Distributive Struggle and Economic Development in the 1970s in Developed Capitalist Countries*

Abstract

The intensity of the distributive struggle is an important determinant in explaining cross‐national differences in unemployment and inflation during the economic crisis of the 1970s. Unemployment is analysed as a result of corporate actions to counter the falling rate of profit. In countries with a high level of distributive struggle, the reduction of the labour force has been the main method of coping with problems of profitability. In countries with a low level of distributive struggle, other methods have also been used. Production costs have been stabilized by means of moderate incomes policy and by revaluing the currency. As a result of these policy differences, both the rates of unemployment and inflation were moderate in countries with a low level of distributive struggle, while countries with a high level faced severe problems of unemployment and inflation.

The Implications of Institutional Design for Macroeconomic Performance

“…Cameron (1984) provides a plausible explanation of the causal chain linking low incidence of strike activity and wage moderation to high levels of employment and low levels of inflation (p. 157). The relationship between high levels of corporatism and low levels of both unemployment and inflation has been demonstrated repeatedly in empirical analyses (Bleaney, 1996;Bruno & Sachs, 1985;Crepaz, 1992;Havrilesky & Granato, 1993;Iversen, 1999;McCallum, 1983McCallum, , 1986Paloheimo, 1984aPaloheimo, , 1984bSoskice, 1990;Tarantelli, 1986). The question remains of why organized labor in strongly corporatist countries is willing to sacrifice short-term economic interests (the wage increases that could be obtained competitively in tight labor markets) for broader long-term goals such as full employment and superior macroeconomic performance.…”

“…The empirical evidence strongly indicates that both are associated with a variety of positive macroeconomic outcomes. The relationship between high levels of corporatism and low levels of both unemployment and inflation has been demonstrated repeatedly in empirical analyses (Bleaney, 1996;Bruno & Sachs, 1985;Crepaz, 1992;Havrilesky & Granato, 1993;Iversen, 1999;McCallum, 1983McCallum, , 1986Paloheimo, 1984aPaloheimo, , 1984bSoskice, 1990;Tarantelli, 1986). The nature of the trade-off may vary from system to system but essentially involves guaranteed labor quiescence and moderation in wage demands in return for employment guarantees and the increased influence for labor in the realm of economic and social policy (Cameron, 1984).…”

Suomalaisen politiikan murroksia ja muutoksia

“…Toisaalta poliittinen järjestelmä ja erityisesti puolueet voidaan suhteuttaa maan talouspoliittiseen malliin ja työmarkkinajärjestelmään, jolloin korporatistisia, markkinapohjaisia ja sekamalleja voidaan verrata niiden instituutioiden tuottaman talouden ja tuottavuuden kasvun, työllisyyden, tulonjaon ja inflaation perusteella toisiinsa. Tästä näkökulmasta Suomi on ollut korporatismia lähestynyt sekamalli, jossa mainituilla mittareilla arvioituna taloudellinen tulos on ollut sangen hyvä, mutta epätasainen (Paloheimo 1984;Väyrynen 2000). Korporatismi ja konsensushakuisuus yhdistyivät tulopoliittisessa järjestelmässä, joka Suomessa oli poikkeuksellinen voimakas ja toimi liki neljä vuosikymmentä (Kiander & Vartia 1998, 30-39).…”

Explaining the Rain: The Rise and Decline of Nations after 25 Years

“…Because the sclerosis literature is so vast, studies that use other dependent variables are not included in the table. Some examples of alternative sclerotic effects investigated include the level of GDP (Quiggen 1992), inflation and unemployment (Paloheimo 1984), income inequality (Chan 1989), investment (Coates and Heckelman 2003b), and degree of financial development (Rajan and Zingales 2003). Empirical tests of other implications from Rise and Decline are not discussed here.'…”