Analyse Whether Reforms Address Problems In This Market

THE POLITICAL ECONOMY OF LABOR MARKETS
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Introduction
Labor market policies have aggressively developed on a global scale over the last three decades although distinctly national in overall orientation. The various determinants of the active labor markets policy include human capital investment, employment, incentives and occupation. Since the early 1970s, the world has undergone significance changes in the labor sector specifically after the fall of the gold standard era and the Britton Woods system adopted capitalism and when communism finally came to an end in the late 1980s, they were both replaced by an era of consolidated monetarism. During the mid 20th century the poor and the workers relations were better addressed by the communist system than the capitalist one and therefore the latter was forced to adopt reformative approaches such as equity after World War II.
Through elimination of economic competition in the post war era, Keynesian policies were introduced and their aim was two pronged in its approach. The first aim was to improve the mode of production in order to enhance the capacity of capitalism and secondly to secure the well-being of the capital by abandoning capitalism without providing an alternative which gave a leeway for significant wage related reforms that saw the legalization of new working conditions with several perks under new social rights based leaderships.
The capitalist model relies on the worker selling their labor power to the capitalist for production of more than is required of them, in what is called surplus value accumulation. By detaching labor from the means of production, labor power is sold in the market as a commodity with an aim to produce more in less time at a lesser cost while the labor is used as a pedestal for improving the living conditions of the worker by decreasing the working time and increasing their wages. From this explanation, the capitalistic production process is antagonistic.
The state as a beneficiary of capitalistic practices represents a political reflection of the economic relations through the class antagonism, which is necessary for social reproduction. This paper analyses the changes from the Keynesian economic policies to the monetary economic policies with regard to the Marxists definitions of class, a capitalist state, class struggle and the disobedience of labor. It further interrogates labor reforms which are considered an initiative for production processes to perpetuate labor dependency for profit making and efficiency.
From the Gold Standard to the Labor Standard
During the period following the wars, commonly known as the gold standard era, governments undertook to full time employment for purposes of economic and industrial recovery. Britain and France however took different directions in how they administered the unemployment issue. While France never attached any political significance to the unemployment Britain undertook policies that aimed at industrial reconstruction which required formal and attractive employment terms. Together with these policies, Britain saw the need to align work practices with manufacturing needs for purposes of industrial sustainability. Social security after the war period was meant to attract workers from rural areas to formal employment with promises of government social protection and retirement benefits at the end of their work service. In France full employment meant formal insubordination to a particular employer in a single profession with guaranteed social security schemes for all workers that became the central feature for trade unionism in France. Meanwhile in Britain full employment was confined to politics of macroeconomics that saw direct state involvement to guarantee jobs for all. Government interventions also meant that working practices were regulated, negotiated wage enforcement, skill evaluation and approval and determination of different cadres of skilled and unskilled labor. Full employment was guaranteed by government’s policies on job security. The state however exercised minimal influence on matters to do with job content and rationalization of the workplace.
Many outcomes of the new policies were at play most notable among them being the impact of full employment on the role of the state on labor market regulation. The British state’s right to intervene in enforcement of the new systems was vehemently opposed by industry players and there was need to draw boundaries for industrial and political spheres of influence for matters such as limitation of state regulatory mechanisms to involve external players on issues concerning social welfare on the labor market. Meanwhile France fostered economic modernization through indicative planning as a tool for coordinating production, training and employment under the Commissariat General du Plan (CGP), which created frameworks for industrial coordination of a five yearly plan for both state and private run industries and also established the necessary structures for its successful implementation both technical and administrative. The CGP plan managed to coordinate and increase productivity through systems and policies that created an enabling environment for industrial taxation whose focus was on payrolls and not profits.
The wage problem was compounded by collective bargaining which legalized the rates of pay unlike the situation of market bargaining between the employer and the employee (Hicks,1955, p.390). The wage structure was insulated from its old exposure to economic pressures which in turn addressed themselves instead of addressing the issue of unemployment. Increased unemployment was not aided by the wage structure and eventually led to the fall of the gold standard. Postwar Britain did not have policy frameworks for socio economic objectives such as the demarcation between public and private interest, industrial and political spaces and this created an enabling environment for debate. The sterling crises of 1956 and 1961 forced the state to consider the wage policies and it instigated interest in French policies while bidding to join the EEC.
Full employment in Britain during this period was muddled in the politics of interests which focused on the scope of the policies rather than how policy should have been determined therefore directly influencing employment and industrial practice. The state capture of social welfare had little impact on the behavior of the labor market. State policy began to be pronounced in terms of economic and technological advancement to ensure sustained growth. Performance of state run projects was poor because particular interests gauged the benefits accrued from free market dynamics and private expertise against a custom of trade shrouded in mystery which encouraged restrictive practices which impacted negatively on output. The rising inflation flexed the government to intervene in labor market in order to sustain and raise productivity as well as ensure full employment. In the late 1970s, the Thatcher administration came into office with a promise to restore labor market forces and spur recovery.
Flexible labor markets
The labor market in Britain was divided because of public and private interests, lack of technical expertise, poor performance in the public sector and all these were aimed at crippling state involvement in the human resourcing. After the British lost colonial markets they developed strategies to counter hard times by increasing investments in human capital and technology so as to stay competitive and promote mass production by competing on price.
The international markets plummeted in the 1970s raising competition which reawakened political interventions that would increase flexibility in the working environment including social protection and national politics. However this gave rise to a number of consequences. For a start employers were able to convince government strict adherence to working agreements and social protection were of no good use to the national economy. Consequently, to be able to address economic inefficiencies and increase competitiveness on the global scene political players would seek avenues to source for capital to create more employment, increase productivity and minimize industry expenditures in a bid to mob up defense budgeting.
In the 1980s a new paradigm in the economic context changed in the labor market conditions as they began to improve. Unemployment which is basically an outcome of a surplus in the supply of low skilled labor makes it difficult to address labor issues. In Europe, unemployment was high in various countries (Italy had 33% and France 25%) and it was increasing. It was during this time that a group of economists led by Blanchard rallied that the policies addressing the unemployment rate in the region must be two-sided- they “must act on supply (on structure) at least as much as on demand; otherwise, gains will be temporary at best and may in fact worsen structural problems” (Blanchard et al., 1985).
Over the past three decades, there have been a lot of changes in the labor markets as well as labor institutions. There has a decline the heavily unionized industries and an exponential growth in private service employment. The rates of unions have declined, but the collective bargaining has remained steady. In the 1980s employment rate was high and stable in the 90s, but begun to rise in the early 2000s. However, this trend was affected by the 2008-2009 crisis. Generally, the unemployment rates have gone down below their historic lows since the 1990s and more people are entering the labor market than before. Nevertheless, mo...