CHAPTER 8: The Miserable Metrics of Neoliberalism

Conclusion to Chapter 8

Consistent with the main line of argument in this thesis then, is the proposition that labour market flexibilisation is the other side of the neoliberal policy coin; namely, price stability and conservative fiscal policy all locked in via the globalisation of production and finance.  In this sense, neoliberalism as a hegemonic accumulation strategy has meant that there is a certain convergent logic when it comes to welfare state and labour market policy design.  Indeed, as we have already seen the OECD was encouraging a convergence along neoliberal lines.  The flexibilisation of labour markets become the desired norm.  One is tempted to conclude that the VoC paradigm was not so much wrong in its central hypothesis that national capitalisms and their attendant institutional arrangements could come in a variety of formal institutional forms.  Where they chiefly erred was in making any serious attempt to evaluate the substantive outcomes being generated by those divergent institutional arrangements (Coates, 2000; Fast, 2005).  As Guy Standing (2008: p.19) succinctly summed just before the consequences of the 2008 global crisis set in:

Since about the mid-1970s, there has been extensive labour re-commodification, in which (re-)casualisation has been one means of leveraging a new set of social relations of production and distribution. In the name of competitiveness, social scientists and policymakers are seeking to make labour markets more ‘‘flexible’’. It is beggar-my-neighbour flexibility, since country after country is urged to make its labour system more flexible by reference to the apparently more flexible system somewhere else. Epitomising this, a debate is taking place in India about the need to make its labour market more flexible to be more competitive with China, the USA and elsewhere, at a time when the Indian economy is growing at 8% a year.

In general, but particularly in western Europe, one alleged cause of unemployment, slow economic growth and labour market ‘‘rigidities’’ is the employment protection system built up in the pre-globalisation era. Accordingly, country after country has weakened it. This is not labour market de-regulation, but re-regulation, in favour of employers relative to workers, the reverse of what had occurred in the post-1945 era. Rolling back employment protection is part of a process of re-casualisation, as is the restructuring of social income taking place, which is intensifying income insecurity. It is the essence of labour re-commodification. There has been a shift back to W, money wages, and a whittling away of entitlement to enterprise benefits, EB, and to state benefits, SB. Even within each of those, entitlement to non-wage benefits and forms of security is becoming more diversified or unequal according to work status.

If there is a shift to W and to PB (individualised benefits, as in savings accounts), it has historical resonance with the casual labour era of proletarianisation, memorably analysed by the likes of E.P.Thompson and Eric Hobsbawm. But remnants of the ‘pre-capitalist’ era have been swept away, leaving those being casualised and made dependent on money wages vulnerable and ready to indulge in concession bargaining as they surrender entitlements acquired by working-class struggles in the 19th and 20th centuries.

The intimate connection between the public regulation of abstract labour and the private regulation of concrete labour (see Chapter 10) was savagely understood by the OECD when it issued its landmark Jobs Study and Strategy during the mid 1990s.  Once it was accepted that globalisation and cut-throat international competition was the immutable context in which policy makers had to act it was a foreseeable consequence (see for example, Coates, 2000; Albo and Fast, 2001; Fast, 2005), that labour market restructuring would have to take a more punitive turn: even if continental social and Christian democrats would attempt to share out the implied austerity more broadly.  If the above narrative once seemed too radical of a proposition to digest, sections of the establishment have now come to accept our central hypothesis in the wake of the ongoing financial crisis.[1]  In recent commentary for the Financial Times, Jeffery Sachs (2011) had, in part, this to say:

…..Neither the US nor Europe has even properly diagnosed the core problem, namely that both regions are being whipsawed by globalisation.

Jobs for low-skilled workers in manufacturing, and new investments in large swaths of industry, have been lost to international competition. Employment in the US and Europe during the 2000s was held up only by housing construction stoked by low interest rates and reckless deregulation – until the construction bubble collapsed…

Of course it should not have taken a global financial crisis rooted in a credit boom and then three and a half years of stubbornly high unemployment across much of the advanced capitalist zone to realize that there was indeed a contradiction at the heart of neoliberalism as a hegemonic accumulation strategy.  As we shall see in the next chapter, the hollowing out of US, UK and Canadian manufacturing was unmistakable in the time series data prior to the financial crisis.  As too was the trend toward increasing pre-tax income inequality.  It is to those two concerns that this dissertation now turns.

[1] Any number of quotations could be pulled from Paul Krugman or Joseph Stiglitz to substantiate this observation.