Full Employment as a Worker-Discipline Device

Abstract

Social democracy in post-war Europe has been dedicated to the proposition that it is possible to obtain the socialist virtues of equality and security without losing the capitalist virtue of economic efficiency. The trouble with capitalism, from the social democratic perspective, is that the market alone fails to provide either a just distribution of rewards or adequate insurance against life’s risks, including the risks of ill health, inadequate retirement income and unemployment. In Norway and Sweden the post-war social democratic regimes emphasized three interlocking policy commitments. First, wage differentials were to be reduced through centralized, solidarity-type bargaining that pushed up the wages of the low-paid workers while restraining the wage increases of highly-paid workers. Second, security for all was to be provided by welfare policies that supplied basic goods — defined as including pensions, decent housing, education and health care — on a relatively universal basis. Third, full employment was to be guaranteed by a combination of macroeconomic and labour policies.

This work is part of the research project ‘Unemployment, Institutions and Economic Policy’ at SNF-Oslo, undertaken with financial support from the Research Council of Norway. We thank Åsa Rosen, Espen Moen and John Strand for their helpful comments.