EMPLOYEE‐OWNERSHIP AND ECONOMIC DECLINE IN WESTERN INDUSTRIAL DEMOCRACIES[1]

Abstract

THE coexistence of capitalism and democracy requires the maintenance of a delicate balance between economic imperatives and social needs. Growth eases the reconciliation. In an expanding economy jobs abound and a growing public sector is smoothly accommodated. But beliefs moulded during fat years hinder adjustment to reduced growth by developing an ideology designed to conserve the status quo. Social conflict sharpens, and state intervention is increasingly difficult to reconcile with the survived of a substantiadly free enterprise system. Programmes and policies fundamenteJly motivated by the desire to preserve industries and jobs may well accumulate to further slow economic growth and ossify production structures, trapping stagnating economies in a vicious circle. Shifts in comparative advantage, technology and industrial location have strained major industrial economies over the 1970s. Plant closings have occurred across the industrial spectrum in Europe and in the U.S. New York State, for example, lost 327,000 industrial jobs between 1970 and 1977. Total manufacturing employment stagnated after 1966 while the North-Midwest-Great Lakes region lost 1.4 million manufacturing jobs - equal to 8 per cent of the national total (Smith and McGuigan, 1979). Decline in the industrial work force and southward locational shifts have similarly occurred in the U.K. (Bacon and Eltis, 1976). Gloomy long-term trends suggest that economic dislocation will prove an increasing problem. Structural and technological change, increasing foreign competition and capital outflows bode ill for free enterprise in the major industrial countries, assuming no reversal of the trend towards satisfying immediate socicil needs - one of which is invariably taken to be employment.'^!