The State and the Reconstruction of Industrial Relations Institutions After Fordism: Britain and France Compared

Master's thesis

The State and the Reconstruction of Industrial Relations Institutions After Fordism: Britain and France Compared

1. Introduction

By the end of the 1970s, the crisis of the dominant Fordist postwar regime of accumulation had become painfully obvious across the advanced capitalist world, even if the severity and symptoms of that crisis varied from country to country. Within the labor market, Fordism came to be associated above all with a range of rigidities: in the ability to hire and fire workers; in the deployment of labor; in work organization; in skill sets; in work time; and in pay and benefits. Unsurprisingly, with that diagnosis of the problems facing capitalist economies, the logical prescription was labor market and workplace flexibility, and by the early 1980s a steady drumbeat of employers, their political allies, and even traditionally social democratic parties, were urging a wide ranging post-Fordist restructuring of work. For employers and parties of the Right, this was usually accompanied by a claim that such a restructuring required an expansion of managerial prerogative and the ability of managers to impose unilateral changes in the workplace, while trade unions and their political allies were more likely to urge the collective negotiation of any changes.

Economic growth in capitalist societies is neither a natural nor a spontaneous process. Social conflict and an assortment of crisis tendencies (particularly those resulting from a mis-match of production and consumption, and the uneven development of industrial and financial capital) make periods of stable economic growth unlikely in the absence of non-market regulation. In practice, it is a set of social institutions operating alongside the market that serve to regulate capitalist growth so as to limit industrial conflict and economic instability. Of particular importance, and the subject of this paper, are industrial relations institutions, which regulate relations between business and labor - both inside and outside the firm. The role of industrial relations institutions is important not only during periods of relative economic stability, but also when one regime of accumulation enters into crisis and pressure for change appears. At this point, industrial relations institutions play a crucial role in the capacity of economies to restructure. To put it crudely, and at this point in a somewhat functionalist formulation, during periods of economic transition, existing industrial relation institutions may act as obstacles to economic restructuring, creating pressures for institutional change.

This paper has two central contentions. First, that industrial relations reform in Britain and France in the period since the early 1980s has been a precondition for post-Fordist economic restructuring and the introduction of flexibility into the labor market and the workplace; change in the institutions of social regulation had to occur before economic restructuring could take place. Second, that the state in these two countries not only played a central role in the process of institutional reform, but that it could not have occurred without the active intervention of the state. This is all the more surprising because the time period during which these transformations took place was one in which it was widely believed that state action was limited and constrained by accelerated international economic integration and resurgent business classes. State action to reconstruct industrial relations took place well after the heyday of statist intervention in France and under an aggressively laissez-faire Conservative government in Britain. Yet in both cases, the state led the process of transformation and business followed, in many cases expressing hostility to important aspects of the reform projects.

For a variety of reasons outlined both in the theoretical section of this paper and in the accounts of reform in Britain and France, employers and trade unions are unable to undertake major projects of institutional reform or to create durable industrial relations institutions without state action; indeed, it is often the case that trade unions and employers will be hesitant or hostile to industrial relations reform, even where they know that economic restructuring is necessary. In both countries, the state ultimately took on the role of “modernizing” employer practices as part of the reform of industrial relations institutions.

In both the British and French cases, a set of industrial relations institutions had been put in place (again with the state playing a central role, though that is a different story) in the decade or so after the mid-1960s, in response to an earlier perception of economic and industrial crisis. It was these institutions, inherited from the past, that came to be associated by the early 1980s with labor market rigidities, and to be perceived as obstacles to post-Fordist economic restructuring. In part it was the role played by the state in these earlier systems of industrial relations that ensured that the state would have to be a central actor in their reform two decades later.

Nevertheless, while the goal of enabling greater labor market and workplace flexibility was similar in the two countries, there were important differences in both the form and the process of industrial relations reform. This was primarily for two reasons. First, the legacies of the industrial relations systems inherited from the past imposed quite different kinds of rigidities. In the British case, the obstacles to flexibility became associated with the decentralized system of workplace collective bargaining and deeply implanted trade union capacities and resources inside the firm, that had spread widely through the British economy from the late 1950s onwards. Thus the industrial relations reform project of the Thatcher government after 1979 was fundamentally decollectivist, aimed at weakening unions, narrowing the scope of collective regulation, and individualizing employment relations. The New Labour government elected in 1997 has emphasized greater legal protection for workers, but for the most part, its industrial relations reform project has complemented rather than conflicted with the earlier Thatcherite project.

In France, by contrast, the rigidities of the Fordist period were associated with the state, and its regulation of the labor market. In response to the crisis of May-June 1968, the French state extended its dirigisme from the arena of state planning to the labor market and the system of social welfare. Prior to the end of the 1970s, French industrial relations were marked by extremely weak firm level industrial relations institutions, high levels of class conflict, and a deeply interventionist form of regulation of employment relations as the French state, in effect, substituted for fragmented and poorly institutionalized trade unions.

Thus the reform projects of the 1980s and 1990s were aimed not at undermining collective regulation, as in Britain, but rather at enabling deregulation of the labor market by the state. To this end, industrial relations reform sought to create institutions that would permit the negotiation of flexibility through decentralized collective bargaining inside the firm, which would in turn permit the state to withdraw from regulation of the labor market. What has emerged since the mid-1980s is a set of decentralized firm-level institutions and practices that have permitted the negotiation of economic restructuring while limiting industrial conflict in the private sector. Underlying this process has been constant intervention on the part of the state to encourage and underwrite the negotiation of post-Fordist forms of flexibility in the workplace. Different starting points and sources of labor market rigidity, led to different industrial relations reform projects in France and Britain.

The second explanation for differences in the form and manner of institutional reform in Britain and France is more narrowly political. Different governments, with quite distinct ideologies, led to different understandings of the sources of economic crisis and hence different reform agendas. It is an important theme of this paper that states have a discursive power to offer an authoritative narration of crisis that in turn shapes institutional reform. Furthermore, the discursive element of reform projects created a certain plasticity in the eventual shape of institutional change which often had unintended consequences for reform efforts undertaken in the context of post-Fordist economic restructuring.

The dominant parties of the Right in the two countries were quite different: Gaullism did not share Thatcherism's neo-liberal ideology, nor its hostility to organized labor; it appropriated the language of social solidarity and consensus with the result that France has seen a high degree of consistency in the direction of industrial relations reform over the past two decades, despite frequent changes of government. Similarly, the British Labour Party - both as “Old” Labour and as “New” Labour - bears little resemblance to the French Parti Socialiste. The latter has been less statist, more enamored of the virtues of social dialogue in the workplace, and less tied to the fortunes of organized labor. The result was that its industrial relations reform project after 1981 proved quite compatible with the spread of flexibility and the deregulation of the labor market.

This paper argues that, once triggered by economic restructuring, moments of institutional reconstruction require state action because of a set of unique state capacities not enjoyed by private industrial actors. Periods of institutional stability may permit states to retreat from active regulation of the political economy, but during moments of institutional rupture - even, indeed particularly, in the era of “globalization” - we can anticipate the re-emergence of an active state role in the construction of new sets of political-economic institutions. The rest of this paper is organized as follows. First there is a brief theoretical discussion of the importance of institutional regulation for capitalist economies, and the centrality of state action in institutional change. Second, an equally brief section contrasts the industrial systems created in the 1960s and 1970s in Britain and France, and points to the different implications they had for post-Fordist restructuring and hence industrial relations reform from 1980 onwards. Then the major elements of the reform of industrial relations institutions in the 1980s and 1990s are outlined for Britain and France. In each case, the consequences of state reform projects for both industrial relations institutions, and the spread of flexibility will be examined.

2. States and Industrial Relations Institutions

This paper has two theoretical interests, which it explores through an examination of industrial relations reform in Britain and France. The first interest is in understanding the relationship between economic restructuring and institutional change. The dominant theoretical approaches in contemporary political economy stress institutional durability and continuity in the face of economic change. Whether the emphasis is upon the importance of political culture, the interlocking and self-reinforcing character of sets of institutions, or more conventional notions of path dependence, the expectation is that economic change can be largely treated as an exogenous shock that is mediated and absorbed by national political economic institutions.. Examples here include Frank Dobbin, Forging Industrial Policy (New York: Cambridge University Press, 1994), Sven Steinmo, Kathleen Thelen and Frank Longstreth, eds., Structuring Politics: Historical Institutionalism in Comparative Analysis (New York: Cambridge University Press, 1992), and contributions to the so-called “Varieties of Capitalism” approach. For the latter, see three collections of edited essays: Herbert Kitschelt, Peter Lange, Gary Marks and John D. Stephens, eds., Continuity and Change in Contemporary Capitalism (New York: Cambridge University Press, 1999); Iversen, Pontusson and Soskice, Unions, Employers, and Central Banks; and Peter Hall and David Soskice, eds., Varieties of Capitalism (New York: Oxford University Press, 2001). It becomes difficult, from this perspective, to explain moments of institutional transformation (as occurred in both British and French industrial relations after 1980), and broad processes of economic restructuring are relegated to the status of background factors, to which existing institutions adapt, rather than the source of institutional change.

In contrast, this paper is primarily concerned with those moments of institutional construction and transition when, to paraphrase Gramsci, one set of institutions is dying while another is struggling to be born. Its focus is on those points at which industrial conflict cannot be contained within existing institutional structures and practices, and thus employers, trade unions and state actors seek alternative arrangements which promise to restore industrial peace, stable accumulation and the legitimacy of capitalist social relations. In fact, sharp ruptures, in which sets of institutions are rapidly replaced or transformed in function, are every bit as important a feature of institutional development as continuity and path dependence. The paper argues that it is changes in the pattern and nature of the economic growth regime which trigger these moments of institutional transformation.

The second theoretical interest of this paper lies in examining the role of the state in institutional change. Again, the main theoretical approaches to understanding institutions anticipate a fairly limited role for the state, one of institutional maintenance rather than institutional construction. In part this follows from a renewed emphasis upon the centrality of business interests and organizations, rather than states or labor organizations, in explaining distinct national patterns of political-economic institutions.. See the introductory chapter of Hall and Soskice, Varieties of Capitalism, p. 5. It is also the case that contemporary accounts of political economy are more likely to highlight “cross-class alliances” and shared interests among class actors, than conflict.. Peter Swenson, Capitalists Against Markets: The Making of Labor Markets and Welfare States in the United States and Sweden (New York: Oxford University Press, 2002). The result is that states are assigned a secondary role in coordinating and maintaining institutions rather than managing class conflict through the construction of alternative institutions. To these factors can be added the more general expectation that national economic autonomy has shrunk, thus limiting the capacity of states to act and contributing to a “hollowing out” of the state.

In contrast, this account assigns a central role to states in explaining institutional development. States have a set of distinctive capacities when it comes to the construction and “embedding” of industrial relations institutions. The argument here is not one of state autonomy, or the importance of the distinct interests of state actors, but rather that states have unique capacities to: 1) enforce and systematize institutional change; 2) narrate an authoritative interpretation of industrial relations crisis; 3) solve the collective action problems of employers and unions; and 4) anticipate and craft alliances among private industrial actors.

The point, simply put, is that certain forms of economic restructuring require institutional change, and that the construction of new institutions requires an active state role. Far from a limited or shrinking role for the state in an era of rapid economic change, heightened competition, and new global pressures, the role of the state becomes more important because of the institutional transformation that accompanies economic change. This process is of particular importance in the sphere of industrial relations, where institutions inherited from the earlier Fordist period have come under challenge, and struggles over institutional change among industrial actors (employers, workers, and their organizations) have generated high levels of conflict.

In offering an explanation of institutional change, this paper seeks to embed an institutionalist account within the Regulationist tradition of political economy. It is important to recognize that there is no single Regulation theory; there are multiple schools of Regulationist analysis, and there has been a certain dissipation of the original shape of Regulation theory.. For a survey of the Regulation field, see Robert Boyer and Yves Saillard, eds., Regulation Theory: The State of the Art (New York: Routledge, 1995). I am heavily indebted, for the account of the development of Regulation Theory that follows, to Bob Jessop's paper, “Twenty Years of the Regulation Approach: Has It Been Worth It?” presented at the Twelfth Conference of Europeanists, Chicago, IL. March 2000. Nonetheless, for all the diversity within the family of Regulation theories, one can identify several shared assumptions which make it clear why this approach should be valuable in the task at hand. First, Regulationist accounts understand capitalist growth to be a profoundly contradictory, unstable and crisis-ridden process which will not occur “naturally.” Left to its own devices, subject only to regulation by invisible hands, capitalist economies will exhibit a range of crisis tendencies, and generate high levels of social conflict. Change within capitalist economies is therefore the product not only of exogenous shocks, but more often of a steady accumulation of internal contradictions. It is for this reason that capitalism requires institutions to regulate or stabilize growth. The Regulation approach is, above all, an institutional account of capitalism, which recognizes that the very “improbability of capitalist reproduction” ensures its “socially embedded, socially regularized nature.”. Jessop, “Twenty Years of the Regulation Approach,” no page numbers.

Second, Regulation theory goes beyond identifying crisis tendencies to offer an historicization of capitalist development centering on the different growth dynamics (or regimes of accumulation) of different phases of capitalism. While economic restructuring, instability and crisis are permanent features of capitalist economies, distinct patterns of growth lasting longer than a business cycle or two can be identified. This suggests that, while core features of capitalist growth remain, the precise relationship between production and exchange, the role of financial capital, and so on, undergo change.

It should be said that the periodization of growth regimes (and the manner in which they are operationalized) is often pretty crude: extensive and intensive, Fordist and post-Fordist. Conventional Regulationist periodization suggests an overly stage-ist interpretation of capitalist growth patterns. Different forms of economic growth do not need, and indeed are unlikely, to neatly succeed each other. Rather, we can expect them to persist and coexist. One might label a period in which industries are dominated by a large number of small producers competing on the basis of labor costs as a period of extensive growth, but that should not obscure the coexistence of multiple industrial structures. It is useful to think of each growth regime as composed of a bundle of elements, and while we may label the bundle Fordism, for example, as a kind of shorthand, that may obscure more than it illuminates. There is no particular reason to believe that all the elements of the bundle experience crisis at the same time, and therefore, one might expect a certain phasing of changes in the regulatory mechanisms. Jessop has suggested that we think of broad growth regimes as families, composed of several (national) variants, differing in many ways and sharing only a basic underlying growth dynamic. For Fordism that is the link of wages to productivity and the spread of mass consumption, while for post-Fordism it is the emphasis upon supply-side flexibility.. Bob Jessop, “Fordism and post-Fordism: A Critical Reformulation,” Lancaster Regionalism Group working Paper, number 4 (March 1991).

A Regulationist conception of institutional development encourages us to recognize that industrial relations institutions are a congealed form of class power; they reflect a particular moment of class power at the time of their construction. There is nothing necessarily fragile or contingent about class power. What gives institutions in the sphere of industrial relations their stability over time is a rough stability in the balance of class power and the economic interests of workers and employers. That is turn rests upon a stable pattern of economic growth. It is when that form of growth breaks down, and consequently the interests and resources of class actors change, that one would expect the institutions that previously regulated industrial relations to mutate, whether that involves the creation of entirely new institutions or the investing of new functions and meanings in existing institutions. In this sense the utility of the Marxist tradition of political economy - with its emphasis upon the economic patterning of social relations - is that it points towards a process of institutional construction, deconstruction, and reconstruction which is not historically contingent, fluid, and open-ended, but instead profoundly structured. A crisis of a particular pattern of economic growth does not cause a new set of regulatory mechanisms to come into being, still less can any new regulatory institutions be guaranteed to ensure stable, orderly economic growth. But the transition from one distinct type of economic growth to another will create a set of problems which are not easily resolvable using existing institutions, and that will encourage the search for new regulatory mechanisms.

This paper argues that neither “the economy” nor class actors will spontaneously produce the industrial relations institutions needed for new patterns of economic growth. The state is both a site of experimentation, and it is best positioned to select successful regulatory experiments, institutionalize them, and extend them throughout the economy. That process is both one of concrete institution-building, and a discursive one in which crisis is narrated, and new institutions and practices are discursively constituted and naturalized.. Jane Jenson's early work pointed in the direction of incorporating a discursive element into the Regulation approach, but scholars have largely ignored that promising direction of research. See Jenson, “Representations in Crisis: The Roots of Canada's Permeable Fordism,” Canadian Journal of Political Science 24: 3 (1990). State actors play a central role in the construction of industrial relations institutions by virtue of a set of unique public capacities, of which I emphasize the ability to solve collective action problems for employers and unions, and a discursive role in the interpretation of crisis, though it is important not to forget the state's overt coercive power. Above all, through the legal authority of the state, it alone can create a system in place of a set of scattered experiments. The role of the state is most significant in the movement from crisis to the construction of a new set of institutions designed to manage crisis; thus a state role is most visible in the constructive phase of institution-building and may be less necessary or less visible for the maintenance of existing institutions.

States intervene in the restructuring of industrial relations institutions because they cannot afford not to. The industrial relations system is the collective form, and regulatory mechanism, of the basic unit of the capitalist mode of production: the wage relationship. That relationship is inherently conflictual, as Marx and Polanyi (for different reasons) pointed out a long time ago. The social, economic and political consequences of industrial relations failure -- in the form of strikes, unemployment, inflation, political crisis -- make it implausible that any state can adopt a non-interventionist stance for long. But, states also intervene because business and labor may be unable to construct institutions themselves, even though they may want them and see them as beneficial. States can institutionalize practices, generalize them beyond a few leading sectors of the economy, and, above all, solve collective action problems, by limiting defection, for both business and labor organizations. States may act against the wishes of industrial actors, for their own reasons. But more often, states will act because other actors cannot - because they are timid, divided, concerned with short-term interests, have sunk costs in existing institutions, and are generally unwilling to challenge existing industrial relations institutions - and because states can perform functions and have capacities unavailable to interest groups. State actors may also anticipate potential alliances between segments of business and labor interests,. Peter Swenson, “Arranged Alliance: Business Interests in the New Deal,” Politics & Society 25:1 (March 1997). and craft policy is such a way was to increase the chances of its eventual acceptance by business interests.

Two other points need to be noted prior to moving to an examination of the reconstruction of industrial relations in Britain and France. The first is that state intervention can take a number of different forms, with legislation being only one. The administrative efforts of agencies of the state, the handling of industrial conflicts, management of the public sector, labor market policy, judicial action, welfare policy (and its impact on the labor market), along with labor law, all influence the construction and functioning of industrial relations institutions. Examining only legislative packages of industrial relations reform can provide a misleading picture of the extent to which a state can be considered interventionist in this sphere. The second point follows from the first. It would be a mistake to think of the state as a unified actor. The very variety of forms of state intervention creates the potential for conflicting approaches and projects of reform. Of particular importance in this regard is conflict between the judicial branch and executive departments such as labor ministries. To the extent that courts are partially insulated from changes in governmental power, they may place obstacles in the way of the industrial relations projects of newly-elected governments.

3. Industrial Relations Prior to 1980

The shape of industrial relations reform in Britain and France in the last two decades has been shaped not only by the imperatives of post-Fordist economic restructuring, but also by the institutional legacy of the industrial relations systems inherited from the past. In both countries, the 1960s saw an upsurge in industrial conflict as an earlier phase of economic restructuring collided with existing industrial relations institutions. During this period, it was primarily the interests of large, Fordist firms seeking to buy labor peace in return for productivity improvements that drove institutional reconfiguration. Whatever the societal interests in reform, it was the French and British states which played the central role in both narrating crisis and constructing new sets of industrial relations institutions.. For detailed accounts of these episodes, see Chris Howell, Regulating Labor: The State and Industrial Relations Reform in Postwar France (Princeton: Princeton University Press, 1992), chapters 4 & 5, and Chris Howell, Constructing Industrial relations: States, Markets and Institution Building in Britain, 1890-2000 (manuscript under review), chapter 4.

3.1 Donovan and the Decentralization of Collective Bargaining in Britain

Three distinct systems of industrial relations have been constructed in Britain in the past century. Each one emerged out of a crisis of the last as changing economic conditions rendered existing industrial relations institutions incapable of containing industrial conflict and permitting economic restructuring. In each case heightened levels of strikes triggered a public debate about the source of conflict and the shape of future institutions better suited to emerging patterns of economic growth. And in each case it was the British state that played a central role in the construction, embedding, and legitimization of new industrial relations institutions. This despite the longtime characterization of the British state as abstentionist, and industrial relations as voluntarist, a characterization that has never been adequately reconceptualized even as evidence of state activism mounted from the late 1960s onwards; accounts of state intervention in British industrial relations have tended to emphasize ad hoc, incoherent, or narrowly political explanations of state action, and they have rarely pushed the analysis back in time to challenge the voluntarist account of the first half of the 20th century.

The first system of industrial relations emerged in the early decades of the 20th century as a response to the first major crisis of Britain's staple industries, those same industries which had powered the second industrial revolution, and it sought to use industry-level collective bargaining as a mechanism for limiting both industrial conflict between trade unions and employers, and market competition between firms in highly competitive industries where the industrial structure made self-regulation by employers extremely difficult.

The second system of industrial relations developed in the early postwar decades when the center of economic gravity had shifted from the industrial staples to newer industries for whom the central problem was how to reorganize work so as to improve the productivity of more capital intensive technology and skilled labor. Industry bargaining had sought to regulate wages and hours across each industry while largely leaving firms without well developed mechanisms for regulating conflict and managing change. But by the 1960s there was a widespread perception that the lack of firm-level industrial relations institutions was both generating industrial conflict and contributing to poor productivity performance.

This culminated in the setting up of a Royal Commission, known colloquially as the Donovan Commission after its chair, in 1965 with a remit of investigating the state of industrial relations. It issued its report in 1968.

. Royal Commission on Trade Unions and Employers' Associations 1965-1968: Report (London: HMSO, 1968). The report became overshadowed by efforts in 1969 and 1971 to introduce legislation that would limit strikes. Enormous political and social conflict erupted around these legislative projects, both of which were widely judged to have failed because of resistance from the labor movement.. See the accounts in Peter Jenkins, The Battle of Downing Street (London: Charles Knight & Co Ltd, 1970), and Paul Davies and Mark Freedland, Labour Legislation and Public Policy (Oxford: Clarendon Press, 1993). But it is important to return to the Donovan Report itself to understand the transformation of British industrial relations that did take place in the course of the 1970s and early 1980s. The fundamental argument of the Report was that Britain lacked firm level institutions of collective regulation: trade union organizations had limited capacities inside the firm, and little control over the actions of unionized workers and lay union officials (shop stewards); trade unions and employers' associations focused their attention and resources on industry level bargaining, despite the fact that it was inside the workplace that economic restructuring was being negotiated; in the absence of both firm-level industrial relations institutions, restructuring tended to generate high levels of industrial conflict. Workplace bargaining was characterized as “largely informal, largely fragmented and largely autonomous.”. Royal Commission on Trade Unions and Employers' Associations, para 65. Managers, it was famously argued, had lost control of the workplace, and could “only regain control by sharing it” with unions.. This comes from Flanders' essay presented to the Royal Commission (“Collective Bargaining: A Prescription for Change” reprinted in Allan Flanders, Management and Unions (London: Faber & Faber, 1970). The phrase is quoted in Sid Kessler and Fred Bayliss, Contemporary British Industrial Relations, third edition (London: McMillan Press, 1998), p.36.

Starting in 1974 a new Labour government introduced legislation that encouraged the emergence of firm-level industrial relations institutions. Collectively, this legislation has “some title to be regarded as a grand plan for the promotion by legal means of the system of collective bargaining.”. Davies and Freedland, Labour Legislation and Public Policy, p. 386. There were three elements to this grand plan: first, a statutory right to trade union recognition was created for the first time in the history of British industrial relations; second, workers were granted a set of individual rights designed to encourage and improve collective bargaining, including funding for shop steward training, time off for shop stewards, and rights to information and consultation; third, a new form of extension procedure was created that permitted trade unions to use legislation to drive employers to the bargaining table and grant them recognition. This is the sense in which the general secretary of Britain's largest union famously described the legislation as a “shop stewards charter.”. Jack Jones, Union Man: The Autobiography of Jack Jones (London: Collins, 1986), p.285.

The effect of this legislation was to reduce the cost of decentralizing bargaining for unions and to require employers and the state to subsidize firm-level bargaining. Evidence from an assortment of workplace surveys demonstrates that the next decade saw a remarkable spread in workplace bargaining, the diffusion of trade unionism into new sectors of the economy, and an explosion in the number and formalized role of shop stewards (whose numbers grew three and a half times between 1961 and 1980.. The benchmark for evidence of these developments comes from the 1980 and 1984 Workplace Industrial Relations Survey: Neil Millward and Mark Stevens, British Workplace Industrial Relations 1980-1984: The DE/ESRC/PSI/ACAS Surveys (Aldershot, UK: Gower, 1986). The figures on shop steward development comes from Michael Terry, “Shop Steward Development and Managerial Strategies,” in Bain, ed., Industrial Relations in Britain, p.67 for the 1961 estimate, and Millward and Stevens, British Workplace Industrial Relations 1980-1984, p.85 for the 1980 estimate. The latter also estimate a small rise to 335,000 by 1984. Accompanying that growth was the spread of a range of other workplace institutions including the closed shop and dues check-off, which had the combined effect of permitting a shift in the role of shop stewards from recruiters and dues collectors to negotiators and grievance officials.

In a fundamental sense, however, this ambitious project of industrial relations reform failed. It did change the face of British industrial relations, creating a new set of workplace institutions, but it did so without bringing about the labor peace that the Donovan Report had anticipated. The result was that employer resistance grew, especially after it became clear that the legislation was vulnerable to outright non-compliance on the part of employers. Thus when Margaret Thatcher's Conservative Party was elected to power in 1979, following the public sector strike wave known as the “Winter of Discontent,” it was plausible to argue that overly strong trade unions, and the system of decentralized bargaining itself, were responsible for economic crisis, and that any industrial relations reform project would have to dismantle or sharply circumscribe that set of institutions.

3.2 May 1968 and The Emergence of Statist Labor Regulation in France

France also experienced important efforts to reform the industrial relations system after the massive strike wave of May-June 1968, efforts in which the state took the leading role. Paradoxically, the goal of institutional reform was something similar to the decentralized form of collective bargaining that did take root in Britain during this same period - indeed an influential academic review of the causes of the France's wave of industrial conflict elaborated a diagnosis that was almost identical to the at of the Donovan Report, and a similar prescription. See the Jean-Daniel Reynaud, Sami Dossa, Josette Dossa and Oierre Maclouf, “Les evenements de mai et juin 1968 et le systeme francais de relations professionelles,” Sociologie du Travail no. 1 (January-March 1971). - but the outcome was quite different.

Repeatedly in the course of the 1970s, an assortment of different governments sought to encourage regular collective bargaining practices between employers and trade unions at the level of the firm. In 1970, the government of Chaban-Delmas launched the “New Society” which stressed the need for a reformed set of modern industrial relations as a precondition for economic modernization. It built upon the provision of legal protection for unions, won in the heat of the 1968 strikes, by amending the 1950 framework legislation on collective bargaining to make it easier to sign firm-level agreements.

In 1974, newly-elected President Giscard d'Estaing set up the Sudreau Commission charged with reforming firm level industrial relations. The resulting report recommended a wide range of measures including a rights of worker expression in the firm, new economic powers to works councils, an obligation for firms to present an annual bilan social, that managers should recognize unions and treat them as partners, and an experiment with co-suveillance (a watered down version of German co-determination). It is worth noting that with the exception of the last element, every one of these recommendations was eventually put in place after 1981 by a Socialist government in the Auroux Laws.. Actually, even this element did appear in the public sector industrial relations reforms of the Auroux Laws. Then, in 1978, after the unexpected defeat of the Left in the legislative elections, the new government of Raymond Barre sought to “re-launch” collective bargaining by encouraging employer and union organizations to bargain over a range of issues. The strategy was one that would become familiar after 1981: to promise employers a withdrawal of the state from regulation of the labor market, and hence greater flexibility, in return for agreement to engage in decentralized collective bargaining with trade unions.

The British and French states responded to an acceleration in industrial conflict in the 1960s in similar fashion: they both sought to encourage the expansion and better implantation of firm-level collective bargaining institutions in the hope that grievances linked to large-scale economic restructuring would be channeled into peaceful wage bargaining. Yet while this strategy was institutionally successful in Britain (in the sense that decentralized collective bargaining became the norm, even if levels of industrial conflict did not decline), it was an almost total failure in France. The primary difference was the weakness of French trade unionism. The reforms were predicated upon union organizations that were strong enough to entice employers to the bargaining table, and strong enough to exercise some degree of control over their members so that collective bargaining would indeed limit industrial conflict. French unions were never up to this task, and it is noteworthy that few of the reforms directly strengthened unions themselves (in contrast to the British legislation of the mid-1970s). The result was that outside the public sector (where the state could mandate collective bargaining, and offered quite generous wage contracts in order to keep unions at the table) and a few large Fordist firms, firm-level collective bargaining remained rare.

However, this did not mean a return to the status quo ante 1968. As private industrial actors failed to take the strain of regulating industrial relations through collective bargaining, the French state became more and more directly involved in the regulation of the labor market. In effect, the state came to substitute for the weakness of trade unions and collective bargaining through a more aggressive use of the minimum wage, the requirement that large-scale layoffs receive administrative authorization, and generous unemployment benefits and public sector wage contracts. It was the state which partially decommodified the labor market in France, rather than labor organizations. All of this was done by governments of the Right, anxious to avoid another social explosion like May-June 1968, and concerned about the electoral danger posed by parties of the Left.

The result, for the purposes of this paper, was that as post-Fordist restructuring gathered pace, and labor market and workplace flexibility moved to the top of employers' agendas, the obstacle to that flexibility was not perceived to be primarily trade unions and collective bargaining, as in Britain, but rather the direct regulative efforts of the French state. All projects of industrial relations reform that sought flexibility had to tackle this problem, and to find some route that would permit a withdrawal of the state from industrial relations. In practice this meant trying to encourage firm-level social dialogue - perhaps with independent trade unions, but perhaps with alternative institutions representing workers - a strategy that had failed miserably in the 1970s.

4. Reconstructing British Industrial Relations

4.1 British Post-Fordism

This section is concerned with the construction of a third system of industrial relations in Britain in the period since 1979. By the 1980s, under conditions of heightened international competition, and as the weight of manufacturing employment shrunk to less than a quarter of the total, employers came to place much greater emphasis upon flexibility in all its myriad forms, and in increasingly individualized relationships between employers and employees, as the manner in which productivity gains could be made; just as different national variants of Fordism appeared in the thirty years after the Second World War, so a particular “hyperflexibility” came to mark British post-Fordism in the absence of many of the political-economic institutions characteristic of “Coordinated Market Economies,” and with the arrival in power of a government that aggressively sought to dismantle those co-ordinating institutions which did exist. Moreover, employers had become disillusioned with joint regulation of economic change, and were more prepared to take unilateral action in the firm. The result was the wholesale collapse of institutions of collective regulation at both the industry and the firm level, and the emergence of institutions suited to ensuring employers the maximum flexibility in the deployment of labor.

In retrospect, British Fordism was not only flawed, but short-lived, lasting two scant decades before succumbing to crisis in the mid-1970s. A combination of social factors (the organization and practices of managers and workers) and economic ones (the size and form of the domestic market, the level of technological sophistication, the interests of financial capital, and the external vulnerability of the British economy), ensured that the effort to construct a durable form of British Fordism quickly collapsed. Under these circumstances, it is no surprise that supply-side flexibility was eventually achieved in Britain through unilateral managerial control, decollectivisation of social relations, and labor market deregulation. What has been termed “hyperflexibility” in the British case, was a natural, though certainly not inevitable, variant of post-Fordism.. Louise Amoore, Globalisation Contested: An International Political Economy of Work (New York: Manchester University Press, 2002), see especially chapter 3. In the absence of a commitment to a difficult and much more thorough reshaping of the regulatory institutions of the British economy, accentuating the operation of market-oriented institutions was a more straightforward route. There was no such commitment from the ruling Conservative party or the main employer organizations after 1979. Without alternative financial institutions, or legislation underpinning alternative structures of corporate governance, employers were faced with the choice of continuing with the industrial relations institutions they had (often only recently) constructed in agreement with trade unions, or seeking a return to unilateral control of the firm.

The main elements of economic restructuring in Britain will be familiar to comparative political economists, involving a deepening and acceleration in the processes of internationalization, deindustrialization and flexiblization. Of course, these processes affected all advanced capitalist economies, yet as noted above, when faced with the resultant economic pressures, different countries responded in different ways. It was the interaction of international and domestic economic developments, played out on a field of national institutions, that generated the kinds of strategies pursued by the state and private industrial actors. Many of the distinctive institutional features of British capitalism - the absence of employer coordination, the absence of long-term relationships between industrial and financial capital, and the absence of the capacity for co-ordinated wage bargaining - had the effect of encouraging a response to any intensification of international competitive pressure through cost reduction, and low wage/low skill strategies.. These features are nicely characterized by Stewart Wood, “Business, Government, and Patterns of Labor Market Policy in Britain and the Federal Republic of Germany,” in Hall and Soskice, eds., Varieties of Capitalism. This has obvious implications for industrial relations. As Heery has pointed out, a social partnership model of industrial relations needs large firms, dominant in their markets, able to pursue high quality, high value-added strategies, to thrive.. Edmund Heery, “Partnership Versus Organising: Alternative Futures for British Trade Unionism,” Industrial Relations Journal 33:1 (2002). The British economy, characterized by smaller firms in competitive markets, pursuing cost-reduction strategies, was more likely to produce social conflict than social partnership. The role and value of trade unions and collective regulation are less clear under these circumstances.

The significance of the economic shifts noted above, has primarily been their effect of the interests of employers. As the internationalization of the British economy, and demands for flexibility, increased so employers have sought different relationships with their employees.. For a discussion of shifts in employer strategy, see Jonathan Boswell and James Peters, Capitalism in Contention: Business Leaders and Political Economy in Modern Britain (New York: Cambridge University Press, 1997), chapters 7 and 8. The ability to respond rapidly to international competition strengthened the existing firm-centric focus of the second industrial relations system. But the greater importance attached to flexibility in this period undermined the collective basis of that system of industrial relations because employers increasingly wanted to differentiate the terms and conditions of their employees. This made collective bargaining for large groups less attractive to employers, and they were more likely to seek an individualization of their relationship with their employees, rendering collective representation problematic.

Yet, despite the shifting interests and practices of employers, the transformation of the institutions of industrial relations required a central role for the state. That was both because employers were unable to change their relations with their employees without the aid of the state (whether through changes in labor law, the demonstration effect of enduring strikes, changes in macroeconomic policy, or the less tangible transformation of the industrial relations “climate”), and because employers were, for the most part, significantly more timid and unwilling to challenge established industrial relations institutions and practices than the state. King and Wood have noted the ambivalent relationship between employers and post-1979 Conservative governments,. King and Wood, “The Political Economy of Neoliberalism,” p. 395. which extended to many areas of economic and social policy. As the Conservatives piled up legislative packages of industrial relations reform in the 1980s and early 1990s, it is striking that the response of employers' organizations to each new consultative document was to be less radical than the government, more willing to take a pause in the reform process, and more cautious about the consequences of further reform.. This is best illustrated by examining the employer responses to government Green Papers that preceded legislation after the first (1980) package of industrial relations reform (the first legislation was widely supported by employers). See also Jonathan Boswell and James Peters, Capitalism in Contention: Business Leaders and Political Economy in Modern Britain (New York: Cambridge University Press, 1997), especially chapters 8 and 9. And yet, once legislated, employers rapidly came around to support legislation about which they had previously demonstrated concern. Employers were won over to the reform project of the state, but they did not instigate or direct it.