Industrial Relations and Unemployment: The Case for Flexible Corporatism

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The debate on the appropriate form of industrial relations for full employment has recently opposed centralisation (or, in one guise or another, corporatism) to decentralisation (or a market oriented system). Without doubt, the appeal of the decentralisation argument has come from the success of the American economy in the last two or three years. But, as I shall argue, this success is both transient and more due to Keynesian policies than decentralised structures; and a better picture of the effect of decentralisation can be gauged from the UK economy, where despite 13 per cent unemployment unit labour costs (ULCs) are rising at 7 per cent (against flat ULCs in Germany), training — left to the initiative of individual companies — appears to have fallen sharply, and where a current balance of payments deficit is forecast in two years’ time in spite of oil revenues and earnings from overseas investments. Moreover, at least until 1980, corporatist economies out-performed less centralised economies; and many of their problems both before and since have arisen because of low aggregate demand imposed by external constraints.