POLITICAL ECONOMY AND COMPARATIVE INDUSTRIAL RELATIONS IN EUROPE
Prof. Yennef Vereycken
Political economy perspective on ChatGPT
GPT is not a neutral tool, it is a part of a specific economic & labour system; we need to analyse it structurally (not
just as a moral panic)
Political economy always asks these questions:
● Who owns, who benefits, who works, who controls?
○ Role of capital
○ Role of labour
○ Role of the state (regulation)
GPT is a tool to extract value from our data, everything that’s being put in. They extract value from general human
behaviour on the internet. There’s barely any regulation, it generates a lot of pressure on the environment. It’s not
to make the lives of workers easier, it’s to increase capital.
We will examine the changing relation between capital and labour through the role of industrial
relations. Industrial relations is about how societies govern work and production.
The bigger picture
←—------------------------------------------------//-----------------------------------------------------//------------------------------------------
1945 1952 1957 1973 1980 1989 1992 2000 2007 2008
WOII start EU Rome agreement oil crisis Thatcher/Raegan fall USSR Maastricht Euro Lisbon
–—-------------------------------------------------//—----------------------------------------------------//—-------------------------------------
welfare state & democratisation rise of neoliberalism globalisation & europanisation
Fordist production regime post-Fordist production regime shrinking autonomy of nations
(full employment, productivity increase) (low wages, flexibility, deregularisation) increased international comp.
golden age of IR & collective bargaining shrinking union power (de)commodification of labour*
financialisation
—----------------------------------------//—--------→
2010 2020 2022 2024
Euro crisis covid Ukraine Trump
—----------------------------------------//—--------→
era of the technocrat; hyperpolitics (theory of Anton Jäger)
*commodification of labour: treating labour as a commodity on a market ;
decommodification of labour: installing regulation that protects workers from market whims (i.e. minimum wage)
How to understand change? How to see the difference between continuity and discontinuity?
→ stability & change in industrial relations
→ KEY QUESTION
1
,C1. CONCEPTS: Industrial Relations (IR) & Employment Relations (ER)
IR / ER emerged from several academic traditions:
● The first influence came from economics. Economists attempted to explain wages and working conditions.
The neoclassical approach argues wages are determined by productivity, the political economy
approach argues power relations between workers & employers are the determining factor.
● Studies of trade unions were a second influence. Beatrice & Sidney Webb examined how workers
organised collectively to improve wages & working conditions. They introduced important concepts such as
collective bargaining and emphasized the role of institutions in regulating employment.
● A third influence came from management studies. Research asked how employers could organise and
control labour more efficiently. Think of scientific management & personnel management in the 1920s
(UK - USA) and Human Resource Management (HRM) from the 1980s.
Historically IR focused primarily on industry, because manufacturing dominated the economy, trade unions were
the strongest in industrial sectors and scientific management techniques were most visible there. Over time
manufacturing declined and the service sector expanded massively. This broadened the field from IR to ER.
Today ER covers all forms of employment relationships between employers & workers in all spheres,
increasingly also non-standard employment such as dependent self-employed workers and platform workers.
The focus is more on economic dependency and not necessarily purely on the employment relationship.
“All forms of economic activity in which an employee works under authority of an employer and receives a
wage in return for his/her labour” (Edwards, 2003)
“The study of the employment relationship and all the behaviours, outcomes, practices, and institutions that
emanate from or impinge on the relationship” (Kaufman, 2004)
A defining characteristic of IR is its collective dimension. Rather than focusing on individual workers &
employers, IR examines collective actors and institutions (e.g. trade unions, employer organisations, collective
bargaining systems, law. Relations can be bipartite (employers - trade unions) or tripartite (employers - trade
unions - government). These collective institutions regulate employment relationships and help manage the
conflict between labour and capital.
Actors
● Capital - enterprises, owners, employers & their organisations
● Labour - employees, workers, trade unions, professional organisations
● Government - state agencies, public agencies, international institutions
● New actors: social movements, NGOs, consulting & rating agencies, clients
Processes of ‘rule making’ (Clegg, 1979)
● Collective bargaining - ‘joint regulation’
○ Substantive - bargaining on wages, working time
○ Procedural - level (company, local, sector, national, …) & form
● Unilateral regulation (by the management)
● Legal regulation (statutory regulation)
○ Anchoring collective bargaining
○ Importance of lobbying
2
, Outcomes
● Collective bargaining - ‘joint regulation’
○ Collective agreements - CAO’s
○ Informal rules
● Unilateral regulation (by the management)
○ HR policies
○ Business decisions about wages, outsourcing, closing of plants, …
● Legal regulation (statutory regulation)
○ Statutory law
○ Public policies
Environment
IR is a ‘field of study’ and not a discipline (Edwards, 2003). It uses an interdisciplinary analytical approach with
tools from different disciplines. It breaks down a problem to its elements and then solves it.
● Economics contributes insights about wages, productivity, labour markets, … Notable is Williamson’s
(1975) theory of transaction costs, an argument on why companies could benefit from having a
permanent workforce. It would guarantee stable access to specific skills, increased performance of
workers stemming from long-term commitment. It would also not make economic sense to search for
employees all the time.
● Sociology asks how common standards and expectations can be created between two (contradicting)
parties. Examples are Behrend (1957) and Baldamus (1961) on the wage-effort bargain. The exchange
of effort for reward is the core of the employment relationship → employers may require increases in effort
without increasing pay. Effort bargaining lies at the core of conflicts at work.
● Psychology (organisation studies) asks what socio-psychological processes the perceptions existing
within relationships influence. Argyris (1960) wrote on the psychological work contract; the process of
accommodation between worker needs and management behaviour (e.g. impact of respect).
⚠ psychological contract ≠ written contract
IR claims that the employment relationship is both an economic and an authority / power relationship. It has
economic function and significance, and it is unequal. Because there is a power dimension in it, we cannot reduce
it to pure economy.
Parties are interdependent and have to cooperate on creating economic value (equity), assuring performance
(efficiency), and social balance (voice). The employment relationship is ambiguous. There is not necessarily only
conflict between employers & workers.
3
,Globalisation and internationalisation
processes have an impact on IR, in particular
on national systems of IR. European
legislation and its impact on national systems
lead to a Europeanisation of collective
bargaining. Hall & Soskice’s (2001) varieties
of capitalism provides insights on differences
and similarities across different institutional
settings.
The concept of work is being blurred: there's
new forms of employment and new economic
relationships that blur the capital-labour
relationship.
New layers of analysis are also being
introduced. Gender studies, migration, impact
of new technologies, … are broadening the
field.
C2. CLASSICAL THEORETICAL PERSPECTIVES
One of the central questions in industrial relations is how we should understand the relationship between
workers and employers. Different theories provide different answers to this question. Some argue that workers
and employers essentially share common interests, while others view conflict as inevitable and permanent.
Three classical frameworks dominate the field:
● (Neo-)Unitarism
● Pluralism / Oxford School
● Marxism / Conflict Theory
The major theoretical traditions can be distinguished according to how they understand the degree of
convergence or divergence between the interests of labour and capital.
(Neo-)UNITARISM
Unitarism assumes workers and employers have largely (if not fully) the same interests. Work
organisation is an integrated and harmonious entity with a common purpose and a shared goal: the
common profit. Workers care for the company, they are loyal and are solidaristically involved. Employers
care for the workers, they invest in wages and training. The quality of the product contributes to the
success of the company and wellbeing of everyone.
Conflict is abnormal in work relations. Conflict is defined as misunderstanding between management and
labour. Combative unionism is seen as harmful.
→ HR must be developed to ameliorate tensions (which stem from misunderstanding).
→ IR is based on cooperation
4
, PLURALISM and the Oxford School
Pluralism emerged as a critique of unitarism. It assumes there is a plurality of interests within society.
Interests of employers & workers are partially convergent and partially divergent.
Conflict is inevitable because there are partially convergent interests. Institutions should accommodate
these conflicts and resolve them. As collective bargaining weakened, the state came into focus as a source
of employment regulation (neopluralism).
→ IR as the study of institutions that regulate employment relationships
→ Focus on order and stability as outcome and function of the IR system.
MARXISM and Conflict Theory
Marxism is a critique of pluralism and unitarism: the focus is on change, not stability. Conflict is
permanent and inevitable; not a problem to be solved but the driving force behind historical
development. Social change results from the inherent class conflict.
Trade unions have an ambiguous position within capitalism. They can improve workers’ conditions, but
they may stabilise capitalism by reducing worker dissatisfaction without fundamentally changing the
system.
An important contribution is Labour Process Theory (Braverman, 1974). He argued that capitalist
management continually seeks greater control over workers through Taylorist-like techniques; leading to
further degradation of work and inevitable deskilling.
Several theoretical approaches explain IR primarily through economic factors. These approaches assume
that markets, technology, and economic incentives are the primary forces shaping employment relations.
→ primacy of the market / economy
Examples include:
● J. Dunlop’s IR System ● Rational Choice Theory
● Convergence Theory ● Transaction Cost Theory
● Varieties of Capitalism (VoC)
J. DUNLOP: THE INDUSTRIAL RELATIONS SYSTEM
“An IR system is regarded as comprised of certain actors, certain contexts, an ideology which
binds the IR system together, and the body of rules created to govern the actors at the work place”
(Dunlop, 1958:7)
Rules are the functions of 𝑅 = 𝑓(𝐴, 𝑇, 𝑀, 𝑃, 𝐼)
● Actors
● Environment
○ Technology
○ Market
○ Power
● Ideology
Rules can refer to management decisions, collective bargaining agreements, state regulation, … and
include wage, discipline, work organisation, … Rules have to be explained (dependent variable) by
independent variables.
5
, Actors are employers (their organisations); workers (their organisations) and governmental bodies (the
state). The environment includes the technological context (possibilities, working conditions, type of
work); market context (competition, monopoly, quality of product, market fluctuations); and the power
context, which lies outside the workplace (socio-political preferences and agendas).
Ideology binds the IR together. It determines the perceptions of actors: the role and place of each actor
in the system. → e.g. voluntarism in British IR
"The full range of rule-making governing the work place is central to an industrial relations system”
Dunlop is interested in the ‘web of rules’ (the outcome) AND ‘rule making’ (the process).
Rules can be substantive or procedural.
Substantive rules regulate wages,
competences, rights, obligations. Procedural
rules regulate how substantive rules are
established: commissions, negotiation
procedures, etc.
An industrial relations system is stable
when there is ideological congruence
between actors, and there is congruence
between external expectations (of the
environment) and internal ideology of the
system. For example: if actors want an
efficient economy, agree on how this can be
achieved, and this is compliant with the
expectations (e.g. clean production).
Dunlop’s framework is often criticised for
focussing excessively on stability and
order; and paying insufficient attention to
conflict, power struggles and historical
change.
It portrays the state as a bystander and
often treats markets & employers as driving
forces.
CONVERGENCE THEORY
Kerr (1960) proposed the idea that common technology and cross-national markets would create
convergence towards a common model of employment regulation. It is assumed employment
relations follow the technological changes (⚠ technological determinism). The convergence is a catch-up
effect resulting from the spread of technology.
→ The structure (of employment relations) follows the functions (requirements of technology)
The belief reigned that the US model of collective bargaining would be the model for the world, as it
proved increasingly effective to solve conflict without necessity for the state. The logic of industrialism
would override diversities and lead to a homogeneous set of labour market institutions and regulations.
→ The function of IR is to regulate ER, to prevent conflict.
6
Prof. Yennef Vereycken
Political economy perspective on ChatGPT
GPT is not a neutral tool, it is a part of a specific economic & labour system; we need to analyse it structurally (not
just as a moral panic)
Political economy always asks these questions:
● Who owns, who benefits, who works, who controls?
○ Role of capital
○ Role of labour
○ Role of the state (regulation)
GPT is a tool to extract value from our data, everything that’s being put in. They extract value from general human
behaviour on the internet. There’s barely any regulation, it generates a lot of pressure on the environment. It’s not
to make the lives of workers easier, it’s to increase capital.
We will examine the changing relation between capital and labour through the role of industrial
relations. Industrial relations is about how societies govern work and production.
The bigger picture
←—------------------------------------------------//-----------------------------------------------------//------------------------------------------
1945 1952 1957 1973 1980 1989 1992 2000 2007 2008
WOII start EU Rome agreement oil crisis Thatcher/Raegan fall USSR Maastricht Euro Lisbon
–—-------------------------------------------------//—----------------------------------------------------//—-------------------------------------
welfare state & democratisation rise of neoliberalism globalisation & europanisation
Fordist production regime post-Fordist production regime shrinking autonomy of nations
(full employment, productivity increase) (low wages, flexibility, deregularisation) increased international comp.
golden age of IR & collective bargaining shrinking union power (de)commodification of labour*
financialisation
—----------------------------------------//—--------→
2010 2020 2022 2024
Euro crisis covid Ukraine Trump
—----------------------------------------//—--------→
era of the technocrat; hyperpolitics (theory of Anton Jäger)
*commodification of labour: treating labour as a commodity on a market ;
decommodification of labour: installing regulation that protects workers from market whims (i.e. minimum wage)
How to understand change? How to see the difference between continuity and discontinuity?
→ stability & change in industrial relations
→ KEY QUESTION
1
,C1. CONCEPTS: Industrial Relations (IR) & Employment Relations (ER)
IR / ER emerged from several academic traditions:
● The first influence came from economics. Economists attempted to explain wages and working conditions.
The neoclassical approach argues wages are determined by productivity, the political economy
approach argues power relations between workers & employers are the determining factor.
● Studies of trade unions were a second influence. Beatrice & Sidney Webb examined how workers
organised collectively to improve wages & working conditions. They introduced important concepts such as
collective bargaining and emphasized the role of institutions in regulating employment.
● A third influence came from management studies. Research asked how employers could organise and
control labour more efficiently. Think of scientific management & personnel management in the 1920s
(UK - USA) and Human Resource Management (HRM) from the 1980s.
Historically IR focused primarily on industry, because manufacturing dominated the economy, trade unions were
the strongest in industrial sectors and scientific management techniques were most visible there. Over time
manufacturing declined and the service sector expanded massively. This broadened the field from IR to ER.
Today ER covers all forms of employment relationships between employers & workers in all spheres,
increasingly also non-standard employment such as dependent self-employed workers and platform workers.
The focus is more on economic dependency and not necessarily purely on the employment relationship.
“All forms of economic activity in which an employee works under authority of an employer and receives a
wage in return for his/her labour” (Edwards, 2003)
“The study of the employment relationship and all the behaviours, outcomes, practices, and institutions that
emanate from or impinge on the relationship” (Kaufman, 2004)
A defining characteristic of IR is its collective dimension. Rather than focusing on individual workers &
employers, IR examines collective actors and institutions (e.g. trade unions, employer organisations, collective
bargaining systems, law. Relations can be bipartite (employers - trade unions) or tripartite (employers - trade
unions - government). These collective institutions regulate employment relationships and help manage the
conflict between labour and capital.
Actors
● Capital - enterprises, owners, employers & their organisations
● Labour - employees, workers, trade unions, professional organisations
● Government - state agencies, public agencies, international institutions
● New actors: social movements, NGOs, consulting & rating agencies, clients
Processes of ‘rule making’ (Clegg, 1979)
● Collective bargaining - ‘joint regulation’
○ Substantive - bargaining on wages, working time
○ Procedural - level (company, local, sector, national, …) & form
● Unilateral regulation (by the management)
● Legal regulation (statutory regulation)
○ Anchoring collective bargaining
○ Importance of lobbying
2
, Outcomes
● Collective bargaining - ‘joint regulation’
○ Collective agreements - CAO’s
○ Informal rules
● Unilateral regulation (by the management)
○ HR policies
○ Business decisions about wages, outsourcing, closing of plants, …
● Legal regulation (statutory regulation)
○ Statutory law
○ Public policies
Environment
IR is a ‘field of study’ and not a discipline (Edwards, 2003). It uses an interdisciplinary analytical approach with
tools from different disciplines. It breaks down a problem to its elements and then solves it.
● Economics contributes insights about wages, productivity, labour markets, … Notable is Williamson’s
(1975) theory of transaction costs, an argument on why companies could benefit from having a
permanent workforce. It would guarantee stable access to specific skills, increased performance of
workers stemming from long-term commitment. It would also not make economic sense to search for
employees all the time.
● Sociology asks how common standards and expectations can be created between two (contradicting)
parties. Examples are Behrend (1957) and Baldamus (1961) on the wage-effort bargain. The exchange
of effort for reward is the core of the employment relationship → employers may require increases in effort
without increasing pay. Effort bargaining lies at the core of conflicts at work.
● Psychology (organisation studies) asks what socio-psychological processes the perceptions existing
within relationships influence. Argyris (1960) wrote on the psychological work contract; the process of
accommodation between worker needs and management behaviour (e.g. impact of respect).
⚠ psychological contract ≠ written contract
IR claims that the employment relationship is both an economic and an authority / power relationship. It has
economic function and significance, and it is unequal. Because there is a power dimension in it, we cannot reduce
it to pure economy.
Parties are interdependent and have to cooperate on creating economic value (equity), assuring performance
(efficiency), and social balance (voice). The employment relationship is ambiguous. There is not necessarily only
conflict between employers & workers.
3
,Globalisation and internationalisation
processes have an impact on IR, in particular
on national systems of IR. European
legislation and its impact on national systems
lead to a Europeanisation of collective
bargaining. Hall & Soskice’s (2001) varieties
of capitalism provides insights on differences
and similarities across different institutional
settings.
The concept of work is being blurred: there's
new forms of employment and new economic
relationships that blur the capital-labour
relationship.
New layers of analysis are also being
introduced. Gender studies, migration, impact
of new technologies, … are broadening the
field.
C2. CLASSICAL THEORETICAL PERSPECTIVES
One of the central questions in industrial relations is how we should understand the relationship between
workers and employers. Different theories provide different answers to this question. Some argue that workers
and employers essentially share common interests, while others view conflict as inevitable and permanent.
Three classical frameworks dominate the field:
● (Neo-)Unitarism
● Pluralism / Oxford School
● Marxism / Conflict Theory
The major theoretical traditions can be distinguished according to how they understand the degree of
convergence or divergence between the interests of labour and capital.
(Neo-)UNITARISM
Unitarism assumes workers and employers have largely (if not fully) the same interests. Work
organisation is an integrated and harmonious entity with a common purpose and a shared goal: the
common profit. Workers care for the company, they are loyal and are solidaristically involved. Employers
care for the workers, they invest in wages and training. The quality of the product contributes to the
success of the company and wellbeing of everyone.
Conflict is abnormal in work relations. Conflict is defined as misunderstanding between management and
labour. Combative unionism is seen as harmful.
→ HR must be developed to ameliorate tensions (which stem from misunderstanding).
→ IR is based on cooperation
4
, PLURALISM and the Oxford School
Pluralism emerged as a critique of unitarism. It assumes there is a plurality of interests within society.
Interests of employers & workers are partially convergent and partially divergent.
Conflict is inevitable because there are partially convergent interests. Institutions should accommodate
these conflicts and resolve them. As collective bargaining weakened, the state came into focus as a source
of employment regulation (neopluralism).
→ IR as the study of institutions that regulate employment relationships
→ Focus on order and stability as outcome and function of the IR system.
MARXISM and Conflict Theory
Marxism is a critique of pluralism and unitarism: the focus is on change, not stability. Conflict is
permanent and inevitable; not a problem to be solved but the driving force behind historical
development. Social change results from the inherent class conflict.
Trade unions have an ambiguous position within capitalism. They can improve workers’ conditions, but
they may stabilise capitalism by reducing worker dissatisfaction without fundamentally changing the
system.
An important contribution is Labour Process Theory (Braverman, 1974). He argued that capitalist
management continually seeks greater control over workers through Taylorist-like techniques; leading to
further degradation of work and inevitable deskilling.
Several theoretical approaches explain IR primarily through economic factors. These approaches assume
that markets, technology, and economic incentives are the primary forces shaping employment relations.
→ primacy of the market / economy
Examples include:
● J. Dunlop’s IR System ● Rational Choice Theory
● Convergence Theory ● Transaction Cost Theory
● Varieties of Capitalism (VoC)
J. DUNLOP: THE INDUSTRIAL RELATIONS SYSTEM
“An IR system is regarded as comprised of certain actors, certain contexts, an ideology which
binds the IR system together, and the body of rules created to govern the actors at the work place”
(Dunlop, 1958:7)
Rules are the functions of 𝑅 = 𝑓(𝐴, 𝑇, 𝑀, 𝑃, 𝐼)
● Actors
● Environment
○ Technology
○ Market
○ Power
● Ideology
Rules can refer to management decisions, collective bargaining agreements, state regulation, … and
include wage, discipline, work organisation, … Rules have to be explained (dependent variable) by
independent variables.
5
, Actors are employers (their organisations); workers (their organisations) and governmental bodies (the
state). The environment includes the technological context (possibilities, working conditions, type of
work); market context (competition, monopoly, quality of product, market fluctuations); and the power
context, which lies outside the workplace (socio-political preferences and agendas).
Ideology binds the IR together. It determines the perceptions of actors: the role and place of each actor
in the system. → e.g. voluntarism in British IR
"The full range of rule-making governing the work place is central to an industrial relations system”
Dunlop is interested in the ‘web of rules’ (the outcome) AND ‘rule making’ (the process).
Rules can be substantive or procedural.
Substantive rules regulate wages,
competences, rights, obligations. Procedural
rules regulate how substantive rules are
established: commissions, negotiation
procedures, etc.
An industrial relations system is stable
when there is ideological congruence
between actors, and there is congruence
between external expectations (of the
environment) and internal ideology of the
system. For example: if actors want an
efficient economy, agree on how this can be
achieved, and this is compliant with the
expectations (e.g. clean production).
Dunlop’s framework is often criticised for
focussing excessively on stability and
order; and paying insufficient attention to
conflict, power struggles and historical
change.
It portrays the state as a bystander and
often treats markets & employers as driving
forces.
CONVERGENCE THEORY
Kerr (1960) proposed the idea that common technology and cross-national markets would create
convergence towards a common model of employment regulation. It is assumed employment
relations follow the technological changes (⚠ technological determinism). The convergence is a catch-up
effect resulting from the spread of technology.
→ The structure (of employment relations) follows the functions (requirements of technology)
The belief reigned that the US model of collective bargaining would be the model for the world, as it
proved increasingly effective to solve conflict without necessity for the state. The logic of industrialism
would override diversities and lead to a homogeneous set of labour market institutions and regulations.
→ The function of IR is to regulate ER, to prevent conflict.
6
