The political economy of inequality in Ireland Labour markets as social institutions
The revival of political economy From the outset, political economy sought to study scientifically, or at any rate rationally, systematically, and methodically, the ideal role of the state in the economic and social organisation of a country. (Piketty 2014) Distributional conflict over the social product (Martins 2013)
Regulation Theory (RT) Economic history Periodisation of capitalism (McDonough 2007) Middle range (Merton 1949) Interconnection between institutional forms and dynamic regularities of capitalist economies (Jessop 2006) Relative stability Structural crisis Institutional restructuring
Labour markets and social agency Individual workers and employers are embedded in classes (Zweig 2015) Social formations reflecting power Capital-labour relation Labour process theory (Braverman 1974) Relative autonomy of the capitalist state (Poulantzas 1978) Social relation Balance of class forces (Wolfson and Kotz 2010) Condensation of the class struggle
Regulating economic inequality Two broad forms of capitalism (Kotz 2015) Liberal Capital largely dominates over labour Free market orientation (ideas, policies, institutions) Rising inequality Financial instability Regulated Labour forces a class compromise Non-market intervention (states, unions) Subdued inequality Profit squeeze Tendency to alternate Punctuated by structural crises
Net income inequality in the EU 50 45 40 35 30 Net Gini 25 20 15 10 5 0 Source: Eurostat
Income share of top 1% and bottom 90% 74% 14% 72% Bottom 90% (left y) 12% 70% 10% 68% 8% 66% Top 1% (right y) 6% 64% 4% 62% 2% 60% 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0% Source: WWID
Wage share, % of GDP 70% 65% 60% 55% 50% Ireland US EU 15 UK 45% 40% Source: AMECO
Incidence of low pay in OECD countries 30% 25% 20% 15% 10% 5% 0% Source: OECD Stat
Rising incidence of low pay 27% 25% 23% 21% Ireland UK US 19% 17% 15% 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: OECD Stat
Trade union density 60% 55% 50% 45% 40% 35% 30% 25% Source: OECD Stat
Net wealth by decile 60% 50% 14.8% 40% Top 1% Share of Net Wealth 30% 20% 10% 0% -3.5% 0.0% 0.2% 1.2% 3.5% 5.7% 8.3% 11.9% 18.9% 22.9% 16.1% 95-99% 90-94% 0-90% 1 2 3 4 5 6 7 8 9 10-10% Bottom Net Wealth Decile Top Source: CSO HFCS, 2015
Wealth share of top 10% and top 1% 90% 1987 2015 80% 70% 60% 53% 50% 40% 42% 30% 20% 10% 10% 14.70% 0% Top 10% Top 1% Source: Nolan, 1991; CSO HFCS, 2015
Income share of top 10% 60% 55% 50% 45% 40% 35% US Ireland Denmark 30% 25% 20% 15% 1917 1920 1923 1926 1929 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Source: WWID
Responding to the crisis Neoliberal solutions won t resolve a neoliberal crisis (Kotz and McDonough 2010) Demands an alternative Privitisation is a vogue word today. Too many economists are enthusing about the race towards an unfettered, unrestrained free market economy. This is worship of an unthinking consumerism, animated not by considerations of social responsibility but a desire for the fast buck and let tomorrow look after itself (Lynch 1994)
A wage-led recovery Generalised wage repression Debt-led growth (EU periphery, US, UK) Export-led growth (Germany, China, Japan) Wage-led recovery (Onaran and Stockhammer 2016) Predistributive labour market policies Redistributive progressive taxation Broader reorientation towards progressive macroeconomic and industrial policy Full employment Equality Ecological sustainability
Political aspects of full employment Full employment capitalism will, of course, have to develop new social and political institutions which will reflect the increased power of the working class. If capitalism can adjust itself to full employment, a fundamental reform will have been incorporated in it. If not, it will show itself an outmoded system which must be scrapped. (Kalecki 1943)
Collective bargaining coverage and low pay incidence in OECD countries 30% Low pay incidence 25% 20% 15% USA EST KOR POL ISR SVK HUN MEX JPN NZL CHL CAN GBR IRL GRC CZE LUX DEU AUS PRT ESP NLD ISL AUT 10% CHE ITA DNK FIN 5% BEL 0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Collective bargaining coverage rate Source: OECD Stat and ILOSTAT
Collective bargaining coverage and net income inequality in OECD countries 0.55 0.5 MEX CHL 0.45 Net Gini Coefficient 0.4 0.35 0.3 0.25 TUR KOR USA JPN NZL POL ISR GBR EST CAN IRL HUN SVK GRC CHE CZE DEU LUX AUS SVN PRT NOR ESP ITA NLD DNK SWE ISL FIN FRA AUT BEL 0.2 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Collective bargaining coverage rate Source: OECD Stat and ILOSTAT
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