ABSTRACT
The literature in political economy has increasingly focussed on the process of ‘globalization’ and its impact on the politics of the developed capitalist countries. The dominant view is that it has augmented the power of capital by increasing its mobility, and thereby its bargaining power vis-à-vis both labour and the state. At the same time, it has blunted many of the state’s policy instruments: in particular Keynesian demand management is ineffective if an increase in purchasing power leads to an inflow of imports and a payments crisis. The failure of the reflationary policy of the Mitterand government’s first year is taken as proof of this point. International agreements and trade blocs such as the European Union also limit the ability of governments to intervene on the supply side. All of this has led to the breakdown or weakening of tripartite arrangements, as capital loses the incentive to bargain with domestic labour when it can transfer production elsewhere.1
