9 - Trade Unions and the Future of Democratic Capitalism

Summary

During the twentieth century, trade unions and employers' organizations had a firm place in modern market economies. Union organizations were the counterweight to business, striving to compensate for the vulnerability of the individual worker to the risks of the market. As economic and political organizations, trade unions could raise wages, improve working conditions, and promote center-left political parties, which represented their interests in the political arena. Social insurance and redistribution, employment protection, health and safety, and the expansion of the middle class over the last hundred years were directly connected to the presence of trade unions. Their organizations and functions emerged in the process of industrialization in the late nineteenth century parallel to employers' organizations.

From the vantage point of the second decade of the twenty-first century, twentieth century industrial organization has been undergoing tremendous change. These developments have impacted on political parties' and industrial interest associations' capacities to make and affect public policies and ultimately to affect economic outcomes, such as economic growth, unemployment, and inflation. Nevertheless, the stark cross-national diversity in industrial relations and political mobilization of labor, crystallized through long struggles, has not simply disappeared without a trace in contemporary postindustrial capitalism. Some critical elements linger on and separate in particular the Scandinavian from the Continental European polities, even though they are often combined under the rubric of “coordinated” market economies. These two, in turn, are still, in some ways, set apart from both the Anglo-Saxon liberal political economies, where the decline of organized labor has been most pronounced, as well as from the Mediterranean “mixed-market” capitalisms, with rather strong state intervention. As asserted in this book's introduction, there are common shocks and directions of change, albeit without entirely removing the cross-national diversity of industrial relations systems and their capacities to cope with the challenges of market allocation.