| Review of: | Wage Setting, Social Pacts and the Euro: A New Role for the State by A. Hassel |
|---|---|
| Reviewed By: | Andy Mathers |
| Reviewed in: | Journal of Common Market Studies |
| Date accepted online: | 02/11/2007 |
| Published in print: | Volume 45, Issue 03, Pages 745-769 |
Book Reviews
My formative experiences of trade unionism occurred in the UK in the 1980s. Successive Conservative governments implemented monetarist economic policies, deregulated the labour market and introduced anti-union legislation which combined to favour the development of business unionism. Anke Hassel's book shows how, by a comparative study of 13 EU Member States, this 'market' approach to tackling union power was actually exceptional. For Hassel, the formation of social pacts in many EU Member States since the 1980s is evidence of the rise of a 'Third Way' (p. 237) whose approach to trade union power has been based neither on the discipline of the 'market' nor on strong corporatist 'institutions'. The 'Third Way' involves, as the book's sub-title indicates, a 'new role for the state' in a process of 'negotiation' with unions regarded as social partners. The purpose of this dialogue has been to achieve the 'negotiated adjustment' (p. 234) of wage levels deemed as a necessary corollary of the new imperatives of 'economic internationalization and financial liberalization' (p. 1).
Under the new conditions, rather than accommodating to union demands by expansionary policies, which had been the case under previous conditions of 'political exchange', Hassel hypothesizes that governments have had an incentive to negotiate with unions in order to limit the economic and political damage of deflationary policies. Whether specific governments have in fact opted for the negotiated approach has actually depended upon several factors. Hassel argues that governments whose deflationary policies have been given credibility by central banks with a conservative reputation have had less of a need to establish greater policy credibility by involvement in wage setting. This was proven by a strong correlation between levels of state intervention and central bank independence in the 1980s and 1990s (0.72). Hassel is ever keen to stress the individual cases with Belgium having a high level of state involvement and a less independent central bank while Germany and Austria possessed highly independent central banks and low levels of intervention. Hassel also demonstrates a strong correlation (0.77) between levels of government intervention and measures of consensus democracy. Again Belgium has been a key case with high scores on both counts while the UK experience was the absolute opposite case. The Conservative Party achieved strong majorities in a competitive democracy which insulated it from any significant union political influence. Hassel also shows that government intervention in wage setting has been high where unions have been less responsive to the pressures to accommodate themselves to the new realities and have defended real wage levels even at the price of higher unemployment. Here the UK was an outlier as wages were bid up, but the government remained non-interventionist. Such examples highlight the utility of Hassel's triangulated methodology which enables her to explore the specific qualities of each case within her overall analysis.
Interesting and useful as her book undoubtedly is, her overall analysis is disappointing as it limits the trade union response to neo-liberal globalization to relative acquiescence. The development of social liberalism in EU Member States and at the transnational level has resulted in most unions deploying an insipid political strategy which has embroiled them in mechanisms of negotiation which have made them complicit in making labour pay for the crisis of capital. Yet, as Hassel notes, such mechanisms have been constructed by governments partly because of the continued political power of unions. Fortunately, a different path is possible as 'dissenting factions' (p. 183) to 'negotiated adjustment' have rejected social partnership. These union currents have developed a strategy of social movement unionism which has built on existing union power to engage politically to advance alternatives to both the neo- and social forms of liberalization.