Industrial Competition, Labor Relations, and National Systems of Innovation
Contemporary economists who deal with labor relations (e.g., the analysis of wage determination and working conditions) do not explicitly discuss business investment and competitive decisions, while scholars in the industrial organization literature (who study the business firm and competition) do not deal with issues surrounding labor relations. Yet in the real world, labor relations and industrial organization shape each other in complex ways. The purpose of this course is to investigate the nexus between these two fields, in both theoretical and historical terms, and the implications for current problems. The course has three broad parts. In the first part, we will investigate controversies regarding the nature of the business enterprise. It is part of the conventional discourse on economic policy that free-market competition is the key to bringing about national wealth creation with rising standards of living. Yet there is considerable debate in the literature on industrial organization theory regarding the nature of the capitalist firm and the environment within which it grows or dies. Drawing on the classic writings of Schumpeter, the Oxford Economists’ Research Group, the Institutionalist tradition, and others, this part of the class will introduce students to a wide variety of theoretical perspectives on the firm by contrasting the textbook neoclassical theories of the firm with other theoretical perspectives. In the second part, we will investigate, from both a historical and an international perspective, the concrete institutional and political contexts that have led to particular links among business investment, labor relations, and social policy. For example, we will ask: How did particular worker-employer relations originate and evolve historically in Denmark, Germany, the United States, and the United Kingdom? How did business groups, trade unions, and the Social Democratic Party in Sweden come to deal with conflictual and cooperative arrangements in the postwar period, and how were these shaped by the global competitiveness of Swedish firms during economic booms and slumps? In the third and final part of the class, we will discuss factors that have influenced business innovation and, in turn, have been shaped by the latter, drawing in particular on contemporary writings in the National Systems of Innovation (NSI) literature. We will discuss the role of labor in the NSI framework, in particular the implications of technological change for employment and skills, given that technological change is of the labor-saving type. Further, we will use the NSI framework to understand the growing challenge posed in the last three decades by firms from less wealthy nations. Finally, we will analyze the challenges faced by smaller firms in developing environmentally sustainable production methods. This course requires some background in economics/social sciences and an interest in historically informed analysis.