ~:~, - 2 ~ (- 2: ) c: 8:~> • Female

c! ~:R> c! l:f> c! ~:~, c! ~:h c!18:~> + 4,g (+ 4, ) c! ~:i,

1

2. TERTIARIZATION OF EMPLOYMiNT Oec11ne 1~ manufaj~uriny n.a. - 3, 1 - 3,6 + 0,8 n.a. - 5,6 - 3,2 emp oymen share -8 i>

,~s3JuîeaJT~flogr73!~iJcff, 54 60 55 56 65 65 69 (+11) (+11) (+13) (+ 9) (+12) (+12) (+16)

3. PART TIME JOBS Increase 1n shares - 0, 1 + 3,7 0,5 1 ,2 0,2 4,0 0,3 (1979 - 1988)

"

4. DISTRIBUTION OF EMPLOYMENT ACCORDING TO PLANTS SIZE < 1980 - 1 986 >

,•

• Less than 10 employed n.a. + 2,9 n.a. + 0,3 n.a. + 2,0 + 0,4 • More than 500 employed n.a. - 3,2 n.a. - 0,4 n.a. - 2,2 - 0,3

(dec11ne 1n share, total= 100)

Sources: Une 1 : OECD (1988), September, p. 218, Table H. L1ne 2: H. BERTRAND (1989), p. 10) ; BROCLAIISKI & A111 (198) p. 15). Line 3: OECD (1990) "OECO Figures", OECD Observer n• 164, Supplement, p. 12-13. 1 fnA A , 1-1 a~DTDAtJn - ,,,, C-- 1"----- 11 ...... ,.................... - • -··-····· • ·---·

IIEST-GERMANY

-2 7 (- :6>

(+ ~:~>

- 2,5

54 (+10)

1,2

0,8 - 0,5

.... 0

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41

• New and marie dema.n.d.Lng generui.tLon.6 call for a larger autonom,y in the work

place, more freedom in choosing Job and ltfe cycle activity. Under this

respect the feminisation of the labor forc.e definitely introduces a lot of

novelty in conventional tndustrial relations (Table 8, Item 1). Basically,

at least two sources of income are now needed to susta in a standard of

living which used to be provided by only one male worker. The genuine ideal

by Henry FORD (1930), according to which women should be kept home, is now

dead, and the women seem to have definitely gained a new status in the work

place and within society.

• New pri.od.u.ctLve pri.LncLpfe6 and teri.tL<111.L6a.tLon. do challenge the o ld vision of

labor, centered upon manufacturing processes requiring human energy much

more than cleverness and committment. The information technologies will

probably have some role in completely redesigning the role of human labor,

not only in the manufacturing sectors but in the services too. The

deepening of labor division, the rise of the tasks of management,

conception, marketing, insurance, finance, the concern for health,

education and training will ultimately completely redefine the boundaries

between the various jobs. Remember that all along the crisis, the global

trend about tertiarisation has not be alted, quite on the contrary (Table

8, Item 2).

• The triend.6 toc.oaJtd.6 dL,,erientLa.tLon. a, .eL,e 6tyfe6 st il 1 re i nf orces a 11 the

previous factors. On one side, customizing mass produced goods is a

permanent feature in the very history of the so-ca lled Ariierican system,

CD.A. HOUNSHELL C 1984), P. CHANDLER C 1990)). From FORD T to FORD A, from the

American annual model change launched by general motors to toyotism (J.H.

JACOT ( 1990)), the same strategies are implemented in order to capture

market shares and oligopolistic power. This might challenge the precise and

paralyzing job rules inherited from fordism. S1milarly, wage earners might

want to play with a whole spectrum of labor contracts. Under fordism full

time jobs and labor contracts with indifinite duration used to be the rule • .­

Nowadays, part tjme is for example capturing most of job creations (Table

8, Item 3), and this is only a small evidence of the numerous innovations

which have taken place during the last two decades. Finally, even if

financial concentration again increases CB. HARRISON (1989)), at the plant

Page 45: SEPTEMBER 1990 N- 9020 TIE CAPITAL LABOR ...Robert BOYER CEPREMAP, CNRS, E.H.E.S.S. 142 Rue du Chevaleret 75013 Paris (France) Contribution to the WIDER project on "Capital Labor Relations",

LABOR PROCESS

LABOR CONTRACT

WAGE AND EMPLOYMENT FLEXIBILITY

( 1)

CONTRACTUAL WAGE FLEXIBLE EMPLOYMENT

(2)

THREE COMPONENTS WAGE FORMULA \IITH JOB TENURE (3) = (1) + (2)

THREE COMPONENTS WAGE FORMULA + MESO/MACRO TUNING

(Job duration, wage funds employment banks, training 1

and retra1n1ng)·· 1

TABLE 9 : A TAXONOHY FOR ALTERNATIVE CAPITAL LABOR RELATIONS

LARGE AND RI G ID LARGE AND RIGID DIVISION FLEXIBLE AUTOMATION DIVISION OF LABOR OF LABOR + FLEXIBLE ORGANIZATION

+ AUTOMATION a b C

TAYLORIST FOROIST .. T .. CALIFORNIAN

NEO-TAYLORIST FORDIST "A" GENERAL MOTORS

REJUVENATED CORPORATIST-SATURNIAN NEO-TAYLORIST FOROIST

SOCIAL-DEMOCRATIC SOCIAL-DEMOCRATIC KALMARIST TAYLORIST FORDIST

FLEXIBLE AUîOMATION + LEARNING BY OOING

+ TRAINING d

FLEXIBLE SPECIALIZATJON

COOPERATIST

. TOTYOTIST SON~IST

UDDEVALLIST

,t,, 1\)

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4J

level, average size has decltned both. in manufacturing and in service

sectors C\.I. SENGENBERGER, G. LOVEMAN C 1987)). May be the shift of

emp 1 oyment towards sma 11 s 1 ze fi rms w 111 de li nea te more than a mere

transition from one industrial regime to another (Table 8, Item 4).

To conclude, all these factors confort the basic hypothests of this

paper: the Eighties have experienced a significant or complete redesign of

the capital labor relations. These changes are likely to be structural and

far reaching, and not at all transitory and reversible. Given the previous

analyses, can any scenario be proposed?

IV - NEH CONFIGURATIONS FOR THE NINETIES

Just to introduce the conclusive chapter by A. LIPIETZ (1990), it 1s

necessary to der ive some prospect ive views about future configurations of the

CLR for the next century, however d1fficult such an exercice might be.

1. A TYPOLOGY FOR ALTERNATIVE CAPITAL LABOR RELATIONS.

Any configuration for CLR can be captured by the description of work

organization on one side, the 1nst1tutional setting forwage formation on the

other. Consequent ly, most of past and contemporary capi ta 1 labor relation can

be located into a two entries table, combining alternative work organizations

and wage formation principles (Table 9).

• Along an horizontal axis, the unfolding of ,cLentL,Lc ma.n.a.gement can be

followed. lnitially, the rationalization of work aims at dividing complex

tasks into simpler ones, via a measure of operating time : this 1s the.·

taylorism stage. Once decomposed, these tasks can be mechanized and

combined along the assembly line, at least for mass produced goods: the

fordism deepens the taylorism breakthrough. If typical fordismused to mass

produce standardized goods, this system has exhibited strong rigidities and

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44

an intr1ns1c unabil 1ty to cope with fast changes into the demand and

consumers' expectations. Therefore, the annual model change 1ntoduced by

General Motors during the 1920's already aimed at flexibil izing mass

production. This general trend is st111 reinforced during the 1970's and

1980's, due to the numerous innovations by Japanese firms such as Toyota.

At the extreme, mass production would vanish and would be reproduced by

flexible production of customized goods, by polyvalent workers using

electronized equipment goods.

• The vertical axis displays the form of the c4plt4f .ta.ho~ compt1.0mL6e about

rent or productivity sharing. The upper part emphasises the role of market

adjustments : in compet1t1ve "régulation", labor mobility 1s supposed to

provide both wage and employment flexibility. But, the history of

industrial relations shows that the very technical centralization has

enhanced the formation of unions and workers demands for hfgher wages an~

more genera l ly co 1 lective agreements codifying some institut iona 1

mechanisms for wage formation, for example cost of living adjustments. A

flexible employment contract, 1mplying layoffs, is used in order to cope

w i th uncer tain ty and econom i c f 1 uc tua t i ans • Ano ther avenue for cap i ta 1

labor compromise runs a long job tenure. In the begining of this century, it

was the initial strategy of large american corporations, such as the Ford

company, but this tenure was mainly implemented by contemporary large

Japanese firm. In that case, wage flexibility was the necessary complement

for this implicit employment stability. Finally, the contractualizationof

the CLR mfght concern the very reproduction of skills, ·"the investment

decisfons i.e. the conditions of long run competitiveness. The social

democratfc compromise gfves a good example of such an highly

institutionalized CLR.

According to this broad historica 1 retrospect, the capital labor

relations has evolved from elementary forms of scientific managemen~ and_.

competitive wage formation to a large mechanization, associated with

collective agreements codifying an explicit capital labor compromise. For

convenience, these stages have been labelled respectively taylorist and

fordist. The distinction between ,ond.L6t T and ,and.L6t A refers to the shift

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45

from totally standardized products to annual model changes, following D.A.

HOUNSHELL (1984>, A. CHANDLER (1990>. The tQ.fllo11.6Lt CLR refers to purely

atomistic industrial relations, whereas neo-t4y.to~Lbt CLR, implies rather

strong unions and wage contractualization.

Let us present briefly the labell ing of the other cells. A WL,01U1.La.n.

CLR combines flexible automation and organization with atomistic competition

on labor markets. The Genen.a..e Moto~ CLR is a variant of fordist A, pushing the

organizational flexibility. A Sa.twmLa.n. CLR borrows its name from the SATURN

experiment by General Motor : basically it combines sophiticated flexible

automatisation, with an agreement upon job tenure. The toyotlbt o~ 60nYL6t

CLR is following the same logic but mechanization is not used as a form of

contra 1, since the manufacturing of workers commi ttment a 1 lows large learning

by doing effects and internal flexibility to product and process changes. A

further deepening of this model concerns the global institutions associated

with training, solidaristic wage policies and wage funds. A social democratic

compromise can be associated with various work organization : fordist,

flexible automatisation, based on continuous learning by doing and

retraining. These give respectively a 60CL4.t democn.a.tlc ,oh.d.Lbt CLR, a

Kalma.h.Lbt con,LgUM.tLon Cby the name of a pionneering experiment ing work

organization in a Volvo plant during the Seventies), and finally the

Ud.d.eu4llL6t CLR, which corresponds to the most advabced experiment away from

the fordist principles. Finally at the other extreme, a totally decentralized

industrial system can be asociated with the same organizational principle and

delineate a ,.eexLb.te 6pecL4lLza.tLon C46e. A priori, technology is far from

implying any definite organization CS.G. PEITCHINIS (1985>, Ph. d'IRIBARNE

( 1989a)).

In the new pro du et ive mode 1 , the commit tment and the sk 111 s of workers

are crue i a 1 for innovations , compe t i t i veness and adapta t ion to chang i ng

markets and tastes. This introduces a discontinuity with respect to one

century of scient ific management : the sk il ls are no more removed from the .·

blue collar workers, but on the contrary managers try to enhance them. In a

sen se , however paradoxa 1 1 t mi gh t sound, work democracy i s on 'top of the

agenda for the next century (8. CORIAT (1990)). In this new era, the method

for upgrading skills has a large impact upon the viability of any CLR. But

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PURE

MARKET

MECHANISMS

MESO-

CORPORATISM

NATION

\.IIDE

COMPROMISE

46

FIGURE 3 : FROH FORDISH TD ALTERNATIVE CAPITAL LABOR RELATIONS

liDRK ORGANIZATION

MORE CONTROL BY MACHINES OF

\.IORKERS

MARKET PUSHED

NEO-FORDISM

CORPORATE PUSHED

FORDISM ~·

SOCIAL DEMOCRATIC

FORDISM

FORDISM

MORE CONTROL BY \.IORIŒRS OF

MACHINES

FLEXIBLE

SPEALISATION

-----t .... TOYOTISM

UDDEVALLISM

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47

again, contrasted compromises and organizations can cope with such a challenge <Table 10). Under toyotism, skills formation and retraining are 1nternalized wtthfn large firms, whereas the capital labor compromise, often

implicit, is specific to each firm ; it reminds corporatist or paternalist strategfes. At the opposite Kalmarism combines nation wide capital labor compromise with a public external organization for skills formation. In the Uddevallist model, given the same national setting, more training will be made internaly to each firm. Finally, the saturnien model is the more decentralized for wage formation, employment and skills enhancement. These

configurations might have Quite different impact upon performance (\l. STREECK (1988a), M. CAMPINOS-DUBERNET & Alii (1988)).

Given this typology, what could be the future of the capital labor relations in advanced capitalist countries. The present analyses suggest that taylorist and fordist one definitely be long to the past, and are now ruled out by more efficient and possibly more promising organizations. Furtheremore, all the. eight countries under review do not belong to the same CLR, and therefore could experfence different trajectorfes.

2. T\10 STRATEGIC CHOICES.

Thus, the demise of the fordist capital labor relations is largely recognfzed, but various alternative restructuring are competing one wfth each

other. How to go from here to there? Basically, firms, governments and unions are facing two major issues, to whfch contradfctory responses can finally emerge according to the basic specificit ies of each nat iona 1 economy and polftical process (Figure 3).

• Hoco to eue the a.d.uance11 Ln L_n,ohma.tLon techn.otogLe11 Ln 11.e11ttu.Lctu'1..Lng c.ooltl2 . oh.Qan.Lza.tlon ? This is no more a Question simply restricted to the

manufacturing sectors, since these technologies permeate the whole economic system, specially the banks, the insurances, engineering, marketing, pub lie and priva te management.... An overwhe lmi ng evidence suggests that the same technological device can be given contrasted role in

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TABLE 10 : HOH IS TRAINING DRGANIZED ?

TRAINING AND WAYS FOR SKILLS INTERNALIZED EXTERNALIZED

GETTING COMPROMISE

DECENTRALIZED TOYOTISM SATURNIAN

CENTRALIZED UDDEVALLIST KALMARIST

..

~y~3gj_Tables 9 and 10 are adapted from a joint research with Benjamin CORIAT

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49

capital labor management :

- If conventional scientific management pr.inciples are still ruling, then

electronized equipment goods (robots as well as computers) will be used

b.v managers in order to ti.e6to11.e contn.o.e ouett btu.e 4nd. wh.Lte co.e.eaJt.6. For

example, new flexible automated equipment could be designed in order to

maintain a clear separation between conception and execution tasks CD.

NOBLE (1984)). Consequentl.v, a neo-,o'1.di6t work organization would

deepen previous trends in scientific management. Man.v examples of such a

strateg.v can be provided by the American CP. ADLER ( 1990)) and French

manufacturers (Ph. D' IRIBARNE ( 1989b)). In most cases 4:>ut of course

there are some exceptions-, the name of the game i s s imp 1 e : "remove the

skills off the grass roots workers I"

- But the same equipments or sma 11 adaptations of them ·can support an

alternative strategy, the motte of which would be quite on the contrary:

"give as many ski 1 ls as possible to workers". Then due to their

workers'committment, the firms can consequently get simultaneously

quality of the product, high productivity and market versatility. Indeed,

information technologies would help, but not necessary imply, to give

more control of machines by workers CH. SHAIKEN C 1984)). This toyot.L6t 011.

,.eexLb.ee 6peciali6a.tion 6tMtegy is at odds with the neo-fordist one

which aims to control workers by machines. This restructuring seems

common to very different national economies : Japanese, as well as

Swedish and German firms seem to share this same concern.

Recent detailled investigations and international comparative studies

suggest that the first strategy gives better results than the second one.

For example, in the car industry, the new conceptions provide

simultaneously more productivity and better quality, lower unit costs and a

larger flexibility to demand variations CD. ROOS (1989)). For the mo~t.

advanced flexible manufacturing system, i.e. computer integrated

manufacturing, comparative analyses show convincingly that the performance

of any given plant is highly corelated with the skills involved. Gfven the

numerous breakings down and the progressive learning how ta repair and

prevent them, only wel 1 trained workers can maintain a decent capacity

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50

utilfsatfon <R. AYRES (1990), R. J. BAOHAM (1990)). Sfm.ilarly, in the service sectors, the efficiency of computer networks is closely associated wfth the qualtty of data, i.e. the concern of white collars for thefr Job. If not, "garbagge in, garbagge out" 1 Consequently, in figure 3, the most promf sing strategies are re lated to the enhancement of sk il ls and organizational flexibility. But now a second major issue has to be addressed at.

• Haw 1>hou.td the dlvlden.d.1, o& thl1, n.eco con.&LaUJta.tlon. be dl1>t11.Lbu.ted ? Aga in, the previous international comparison suggests that there is not necessarily one best way: alternative strategies might cape with the same restructuring of work organfzation. How and at what level should be negociated the sharing of the related rents? Three major strategies are available :

- Ma.h.ket mecha.n.L1,m1, can be considered at the more efficient tool in order to guide such a restructuring process. Labor mobility from obsolete firms to promising ones, as well as efficient labor markets would provide incentives for such a diffusion of the new productive organization. According to a "laissez faire" strategy, the past fordist collective agreements should vanish and be replaced by purely individual strategies.

- Me1,o co11.p0Mtl1,m is an alternative arrangement. On one side, workers, managers and firms holders would negociate a long run compromise about rent sharing, at least for large conglomerates (M. AOKI (1988), (1990)). On the other side, labor .mobi 1 ity would provide a diffusion of this capital labor relations to the rest of the economy. State interventions would be as moderate as within the purely decentralized cas.

- Soclal democMtlc compttoml1>e extend this configuration to the who le economy via a centralizatfon of wage bargainfng, subsidies to fndustria.1 restructuring and retraining, via macroeconomic policy used in order to sustain this basic capital labor relations. Consequently, State interventions are numerous and imply many genuine institutions as well as large social transfers.

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51

Ouring the Sixties and Seventies, economists used to think that market

mechanisms generally provide an optimum outcome, superior to meso or social

democra tic corpora t i sm. Modern micro theor i es emphas i ses the externa 11 t i es

associated with network information technologies (B. ARTHUR (1988)) and the

spillovers from one innovation to another (P. ROMER (1986)). Consequently,

pure market competit1on might lock economies into 1nferior state and

conversely some coordination ru les could provide better outcomes. This is a

first reason for the possible super1ority of meso or macro institutions.

Another one is st il 1 more important for CLR : the apparent unabil ity of pure

and perfect competition to provide the adequate skills. Firms would under

invest into training, since it raises a public good dilemma: why to train

if skilled workers can be poached from other firms? The more decentralized

industrfal systems US and UK do exhibft poor vocational training. The

prob lem is specia 11.Y acute for the United States <DERTOUZOS M. &. Ali i

(1989), BUSINESS WEEK (1988)). On the contrary, some international

comparative studies suggest the superiority of meso or micro corporatist

training institutions CW. STREECK (1989a,b)).

Therefore, each economy manifest some institutional and technological

inertia, more or less related to the form of labor division and ways for

getting social and political compromises about the CLR. Consequently, each

economy does not have the same opportunity to follow a given strategy: some

are more likely than others.

3. FOUR NATIONAL TRAJECTORIES.

The choice 11mong alternative strategies is always, at least partially,

the consequences of the regulatory schemes of the various countries. A

substantial amont of comparative research ( including R.J. FLANAGAN &. al.

(1983), R. BOYER Ed. (1986), R.Z. LAWRENCE&. Ch. L. SCHULTZE Eds (1987>~·H •..

SARFATI &. C. KOBRIN Eds < 1987), ILO < 1987), OECD < 1988a), < 1989>, Ph.

SCHMITTER &. W. STREECK C 1988), B. BRUNHES < 1989), points to four major

trajectories regards the wage-labor relationship <Table 11). The following

analysis confines itself to advanced capitalist countries, leaving as ide the

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TABLE 11 . OUTLINE OF A TYPOLOGY : FOUR TRAJECTORIES .

TRAJECTORIES DECENTRALIZED

AND ADVERSARIAL MICRO-CORPORATISM SOCIAL DEMOCRATIC HYBRID

·- - -·· ·- - ..

lnstitutional - Decentralisation - Compromise within - High degree of - Relative cèntrallsation characteristics - External mobility the firm centralisation - Weak internai inobil-

- Market forces - Internai mobility - Region- and state- ity/enforced external - Little trade union - Weak trade union sponsored mobility , mobility

involvement involvement - Much involvement of - Trade union tradition strong trade unions

Adjustment - Lay-offs - Internai transfers - lndustrial - Staff eut-backs variables - Variation of average f rom job to job redeployment - Rigidity of real wages

/ wage - Pressure for product - Possibility of wage - Weak variation of --L. Variability of wage innovation flexibility wage dispersion

dispersion - Multiple skills - Flat wage structure - Unemployment - Regional mobility - Reliance on bonuses , - Training among the yoûng

Advantages - Quick response to - Short-term response: - Maintenance of wage - Maintenance of thé 1 ~·.

recessions bonuses uniformity welfare state - Adjustment to - Long-term response: , - Affirmation of the - Stimulation ot

structural changes productivity and principle of full productivlty product innovation employment

Drawbacks - lnadequate training - Build-up of labour - Strain on the capital/ - Arbitratlon ln - Little l9ng-term - De facto segmentation labour compromise favour of

investment of the labour force - Strain on public jobholders - Possible inhibition of (large enterprises/ finances - Erosion of the

technical chang.e subcontractors) - Adverse eff ects wage-labour - Limitations in labour- of fiat wage relationship

intensive industries structure on incentives - Youth unemployment

- Forced reductlon of activity rates

Examples United States, ' Japan Sweden, Austria, W G France, Italy , U K

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5J

newly fndustrfalised countries, despfte thefr growfng importance in the

international division of labor.

• A decen.t'1.allzed and a.d.ueru,a11.Lal th.a.J ectol'Lfl tests , in genera 1 , on a broad

decentralisatfon of wage bargainfng ; it favours recourse to external

mobility and relies on the market, rather than on trade union efforts, to

adjust employment to technical innovations, to the pressures of competition

and to the frequent disruptions which have characterised the international

economy in the past two decades. In theory, the mobility of employment and

the corresponding flexibility of wages constitute the keyvariables in the

adjustment ta changing circumstance. This model offers a deffnite advantage

during recessionary periods or wi th respect ta the dec 1 ine of ageing

sectors. Yet ft has a number of defects. The extreme flexibilftyof wages,

the heterogeneity of legislation concerning trade union rights and the

modest levels of the minimum wage may inhibft labor-sàving technical

changes. Why chance expensive and risky innovations ta obtain results that

can be ach i eved through a de f ens ive f1 ex i b il i ty ? However, as severa 1

econometric studies have shown CG. DUMENIL & O. LEVY (1989)), in the long

run the s 1 ugg i shness of rea 1 wages slows the ove ra 11 produc t f v i ty of

production factors. The reader will have recognised this as a description

of the American and Canadian economies. This would propel these economies

towards d ma.ttl2et pu6hed neo-,oltd.L6m (Figure 3).

• A mLc11.o-co11.po'1.a.tL6t mode.e, on the contrary, seems to characterise Japan. A

compromise concerning the sharing of surpluses resultfng from quick

reactions to market opportunities and from productivity gains made possible

by the effects of experience is evident in its large enterprises. Obviously

the subcontracting network helps to soften the impact of economic

fluctuations, but it also plays a role in the ongoing modernisation

strategy. The versatility of labor and product innovation are the key

factors in long-term adjustment, while flexibil ity and large bonuses

facilitate short-term adjustment. This model is therefore effective in bath

respects, fnasmuch as the compromise wfthin large enterprises does not

hinder short-term adjustments, and yet stimulates technical change.

Nevertheless, there fs no denying the disadvantages of this system. Long­

term prospects hinge on favourable global economic conditions and the

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ffnancial system's willingness to gamble on a bright future. ln addition,

this model cannot be applied 1n traditional or labor-intens1ve industries,

unless the corresponding enterprises are part of large conglomerates that

can guarantee a high level of internal mobility. In Japan's case, this

decentralised offensive flexfbilfty fs therefore accompanfed by some

segmentation and inequality among wage earners. This second trajectory is

the very example of a towotL6t c4pLtal l4bo~ n.el4tlon {Figure 3).

• The model a, o"en6Lve ,iexLbLlLtw Ln the 60CL4l democMtLc mold constitues

a third configuration which is of interest because it stands in sharp

contrast to the previous two models. The strength and solidarity of the

workers'movement, and its close ties to the social democratic party, have

led to a unique institutional configuration, characterised by a

multfplfcit.Y of collective mechanisms whfch ensure the mobilfty of wage

earners and the adaptation to techn i ca 1 change. The advantages of th i s

system are to be found -in the assistance made available for industrial

reconversion, the possibility of timely wage flexibility and the priority

accorded to full employment. Contrary to the European model, preference is

given to training and active employment creation measures over traditional

unèmployment benefits <OECO { 1989)). Nevertheless, if we are to judge by

its socio-pol1tical track record of the 1980's, this system also exhibits

certain tensions : the temptatfon of enterprises to question the compromise

of the 1980' s, persistent public def i c 1 ts, and the counterproduct ive

effects of an overly flat wage structure. An yet, the return to nearly full

employment is proof that this model has coped successfully with the

structural changes of the 1970's and 1980's. The 1990's, however, are aga in

cha 1 lenging the compromise, espec1a 1 ly as regards ear 1 ier wage

restraint.But this model, far from representing a transftory exception to

defensive flexibil ity strategies, seems to be b lessed with a g1ft for

regulation which, barring major transformations, may keep it viable for

qui te some time. This third trajectory corresponds to the Uddevall4 mode.l,

pointed out by figure 3.

• Lastly, 4 hw~Ld model seems to character1se the general situation 1n the

Europe Community, allowing for occasionally significant differences

between individual countries. The system is characterised by the interplay

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of market forces and institutionalised compromises in which the trade

unions have trad i t i ona 1 ly p 1 ayed an important ro 1 e. Branch 1 eve 1 co 11 ect ive

agreements typify this approach to wage set·ting. In the 1970's, given the

initial rigidity of real wages, enterprises relied on adjustments in staff

levels. As a result, unemployment in Europe is distributed very unequally

among the various occupational groups, with the young bearing a

disproportfonate share of the burden. This is not to fmply that the

European model is without mer1t : indeed, the maintenance of social

transfers and pub lie interventions has enab led fndividua 1 countries to

to 1 erate 1 eve 1 s of unemp 1 oyment hi gher than any exper i enced si nce the

1930's. Moreover, despfte the stability of real wages, the fncentive for

productivity has never totally vanished, and there is, therefore, cause for

optimum as regards long-term competitiveness and continued improvement in

the standard of living. This trajectory is hard to locate on figure 3 since

it combines toyotL6m, Ud.d.ev~ffL6m and co~poM.te o~ ma.hket pu6hed &ottd.L6m,

in various proportions in the different countries or ·regions within the

same countries.

The pos 1 t ion of the European Commun i ty ca 11 s two comments, one

retrospective and the other prospective (M. EMERSON (1988)). ln the ELghtLe6

Europe showed the poorest results as regards unemployment and, to an extent,

inflation. Arguments in support of this contention exceed the scope of this

article, but this area is the subject of much active research which ts

expanding the frontiers of macroeconomics and labor economics· CR. BOYER Ed.

C 1988b), R. FREEMAN < 1988), R. BRUNETTA & C. De 11 'AR INGA < 1990), OECD C 1988),

L. CALMFORS & J. DRIFFILL (1988». Briefly, 1t can be argued that the

Community has yet to make a chofce. It benefits from neither the defensive

flexibility of the American continent, nor from the advantages of a social­

democratfc global compromise. This intermediate position between purely

centr~lized and decentralized models, between Fordist inertia and promisi~g

work experiment and between systems of industrial relations with either

strong or very weak .trade unions, is qualified as "hybrid", since it combines

features of both the market oriented and social-democratic strategies.

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V - CONVERGENCE THEORY REVISITED

Fina 11.Y, this work proposes an unconvent iona 1 view of the

transformations which will shape the XXIst century. The falling of the Berlin

wall and the total collapse of Eastern Europe, as well as the fad about the

Japanese mode 1, that every firm or nation should adopt and import, have given

a new appeal to the old convergence theory: in the Sixties, it was fairly

common to think that all economic systems would evolve towards a unique

configuration. In the Nineties, this vision is reviving. Still more the

breaking down of the so-called communist regimes has sometimes be interpreted

as the end of history : is not the democratic capitalism the only viable form

of organisation? So, SCHUMPETER and HAYEK would finally have defeated MARX

and KEYNES.

Of course, cap i ta 1 i sm has overcome the cha 11 enge of the commun 1st

regimes but it has itself envolved far aways from its early configuration and

taken contrasted national . .forms. Consequently, the same constraints and

opportunities ma.Y generate quite contrasted institutional forms. This

sketch.Y but we hope suggestive, analysis of the capital labor relation hints

that man.Y paths are open to capitalist dynamics, and that history is neither

totally reversible nor absolutely irreversible. Still more, in the long run,

strategic political choices during structural crises might exert a

determinant role in shaping new social relations and correlatively economic

regulation modes. The contrast between the Swedish social-democratic

compromise and Japanese micro-corporatism or the distance between the

American highly decentralized system and the European hybrid configuration is

sharp enough to show that it is nota purely cosmetic choice, but a true and

cha 11 eng i ng one •

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