2 - The structure of the labor market

Summary

This chapter argues that the capitalist organization of production creates clusters of jobs offering workers systematically different opportunities for the use and acquisition of skills, and for regular employment. The capitalists create jobs of various types, and the worker tries to find one suited to his ambitions.

But the freedom of the capitalists as a group is not the freedom of the single entrepreneur. He is not at liberty to organize work as he will. The types of jobs he offers depend on the sort of investment strategy he pursues; and his choice of investment strategy depends on his firm's position in the market. We will see that since the last quarter of the nineteenth century, capitalist industrial societies have been dominated by firms of two kinds. The first count on sizable and stable demand for their products. They invest in technological innovations that reduce production costs and redistribute skills among workers: A few come to have jobs requiring ever-more-sophisticated and general knowledge; the rest are assigned increasingly routine and specialized tasks. Firms of the second kind are smaller. They face fluctuating demand and live in the shadow of the first group. They pursue short-term investment strategies requiring less-specialized use of labor and often employing technologies discarded by the larger firms.

From above, the perspective of the student of industrial structure, the economy thus appears to be divided into a technologically advanced sector made up of large, innovative firms, and a backward sector of smaller laggards.