Volume 44, Number 173,
April-June 2013
Adjustment: Origin of the European Crisis
Andrés Musacchio
TRANSFORMATIONS IN THE EUROPEAN ECONOMY FOLLOWING THE 1970s CRISIS ( ...continuation )

On a basic level, the new mode of integration turned the States into the main place of intervention for labor market and social security adjustments, always in a negative direction. The end of the Cold War and the fall of the socialist regime are also linked to this trend. The welfare states of a set of countries located on the border with the socialist world owed much of their existence to the fact of this border location, as they served as a barrier against the advance of ideas and communist influence and a demonstration of the social prosperity of capitalism versus socialism. When the socialist system collapsed, the welfare states lost their strategic role and were gradually closed off, at the speed allowed by the internal conditions of each country. Starting in the 1980s, new strategic conditions on the international plane, restrictions imposed by integration and internal restructuring began to develop a “Europe of capital,” which was much more accessible to the needs of large business conglomerates than to sustaining living standards and equality.

In this Europe of capital, two sets of factors increasingly weakened the position of laborers in defending their living standards, salaries and social benefits. On the one hand, the new institutional nature of integration left nation-states with few tools to react in the face of shocks or structural imbalances. Fundamentally, this was a result of stimulating internal competition by increased flexibility in the labor market and fiscal adjustment by reducing social spending.

THE LABOR MARKET AND INCOME DISTRIBUTION: THE CRISIS BEGINS

Transformations on the spatial level – local, national and regional – are linked to a change in power structures, as well as relations among groups that participate in the productive process, or as Bieling and Schulten (2002: 260) call it, a displacement of power in three simultaneous spheres. First, between businessmen and laborers, based on technical-productive reorganization, anti-inflationary policy, fiscal adjustments and competitive pressure, all of which have put the working class on the defensive. Second, there is a displacement of power between local departments and central offices of large corporations, putting the latter under strong pressure to achieve earnings and competitiveness objectives in the short term, affecting labor conditions and salaries. Finally, investors are acquiring growing power – especially in institutional investments such as pension, investment or insurance funds – over the direction of companies receiving these funds.

The advance of capital in social relations drives three tensions, which may be understood as a result of the contradictory relationships in the heart of the accumulation process between the emerging needs of the valuation process and the needs of the labor process. First, if, on the one hand, the firm tries to minimize salary costs and as such drive job insecurity, on the other hand, the need to increase labor productivity – from the point of view of the quality and reliability of productive processes – imposes a certain level of stability for salaried workers to develop and use their cooperative capacities and specific training in the search for growing competitiveness (Freyssinet, 2007: 53). In this sense, it must be added that in the search for reliability, businesses internalize the features of national educational systems, which are an additional division between countries. Secondly, there is a tension between, on the one hand, the need of businesses to weaken the negotiating power of laborers by generating insecurity, competition and fragmentation, and on the other, the need to generate some labor stability to contain conflicts and prevent clashes that may endanger the reproduction of social relations (Freyssinet, 2007: 54). In this sense, nations continue to be the principal institutional reference for the Union or local institutions to stabilize serious conflicts. A third tension, equally as important as the other two, results from the growing importance of financial capital. This tension traps productive activity between the need to obtain extraordinary immediate earnings – accelerating all possible forms of exploitation, either in labor relations, the use of physical capital or the use of natural resources – and the need to establish a sustainable activity that represents a less damaging use of the set of resources.

These tensions define the field of negotiation for labor relations, where there is clearly the greater power of capital pressure, but also the existence of some spaces where the deterioration of union sectors is contained. In this way, new forms of labor relations bring together spatial institutional changes as well as structural economic phenomena.

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Feb 23th, 2018.
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