The Effects of Post-Industrialism On the Political Economy of Western Europe

The Decline of Corporatist Bargaining

The sustained, high economic growth in Western Europe during the post-war period until 1973 led to dramatic changes in the

region's political economy. As advances in transportation and communication extended the reach of international trade into new

areas of the world, as technological advances allowed establishment of manufacturing facilities overseas, and as European real

wages climbed to unprecedented heights, the industrial base that had served as the foundation for rapid Western European growth

in the 1950's and 1960's increasingly moved to Western Europe's poorer neighbors. As the industrial base moved, so did the jobs

of a large quantity of unskilled manufacturing workers who populated the assembly lines.

In recent years, the liberalization of international trade has clearly demonstrated that European industry can no longer compete in

traditional, large-scale industrial sectors. European successes have increasingly come from specialized, high value-added industry

and from intelligent, flexible companies able to shift production quickly to capitalize on movements in world demand.

The net result of these changes has been a transition to a post-industrial society, where the stable economic order of mass

employment in large-scale industry has given way to mass unemployment and a breakdown of the political and social consensus

that held sway throughout the post-war period. These changes have fundamentally altered the Western European labor market.

This paper will show how post-industrialism has dramatically reduced the ability of many Western European countries to deliver

full employment, not simply because of changes in employment structure, but more importantly because those structural changes

have undermined the institutional framework that allowed Western European countries to control prices while pursuing full

employment policies, and have left Western Europeans widely dissatisfied with their political system.

Western European countries demonstrated varying abilities to control inflation and unemployment in the 1970's and 1980's.

Cameron argues that two variables explain much of the differences in economic performance: 1) the presence or absence of

corporatist institutions and practices,1 and 2) the role of leftist, Social Democratic political parties in government (Cameron: 144).

Centralization of labor representation facilitates corporatist bargaining. Conversely, fragemented labor representation makes

agreement difficult. The greater the number of parties, the less likely that they will find a solution palatable to all negotiators.

According to measurements of labor organizational unity by the European Yearbook, countries with the most unified labor during

the 1970's and 1980's, Austria, Sweden, Norway, Germany, Denmark and Finland, were all among the best in Europe at

controlling unemployment and inflation, while the countries with the most disunited labor, Italy, France and Spain, were less