Concertation, with its various patterns discussed in the preceding chapter, represents one possible type of relationship between state and organized interests in the advanced industrial democracies. In this chapter I shall analyse the ways in which these organizations can participate first in policy-making and then in policy implementation. The strategies of political exchange and concertation – which were pivotal to the model of the centralized political regulation of the economy and hence attracted most attention from students of the relationship between economy and society in the 1970s and 1980s – will thus be framed in a broader typology which highlights their features and specific effects.

ORGANIZED INTERESTS AND POLICY-MAKING

Organized social interests are able to condition regulatory intervention by the state in various ways and to various extents. Of course, the observation that social classes and groups influence state action according to the resources available to them is by no means a new or controversial one. But what I shall seek to show in this section is that there exists another, perhaps less obvious relationship. Put briefly, depending on the type of interaction that takes place between organized interests and state institutions in the public policy-making process, the abilities of these interests to influence its outcomes will vary. In other words, although the differences in the power wielded by social groups in society account, to a large extent, for their various abilities to condition public policy, these abilities are in turn mediated by the forms assumed by their relationship with the institutions that exercise decision-making power.

The intense debate of the 1980s on employers' strategies for the reorganization of production and work (Piore and Sabel 1984; Kern and Scumann 1984; Boyer 1986; Dore 1986; Streeck 1987) probably paid insufficient attention to the variability of managerial attitudes towards the use of human resources and the problem of in-company consensus. Not that these issues were omitted from analysis; indeed, they received considerable attention in both the social sciences and management literature. But they were too frequently taken simply as corollaries to more general changes in production patterns – as phenomena, therefore, that did not require specific explanation. In other words, the variability in managerial policies of labour regulation – a concept that I clarify later – was for the most part interpreted in a straightforward manner as an aspect and a consequence of the diversification of production models.

The premise of this chapter is instead that the different strategies pursued by European employers in personnel management and industrial relations depend only in part on productive, technological and organizational choices. Institutional and social factors play no less important a role, during a phase in which previous action models have proved clearly inadequate and in which uncertainty has consequently increased. My intention here is, first, to provide an analytical scheme which helps us to understand the range and significance of the search for greater labour consensus that has characterized the strategies of various European companies in recent years. I shall then use this analytical scheme to explain the more general changes that have taken place in the 1980s and 1990s. Finally, I shall examine a number of differences among the European countries and the factors that explain these differences.

This book does not set out the results of a specific research study, nor does it present a fully developed theory. It is the outcome, instead, of the accretion, so to speak, of analytical insights derived from various research studies conducted in recent years by the present writer and from the theoretical reflections that accompanied them. The overall analytical framework proposed here was by no means clear when these studies were carried out and when these reflections were developed. I have found it necessary, in fact, to re-examine them carefully, to complete them with further analysis and to seek out the connections among them. The structure of the book emerged only gradually as the implications of each piece of analysis for the others, and the interconnections among them, became clear.

Why this overall analytical framework was not initially clear, and indeed at first sight may seem arbitrary to the reader, warrants some explanation. The reason lies in the increasingly sharp division of scientific labour – and the scant incentive to scholars who wish to overcome the specializations of their disciplines – with regard to both tools of analysis and the topics that have traditionally been addressed by the discipline. As will become immediately clear to anyone familiar with the contemporary social sciences, the topics examined in Part I of this book are conventionally the concern of political economy, to some extent of political sociology, and of political science. The topics addressed in Part II pertain to the sociology of work, to industrial economics and to industrial relations.

By now, the observation that firms and trade unions today face markets that are much more volatile than they used to be has become largely a commonplace. Almost equally commonplace is the view that, in order to react to this greater volatility, a growing number of firms have been obliged to abandon, or at least to alter substantially, their productive and organizational strategies (in particular, the mass production of standard goods by means of specialized and rigid machinery operated by semiskilled workers) – strategies which presupposed stability. For these firms, adjustment to changed economic conditions has entailed first and foremost increased flexibility – that is, the ability to use machines and workers in different combinations in order to adapt to changing market conditions. Unions, too, have had to adjust, and they have sometimes discovered in the process that participation in the management of flexibility offers them new opportunities to regain the institutional authority over workers that they had lost.

FLEXIBILITY AND DIVERSIFICATION

Indeed, the breakup of mass markets and constant shifts in the level and composition of demand are general, almost universal, phenomena today. The assertion that firms must cope with more volatile markets is, as I have said, by now a commonplace and one widespread in the business literature. One might even say that there is a broad consensus that it is now impossible to forecast demand by means of market research. The successes or failures of new products are today practically the only available indicators of what the market can absorb.

In the 1960s, the attention of analysts was drawn to the state's increasing intervention in the economic system – that is, to its intervention in a sphere of activities previously dominated almost entirely by the market (Shonfield 1965). However, it was only toward the mid-1970s that the full importance was grasped of what was, in a certain sense, the phenomenon in reverse – the other side of the coin, so to speak: the reduction of the state and its economic resources (public spending) to a market, to a system of exchanges among organized social groups. In other words, the realization grew that public intervention in the economy, and the partial restriction of the market's sphere of influence that this entailed, came about less through the use of the bureaucratic structures of the traditional state than through forms of exchange, of institutionalized bargaining between governments and the large interest organizations. On the one hand, as we saw in the preceding chapter, the state thus assumed a key institutional role in the management of the economy. On the other, its economic decisions in turn became the object of bargaining – that is, of exchanges with other subjects, just as happens in a market. These other subjects were the large interest organizations, which, in order to equip themselves to handle these new relationships, progressively transformed their structure and their strategies.

POLITICAL EXCHANGE AND CONCERTATION

This realization bred various new concepts, such as ‘political exchange’ and ‘political market’ (Pizzorno 1978), or ‘neocorporatism’ and ‘concertation’ (Schmitter 1974; Lehmbruch 1977), concepts which, albeit in different ways, sought to incorporate these phenomena into the model of centralized political regulation that was apparently predominant in the early 1970s.

In this chapter I describe the simultaneous occurrence of two phenomena which, in the 1980s, characterized the role of organized interests in the economies of several European countries. Because these phenomena have usually been analysed separately, it has proved difficult to capture their overall dynamics. Inevitably, therefore, any conclusion concerning their impact has been at best partial.

On the one hand, the traditional form of social concertation as practised in Europe in the 1970s and early 1980s – that is, macro-concertation at a national level – is now everywhere in decline. The general reasons for the structural instability of systematic political exchange, in whatever form, were discussed in Chapter 2. But what were the specific features of the kind of concertation which was practised in Europe in those years and which today faces severe difficulties?

First, this form of bargaining was strongly political, not so much because of the frequent involvement of the government in formally tripartite negotiation, as because its symbolic function was to exchange legitimation between the government itself and the social partners. Second, this political exchange was highly centralized, both in the sense that it took place at the central (i.e., national) level and in the sense that it was the central component of the industrial relations system. National-level concertation was the pivot around which all inter-actor relationships rotated, and company-level bargaining and other forms of decentralized relationship were subordinate to it. Third, this was largely institutionalized bargaining, to the point that in many cases attempts were made to convert it to periodic formal agreements.

The changes in the organization of firms that took place during the 1980s in Italy (in line with the more general trends described in Chapter 6) were exceptionally far-reaching and rapid. No one could have predicted their range and impact as the decade began. In the late 1970s, in fact, large firms and unions seemed to be locked in disastrous stalemate. Although the unions were greatly weakened, they still retained sufficient power to block, if they wished, successful adjustment to an economic environment that had become increasingly uncertain. The firms, for their part, had it in their power to decentralize production to small units operating beyond the control of factory councils, to make selective use of the Wages Guarantee Fund in order to disrupt trade-union organization in the work-place and to introduce new technologies a little at a time, thereby gradually eroding the unions' ability to exercise effective control over labour.

In this situation the only winners were apparently small firms, which were able to take considerable advantage of the wave of decentralization. The so-called Third Italy (central and northeastern), with its economy based on industrial districts – that is, integrated systems of highly flexible small firms (Brusco 1986; Bagnasco 1988) – seemed to encapsulate everything new that Italian industry had to offer and consequently attracted much attention from observers, with the concomitant neglect of both the North-West Italy of earlier industrialization and the Mezzogiorno.

During the 1980s, however, the situation changed extremely rapidly (Barca and Magnani 1989).

The model the centralized and concerted political regulation of the economy discussed in Part I based its legitmacy and attraction on two presupposition: (1) if left to itself, the market it able to ensure neither the production of socially desirable goods (such as full employment or income security) nor the production of ‘collective goods’ (Olson 1965) for its principal actors, that is, firms (goods such as the containment of inflation, the development of human resources and social peace); (2) consequently, these goods should be the object of policies elaborated centrally by public institutions acting in accord with large interest organizations. The first of these assumptions has rarely been contradicted over the half century since the end of the Second World War during which we have seen the rise and decline of this model of regulation in the European economies. By contrast, the evident difficulties, limitations and contradictions of the second assumption have bred doubts among scholars and political actors alike.

Reactions to these difficulties have ranged from a revival of the ideology of the unregulated market, on the one hand, to repeatedly frustrated attempts to render public intervention more efficient, on the other. Only rarely has consideration been given to the hypothesis that the production of collective goods might be, under certain conditions, the outcome of processes different not only from the workings of the market but from intervention by public institutions and interest organizations at the central level – intervention deliberately designed to achieve this goal and which seemed the only possible alternative to the free market.

The dynamics of the relationships between state and economy examined in Chapter 1 concern to some extent all the advanced industrial democracies. Therefore, Italy has also seen the growth and decline of the Keynesian welfare state. However, in both scientific and political debate, one notes a certain reticence, almost discomfiture, in applying this analytical category to Italy -so much so that it is frequently accompanied by stress on the country's ‘peculiarity’.

Whereas ‘American exceptionalism’ and the Modell Deutschland – to cite two examples of categories equally widespread in analysis of these two national cases, respectively – assume the status of real conceptual tools, rather than being treated as national variants of a general pattern, the ‘Italian case (Cavazza and Graubard 1974; Lange and Tarrow 1980; Lange and Regini 1989) has come to symbolize the difficulty of applying any analytical category developed for the purposes of comparison. In fact, with respect to the models used in comparative analysis, interpretation of the Italian case and of its evolution consists mainly in highlighting a series of ‘shifts’ within a context considered, for reasons that are rather unclear, to be more multiform and complex than that of other countries and which therefore cannot be captured by oversimplified concepts.

HAS THERE EVER BEEN A KEYNESIAN WELFARE STATE IN ITALY?

First of all, there is the widely held opinion (Amato 1976; Cassese 1987) that, in Italy, public intervention in the economy is both more extensive than in other Western countries and extremely inefficient, in that it is unable to produce a coherent and comprehensive economic policy.

In Part I we saw how the model of the concerted and centralized political regulation of the economy, after functioning with conspicuous success for almost fifty years, entered a phase of decline. This is by no means a novel finding – indeed, it is taken for granted by that strand of debate in the social sciences which, by paraphrasing the title of an article by Panitch (1980), we could call ‘the crisis industry’ – but it should be viewed in a new light when set in relation to the tendencies that I shall now examine in Part II.

To begin with, the emphasis should be placed on these three adjectives -political, concerted and centralized – as applied to the model of economic regulation described in preceding chapters. The fact that three distinct adjectives are required to specify this type of regulation demonstrates that there is not just a single nonmarket institution by which the economy can be regulated, or a single way in which nonmarket institutions work. This was the principal error of the many analyses conducted during the 1980s of the deregulation of Western economies, analyses which often did nothing more than simplistically echo what, for business people and neo-laissez-faire politicians, was a slogan from the realm of wishful thinking. But, on closer examination, even considerably more sophisticated analyses of the advent of ‘disorganized capitalism’ (Offe 1985; Lash and Urry 1987) were based on a similar premise: that the crisis of a historically specific form of regulation signalled the decline tout court in the capacity of social and political institutions to structure economic behaviour.

In contemporary Western economies, the principal institution regulating economic activities is the market. According to the traditional view, the liberal state should refrain from intervening in the economy. Consequently, a sharp distinction should be drawn between the tasks and spheres of action pertaining to the market (chief institution of the economic system) and those pertaining to the state (the paramount institution of the political system). Nevertheless, the history of this century has been marked by constant shifts, spillovers and blurring of this traditional distinction, mainly because of two enduring phenomena.

On the one hand, increasing intervention by the state in the economy (which I examine in Chapter 1) has led to a marked expansion of political regulation and a corresponding decline in regulation by the market, an expansion which has only recently come to a halt, to differing extents in different countries. On the other, there has been a manifest tendency for the distribution of the resources produced or allocated by the state to take place according to criteria of exchange and private appropriation, and not according to administrative rationality geared to the public interest. The development of large interest organizations and political exchange (which I examine in Chapters 2 and 3) is an integral part of this process.

This redrawing of the boundaries between economy, politics and society has to some extent been the unintended outcome of multiple small shifts in the roles traditionally performed by state, market and organized social interests.

This chapter concentrates on the roughly fifty-year period from the mid-1930s to the early 1980s. This is not to imply, however, that before this period the state performed no function in the market economies.

THE TRADITIONAL ECONOMIC FUNCTIONS OF THE STATE

Economic historians have identified three major traditional functions of the state – functions performed even during the phase of the so-called liberal state which adhered to the doctrines of laissez-faire – in capitalist systems. The first of these is the creation and enforcement of a legal code which guarantees and reproduces existing relations of production and which makes exchange possible. The right to private ownership, the enforcement of contracts, the regulation of free competition – without these legal institutions the free market as we know it today could not have developed.

The second traditional function of the state is to manage international economic relationships in such a way that national capital is defended and augmented on world markets. Historically, such management has taken forms ranging from the aggressive behaviour associated with colonialism and imperialism to others more defensive in character, such as protectionism and currency devaluation, in order to enhance the competitiveness of the country's products.

The third function is to guarantee the ‘material conditions of production’, that is, the supply of at least some of the inputs that the productive process needs: labour, capital, technology and infrastructures. Although the importance of each of these inputs has varied from one period to another, the role of the state, in its various forms, has almost invariably been decisive in ensuring their supply.

The history of the development of capitalism in the West, and of the organization of the economic system consequent upon it, evidences the progressive predominance of the market over other institutions. As well as being the chief mechanism for the regulation of economic activity, the market is conventionally regarded as an institution whose laws have come to permeate broad areas of social life, supplanting the norms produced by the state and the community. In short, when we think of the growth of capitalism, we often think of the penetration of the market – and of the principles of competition and exchange on which it is based – into economic and social relationships which were previously governed by other principles, notably solidarity and hierarchy or authority.

The founders of the social sciences based various of the themes most central to their thought on this vision of the market. Suffice it to mention Weber, who ascribed great importance to the principle of rationality, which arose from the necessity for calculation and predictability imposed by the market, and which also came to dominate social life and the political system by embodying itself in the bureaucracy. Or Durkheim, for whom the demise of ‘mechanical solidarity’ and the rise of ‘organic solidarity’ was based on the division of labour, and hence on exchange – the predominant criterion for the allocation of resources in the market. Or Marx, for whom capitalism reduced the relationships among individuals to market relationships tout court and labour to a commodity, to a ‘labour force’ which was demanded and supplied on a market, the labour market.