Industrial Relations and Unemployment: The Case for Flexible Corporatism

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.