ABSTRACT
Introduction and overview Since the 1970s the capitalist/employer classes of the OECD nations have been on the offensive in trying to “liberalize” their economies. This has involved changes in tax, industrial and welfare policies, as well as labor market policy, which is our focus. In terms of labor markets and labor relations, employers and their organizations have sought to roll back the common “restrictions” imposed by organized labor and collective bargaining agreements, typically on wages, hours, holidays and managerial hiring/firing provisions. The advanced nation where liberalization has had singular success is the United States.1 In this chapter we argue that this new US Exceptionalism is the contingent result of unique patterns of capitalist and working class formation, as well as the peculiarities of US politics. Capitalists in the United States have sought to gut the New Deal welfare state, and especially to roll back the presence and effect of organized labor in order to lower wages, erode employer and state-provided benefits, and increase both the intensity and extent of labor performed by the typical worker and household. German, French and Scandinavian employers also pursued these objectives in the 1980s and 1990s, but working-class political strength, evidenced in the ability of trade unions to impose costly strikes and in the enduring political support for social-welfare and labor-market regulatory regimes, defended in both normal politics and in mass action, largely rebuffed these offensives (Thelan 2001; Moss 1998). Whereas US wages declined significantly during the period between the early 1970s and mid 1990s, wages continued to climb in most OECD countries, with manufacturing workers in other countries closing a considerable gap with the United States during that period and in a some cases exceeding the United States by 2000. This is true despite the leap in US productivity growth in the 1990s. American workers increased annual workloads considerably, while those in Western Europe and Japan saw annual hours worked dropping by 200-400 hours per year (Mishel et al. 2005) While trade union density declined in most (though
not all) of the OECD countries, the drop was most severe in the United States and in fact the variance of trade union density increased. Less tangibly, capitalists and their allies gained ideological hegemony as they did nowhere else outside the Central Bank of Sweden, which awarded the Nobel Prize in economics to a series of Chicago School economists in this period. A variety of comparative analysts have attributed these differences to the distinctive institutional histories of the advanced capitalist nations (Hall and Soskice 2001; Streeck and Yamamura 2002). Attention to such difference is both the strength and weakness of the Institutional/Keynesian version of heterodox economics. It is a strength in that this approach allows us to think seriously about historical change in a way that neoclassical economics simply does not, but it also means that concepts must always be revised for new situations, and no abstract description of capitalist economies can ever be sufficient. Our own standpoint is both Institutional and Marxian and thus in some ways parallels James Crotty’s attempt to develop the complementary analytical strengths of the Keynesian and Marxian traditions (Crotty 1990). It was Keynes himself who pointed out the affinities between his own work and Institutional thought, in a letter written to John R. Commons in 1927. More recently, Crotty wrote:
Keynes’s theory is – as it ought to be – institutionally specific and historically contingent. In The General Theory and elsewhere Keynes made evident his belief that no all-purpose, institutionally abstract macromodel can adequately capture the processes and outcomes of distinct phases or stages of capitalist development: qualitative change in institutions, in class structure or in agent constitution or motivation requires a qualitatively distinct version of his theory.
