Comment on Ronald Dore, ‘Rigidities in the Labour Market’

Extract

AT THE END OF HIS REVIEW OF LABOUR MARKET RIGIDITIES in advanced capitalist societies, Ronald Dore presents us with the classical and highly uncomfortable dilemma between equity and efficiency. There are two kinds of rigidities, he suggests: those that improve economic performance while giving rise to social inequality and societal dualism, and those that promote equity while detracting from efficiency. Unlike neo-classical economics, Dore recognises that to be efficient, advanced production systems require institutions above and beyond the market — such as long-term employment, internal labour markets, and ‘sticky’ mechanisms of wage determination. But these institutions, he insists, are not, or no longer, defensible in terms of the Marshallian tradition of industrial and social citizenship. Social justice and equality, according to Dore, are vested today in a second type of ‘ridigities’ — the redistributive apparatus of the welfare state — which, unlike the first, extracts an ‘efficiency price’ from the economy.