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DEINDUSTRIALISATION IN POST-SOCIALISM. Strategies for Co-habitation with Long-term Unemployment in Hungary
Pal Tamas, Budapest

1. Introduction

In the development of any body of knowledge there are always shifting emphases and changing foci. One can distinguish a kind of "product cycle" within each area of study, especially in the new technologically-driven subjects like structural unemployment or information and communication policies. In the study of emerging subjects there are at least four phases in the product cycle (Kahn-Wilson, 1997). Each new wave informs the public debate, before a new set of issues comes to the fore in the next phase. They differ by their audience, their arguments, and their principal authors.

In phase one, a once-quiescent technical issue handled in the middle ranks of public bureaucracies is propelled into the public debate and onto the action agenda of senior policy makers. Typically, the works that dominate this phase are authored by engineers, scientists or economists whose purpose most often is to explain the cutting-edge features of the new technological issue to other like-minded experts. The policy problem is defined in technical terms as requiring a technical solution.

In the second phase, social theorists and journalists take up the issue. This new group of analysts has different purposes and audiences. They grab the idea of the technology and find within it the answers to a whole range of social problems. Their purposes are more ambitious than these of the phase one writers,

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and they seek a broader audience of non-specialists. Their writings are often utopian, apocalyptic, hyperbolic.

In phase three, other non-technological dimensions are brought into the picture by a wider group of social scientists. One finds more careful attention to institutional, political and distributional issues. Analysts recognise that diffusion rates for the new technology will be shaped by institutional incentives. They see that technical changes create losers as well as winners, and begin to analyse the potentially dark side for poor people or poor countries. As the scope of analysis widens, observers recognise that different countries, like different firms, can approach the same policy issues in very different ways.

In phase four, the discussion is opened still further and more university-based scholars take up the issue. Some of them test traditional concepts and hypotheses from their respective disciplines and try to explicate the intricacies of the topic at hand. This represents the normalisation of social science analysis.

Given this perspective, I wish to advance the debates by posing a series of conceptual questions that may be useful to academic, business and other analysts anxious to draw lessons from the differing experiences with the technological unemployment in Eastern Europe by mainly focusing on issues raised by the dependency theory.

Dependency theorists argue that the economies of Third World countries and the post-socialist societies of Eastern Europe have been shaped in response to conditions established by developed countries and thus their growth and development has been retarded and dependent. Theotonio Dos Santos (1993: 194) defines dependency as a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected. The relation of interdependence between two or more economies, and between these and world trade, assumes the form of dependence when some countries (the dominant ones) can expand and

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can be self-sustaining, while other countries (the dependent ones) can do this only as a reflection of that expansion, which can have either a positive or a negative effect on their development.

The dilemmas of dependency theory sparked debates in the 1970s. According to the classical formulation of the theory, dependence is incompatible with growth. Yet such cases as the Brazilian "miracle" under the military (1964-1975) were in blatant contradiction with the theory. Cardoso (1973) then coined the expression "associated dependent development" in order to describe the new reality. Evans' concept of "the triple alliance" of the state, MNCs, and local capital (1979) and O'Donnell's concept of "bureaucratic authoritarianism" further helped to reformulate dependency theory. The emphasis is on the notion that independent growth and development are impossible for truly dependent economies. The implication is that this situation is harmful to the long-term development prospects of dependent countries, while the short-run effect can be positive.

The above idea characterises the work of Andre Gunder Frank. He argues that one can divide the world into countries of the centre and countries of the periphery. The state of underdevelopment is created in the periphery through the growth and expansion of the centre. The relationship between centre and periphery, or between metropolis and satellite, is one in which exploitation occurs and provides a structure by which surplus is transferred from one geographical region to another. This siphoning of surplus away from satellite areas and peripheries is what makes long-term development in these areas unlikely. The mechanisms of exploitation work in different forms. The monopolistic powers of the centre countries raise the prices of their exports relative to the prices of periphery exports. As a result, the terms of trade turn against the periphery causing a transfer of surplus.

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The work of Samir Amin provides another view of dependency theory. The world is understood as being organised into a world wide capitalist system. The centre and the periphery play unequal roles in the system because of unequal exchange. In the periphery there is an abundance of labour which is partly due to policies. The ruling groups in the periphery in alliance with those of the centre create environments in the former in which few employment opportunities are available to workers and peasants lack access to the quantity and quality of land needed to maintain their family's livelihood. As a result, the pool of labour available is large. The reduction in wages which follows makes the reduction of prices of commodities produced by the periphery possible. Thus the terms of trade turn in favour of the centre and against the periphery. Production activities are unevenly distributed across sectors in the periphery. There is a modern sector, but much of the rest of the periphery is starving because of the lack of capital. The production processes in the centre are articulated whereas those in the periphery are dis-articulated. In the centre demand and supply linkages connect the production process throughout the economy. Thus expansion of sector A has positive impacts on other sectors via these linkages. Alternatively, in the periphery there are few links between various sectors. The expansion of one sector has little impact via demand or supply linkages to the rest of the economy. This rules out autonomous development in the periphery.

The broader concept of development has three aspects: growth (the economic aspect), equality (the social aspect), and liberty (the political aspect). In the pursuit of development there may be trade-offs between these aspects, making it a challenge to promote growth, equality, and liberty simultaneously. The groups of variables include development, multinational presence, dependence, capital accumulation, and state intervention.

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2. Deindustrialisation: The Fate of the Semi-peripheries?

The growth of direct investment has played an integral part in a larger process of globalisation or internationalisation (Ietto-Gillies,1992; Robertson, 1992; King, 1991; Featherstone, 1990; Giddens, 1990; Albrow and King, 1990; Chase-Dunn, 1989; Harvey, 1989; Lash and Urry, 1987). This interest has been fuelled by the sense that the most recent round of globalisation, which finds its origins - according to a variety of authors - in the late 1960s, has exhibited a number of unique features and raised a number of profound questions concerning everything from the representation of identity to the sovereignty of the nation-state. Although "globalisation" (as noun) only emerged as a significant concept in academic circles a decade or so ago, it has become in that short period of time a subject of intense scholarly and public interest (Robertson, 1992: 8).

While the authors of what Gordon (1988) has termed the "New International Division of Labour" (NIDL) and "Globalisation of Production" (GOP) have offered a variety of arguments for the existence of a link between globalisation and deindustrialisation of the core and in a very special manner of the semi-periphery, such arguments have by and large not been followed up by systematic empirical research. The idea that direct investments have contributed in an important way to the phenomenon of deindustrialisation is, at least in the English-speaking world, a fairly general one. In two widely cited pieces Bluestone and Harrison have set out one of the popular versions of this argument (Bluestone and Harrison, 1982; Harrison and Bluestone, 1988). They argue that DI in the contemporary era is being undertaken as part of a "globalisation gambit". This move constitutes an integral part of a new set of corporate strategies designed to abrogate the old post-war social contract between capital, labour, and the state and, in doing so, to restore acceptable levels of profitability in response to the "profit squeeze" of the 1970s. The result of this strategy, they argue, is a kind of

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hollowing of the economy. By hollowing, they mean that DI is no longer being undertaken by firms in an effort to complement domestic investment and production in the periphery, but to replace it.

While Bluestone and Harrison focus most intently on the US, other studies paint a similar picture of the role of MNEs and DI in deindustrialisation in other core societies (Frank and Freeman, 1978).

The discussion raises a number of questions regarding arguments. The image of "globalisation" that Bluestone and Harrison have in mind is first and foremost one of North to South capital flight in which direct investment decisions are guided in largest part by simple labour cost differentials. This is an inaccurate picture of the contemporary pattern of DI. Most DI flows between nations with roughly comparable labour market conditions in which labour cost differentials are relatively minor (e.g. the US and Germany). While the spatial reorganisation of manufacturing along a north-south axis is a real phenomenon, this simply does not represent the "general" pattern of DI in the last two decades or so. Moreover, there may be other avenues through which DI might prompt deindustrialisation. However, the North to South - in the new debates West-East - capital flight image is so strong in popular statements of the DIDT that these more subtle mechanisms are sometimes overlooked. Most statements in this field largely neglect to account for the fact, as Singh (1977) has noted, that "deindustrialisation" (or, at least, the relative decline of industrial employment) had long been anticipated by social scientists. Much as the Industrial Revolution initiated a movement of labour out of the primary sector and into the secondary sector, social scientists had, well before Daniel Bell (1973), predicted developments which would yield the future "coming of post-industrial society". Colin Clark in his The Conditions of Economic Progress (originally published in 1940) laid out an early version of the shift from manufacturing to

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services argument that roots this phenomenon in two processes (1960: 493-494). First, with economic development, "as real income per head increases, it is quite clear that the "relative" demand for agricultural products falls all the time, and that the relative demand for manufacture first rises, and then falls in favour of services". Second, given higher relative productivity in the industrial sector, "a 'stationary' relative demand for manufactures would lead to a 'decreasing' proportion of the labour force employed therein".

For the actual East European situation - and less for the Central European trends - we employ the framework developed by Rowthorn and Wells (1987). For Rowthorn and Wells deindustrialisation (as the relative decline of manufacturing employment) can occur in at least three ways. There is the "positive deindustrialisation" that was noted by earlier analysts such as Clark (1960) and which represents much of conventional economic thinking on deindustrialisation (Singh, 1989). Here deindustrialisation is viewed as a structural feature of all economies during the course of economic development. With development, as per capita income increases, the share of employment in agriculture falls and the share of employment in manufacturing rises until a high level of development is attained. However, beyond some threshold of per capita income the share of services in employment begins to expand at the expense of manufacturing. This will occur as a consequence of the typically higher rate of productivity growth in the manufacturing sector relative to the service sector and of the systematic changes in consumption patterns that occur over the course of development (specifically, differences in the income elasticity of demand across sectors). Such deindustrialisation is "positive" because it is viewed not as a pathological phenomenon but as a symptom of economic success. And labour shed in the course of positive deindustrialisation is viewed as being more or less quickly absorbed by the growing service sector.

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"Negative deindustrialisation" as posited by Rowthorn and Wells (1987) is the result of a pathological phenomenon, namely of a structural disequilibrium in the economy which prevents a nation from reaching its growth potential or a full employment of its resources. It manifests itself in poor performance in the manufacturing sector and is accompanied by a slow-down in manufacturing output and productivity. This leads to poor performance for the economy generally and to a decline in competitiveness (in a cumulative vicious circle). The labour shed by negative deindustrialisation is, given the general state of the economy, not absorbed by the service sector. Thus where positive deindustrialisation is associated with rising real incomes and full employment, negative deindustrialisation is associated with stagnating real incomes and rising unemployment. The appreciation of currencies, high labour costs, poor product quality, and the failure or inability of firms to respond to changing market conditions have all been identified as factors in the "decline of competitiveness" experienced by a number of core societies in the past two decades or so (Ferguson and Ferguson, 1994).

Finally, shifting the focus from the domestic to the international economy, Rowthorn and Wells (1987) argue for the existence of "trade-related deindustrialisation". Trade is seen as affecting manufacturing employment through macroeconomic channels and through its influence on specialisation. In contrast to many discussions in the NIDL and GOP literatures of the effect of international trade on manufacturing employment in the core, Rowthorn and Wells stress that in a mature economy deindustrialisation may be associated with either strong or weak trade performance. Where manufacturing trade balances are positive and large, and the strength of the manufacturing sector contributes to sustained economic growth in the economy at large, the manufacturing sector may begin to shed labour (via positive deindustrialisation) at a higher rate than it would in the absence of trade. Where manufacturing trade positions are dete-

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riorating, and investment in manufacturing falls as a result, the manufacturing sector may begin to shed labour (via negative deindustrialisation) into a stagnating economy in which it is not absorbed by the service sector. Underlying these potential macroeconomic effects of trade on the relative size of the manufacturing labour force are the structural effects. Quite simply, nations that run manufacturing trade surpluses will, all else being equal, devote more resources and labour to this sector than will nations that run deficits. Trade may thus lead to further specialisation in manufacturing among successful nations, and accelerate the move away from specialisation in manufacturing among unsuccessful nations.

These differing forms of deindustrialisation can be understood to operate concurrently. What is experienced by any given nation need not be the exclusive result of any one "form" of deindustrialisation. Indeed, it is probably most likely that the deindustrialisation experienced in the East European societies has been in part the result of a mix of "positive" and "negative" factors - continued (slow) growth in real per capita incomes coupled with weak manufacturing performance - that has varied across time and place.

3. Long-term Unemployment, Cycles of Capitalist Restructuring and the East European "Take-off"

The cycle of capitalist restructuring which characterised the past decade had as its aim a double strategy. Its result has been what is called the dispersed factory or dispersed Fordism. It was the industrial strategy of overcoming workers' resistance (and the pressures exerted on the terrain of production itself) by dispersing the great mass of workers which had formed around the productive centres after World War I. In this period the massive aggregation of labour force around the production lines of large factory complexes was the basis of the cycle of capital accumulation. This extended into the 70s' and implied the culmination

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of the scientific organisation of labour put into practice by Ford half a century earlier. It was an organisation which, alongside the massive numbers of workers, revolved around the parcelisation - breakdown of the physical movement of the worker on the production line. This was the source of resistance, strikes and sabotages. The industrial conglomerations also implied the establishment of a social and economic force able to exert pressure through struggles (trade union inspired and autonomous) which eroded the rate of accumulation in the industrialised countries.

At the end of the 70s' the crisis of profitability arrived at a point which made a reorganisation of the labour force inevitable as regards control and intensifying its exploitation. A recovery in the rate of capital accumulation was then possible. It was the era of social contracts, the politics of austerity and neo-liberal models resulting in undermining the foundation of the welfare state. As a consequence, the second strategic orientation of capital in the restructuring achieved in the past decade was the recomposition of the productive process. In addition to overcoming the resistance of the mass-worker, the cycle of accumulation was intensified by implantation of electronic technology and new systems of communication. This brought into being a territorial disaggregation of productive processes. Flexibility was increased by a type of flexible demand of a limited number of products. Factories attempted to achieve a greater market share based on the introduction of design, fashion etc.

In such an industrial landscape new techniques regarding the organisation of labour and the management of production are a pressing necessity. And this is how there began to proliferate the precepts and watchwords of the new enterprise culture (just-in-time, zero inventory). This new enterprise culture was the response to a new stage in the division labour between firms and warrants being called the logistical chain of added value. As for the workers, this new industrial order represents a new turn of the screw. The splitting up of the great aggregations of masses of

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workers is transposed into a relative loss of the capacity to exert pressure, characteristic of the "old workers movement". The consequence is the devalorisation of labour and the worsening of work conditions. It is the state of affairs we know as lack of security. All this has resulted in a neo-corporatist conduct that counterpoises employed to the unemployed, temporary to fixed contracts, advanced sector workers (information technicians) to the marginal sector (operatives, cleaners), the skilled to the unskilled etc.

Attempting to remedy the compact resistance of the mass-worker, the new organisational and managerial formula for the socialised production of commodities has given a different dimension to the contradictions inherent in the social relations between capital and labour. The new organisational techniques no longer function as theoretical models but in productive practice as well. It is necessary to eliminate the possibility of any delay, eventuality or unforeseen situations that could shutdown the continual flow of commodities and components in the production proper as well as in the realisation or marketing. In this way the formally subjective vulnerability resulting from the aggregation of the mass worker in the factory, whose intervention could put the productive process in jeopardy, has been resolved by dispersed Fordism. More precisely, it has been resolved by transforming the subjective vulnerability into the objective, functional vulnerability of the new productive organisation.

Seen as a social relation, capital is not a force exterior to labour force. It is only so formally, that is in the social forms of domination which it clothes itself with. This brings about the insoluble contradiction between the affirmation of the forms of formal domination (financial/technological decision making centres) that require the physical suppression of the potential for conflict that labour power brings with it and the necessity of incorporating and intensifying the exploitation of labour power as

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the means of guaranteeing the continuation of the process of the extended accumulation of capital.

Whether in the classical Fordist type of organisation or in the actual expression of dispersed Fordism, the real limits (objectives) of the growth of the accumulation of capital is located in labour power, or, to put it in another way, in suppressed human existence as labour power. This is true not only in respect to the knowledge integrated into technology, but also as regards the functions of control, supervision, maintenance and related services that go from the most advanced sector to cleaning functions - the most devalorised labour.

4. Confronting the Crisis of Fordism in the Post-socialist Eastern Europe: Alternative Hungarian Strategies

The gradual unravelling of the post-war social compact in the OECD states has raised fundamental questions for developmental strategies. Within much of the West, the crisis of what is commonly called ‘Fordism’ has entailed not only the emergence of new (and sometimes very old) production regimes, but also some speculation about the ongoing status and standing of wage labour itself. One of the most frequent responses to this uncertainty has been to call for a 'guaranteed income for all'. More and more, the relative merits of such a demand, often counterpoised in turn to that of 'full employment', are being argued out in a number of forums above all in Western Europe, but also on occasion in Hungary (Gray, 1988; Alcock, 1988; Gorz, 1989; van Parijs, 1992; Pixley, 1993; Watts, 1995).

For some, this development offers a means to ensure social stability in the conditions of structural unemployment and an increasingly global capital. For a small minority, guaranteed income has become one plank in a raft of demands intended to destroy the wage relation once and for all. New production regimes, new forms of waged and unwaged work, new stratification, or perhaps a new class composition are expected to emerge.

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As always, changes to the composition of the working class demand a debate about the meaning of structural politics.

The notion of a guaranteed income has long held an honoured place within East European leftist discourse. After 1968 and especially after 1989 the 'social' or 'political' wage was an important theme for the alternative social research's understanding of modern class conflict. The notion of a struggle was within the immediate process of production which, in challenging the hierarchies of skill and command to be found there, sought to uncouple income from productivity. This refusal of work, exemplified by the practices of the mass worker found on the assembly line of large corporations, expresses and organises itself 'positively' in the struggle to appropriate an ever greater slice of social wealth. At this point, the struggle for the 'social wage' (equal for all and tied to workers' material needs, rather than to the productivity) is something qualitatively, totally different from negotiating the wage as compensation for work performed. A 'social' wage was also demanded for those outside the traditional realms of paid work. Since, for some leftist theory, capitalist society was now a social factory subject to the dictates of accumulation, a 'political' wage was necessary for all those with nothing to sell but their ability to work.

In a country where the official safety net privileges workers in the larger factories, the political wage is more than a simple compensation for unpaid labour; forcing further apart the disjuncture between pay and productivity. It could only exacerbate the crisis of capital. Apart from students and the unemployed, women as houseworkers could also be seen as prime candidates for a guaranteed wage, sparking a controversy that would last for years within and around the feminist movement in Eastern Europe.

Inspired in part by mass campaigns to 'self-reduce' the rising cost of social services and to seize various means of consumption and reproduction (Balestrini, 1989), the dominant currents

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in that understanding staked everything on their ability to give political cover and representation to such instances of direct appropriation. Toni Negri's first attempts to decipher the forms of social conflict found within what he termed the new 'social proletariat' would explicitly reformulate the question of the wage in terms of the 'direct appropriation of the productive forces of social wealth' in the spheres of both production and reproduction (Negri, 1976: 51).

5. Beyond Gorz? Guaranteed Income as Reappropriation

Over the last decade or so, much of the left debate over guaranteed income has revolved around the work of Andre Gorz. Reviewing his Farewell to the Working Class in 1984, the American journal Midnight Notes insisted that Gorz's plans for a new realm of productive activity constituted outside the parameters of wage labour simply obscured a project aimed at 'forestall[ing] struggles around the refusal of work and install[ing] the left as the managers of the working class'. Far from bringing freedom, his designs would only mean more unpaid work, a parody of communism in the form of self-managed poverty. By contrast, Midnight Notes offered its vision of a new society - the result of struggles which had assaulted the wage relation from within as well as without - where everyone takes it pretty easy and begins spending some of their spare time thinking up how to build safe machines that can do the work people still do, and inventing new drugs, sex positions and crossword puzzles made up of the names of famous Marxist ideologists (Midnight Notes, 1984: 16).

In the debates around Gorz's reception many analysts argued that, while Gorz's image of a sector of 'alternative' production should not be taken literally, his vision, despite its 'Proudhonian and backward' aspects, remains suggestive - 'offering, like all prefigurative activities, some elements of truth' . Carlo Palermo has sketched out a position which, in the name of going beyond

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Gorz's Critique of Economic Reason, seeks nonetheless to build upon aspects of that work. Whilst rejecting Gorz's inability to see past existing forms of technique and the division of labour, Palermo praises him for insisting that the question of income be tackled hand in hand with the 'progressive but radical' reduction of labour time. Gorz's biggest failure, he argues, is that in the absence of any real sense of how to implement his project since it remains trapped within terms set by capital. Designed to straddle an unwaged world of 'autonomous activity' and a waged sphere of 'necessity', Gorz's version of a guaranteed income ultimately offers no means with which finally to break the dominance of the wage relation.

Surveying a range of schemes whose proponents, unlike Gorz, have no interest in challenging the hegemony of wage labour, Palermo indicates the ways in which their understandings of a guaranteed income are designed either to perpetuate or to exacerbate hierarchies found in and around the labour market. Like him, Massimo De Angelis has argued that, in order to serve as a means to challenge the capital relation, a guaranteed income must be linked to an attack upon the length of the working day. Just as many proposals 'to separate access to income from the labour market' are in fact designed 'to make the latter function effectively' (De Angelis, 1994:30). So any plan to reduce labour time which accepts existing social relations as given will only entail a 'redistribution of misery'. This, De Angelis holds, is the real meaning of the slogan - so popular within the mainstream European left - of 'Working Less so that Everyone can Work'. It must be emphasised that we don't want to work less so that everyone can work, for the simple reason that in one way or another (in production or in reproduction, in full-time work as in casual work) we are all already working for capital. What we want is the power to all work less, and much less, whilst simultaneously destroying the hierarchy of the labour market. Linking a guaranteed income to the reduction of the working day, he con-

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cludes, would provide an effective means of circulating struggles between those that capital seeks to divide: the employed and the unemployed, full-time staff and those in part-time or casual employ (De Angelis, 1994: 32).

The following points offer the beginnings of a 'radical reformist program' against wage labour and 'beyond Gorz':

1) the guaranteed income must be tied not to the 'right/duty' to perform wage labour, as Gorz would have it, but rather to the right/duty to perform socially necessary labour;

2) 'the liberation of free time' must involve a reappropriation of administrative functions which challenges and goes beyond both the forms and political personnel of today's representative democracy;

3) not only must 1) entail 'an ecologically sensitive, generalised and egalitarian reduction of labour time', it must also involve the free distribution of a whole series of services and use values, from housing and schooling to health;

4) 'the guarantee and development of these use values and services must take precedence over the social goals of production, and thus become the motor of a process of reappropriation of the welfare state's institutions and services, based upon the expansion of self-managed social labour and cooperation';

5) rather than remain confined to Italy's richest regions, this citizenship income 'package' must be posed in broader - and ultimately global - terms.

It is worthwhile dwelling briefly upon the place within his schema of a very traditional left demand, namely the 'right/duty to work'. According to one of Negri's close associates, the refusal of work (lavoro) was never the refusal of labour (lavoro) as such; it was never directed against productivity, creativity or inventiveness. Rather it was the refusal of a specific relation between capital and labour (Hardt, 1993: 114). Against this, one could ask whether 'labour as such' has ever actually existed - except, perhaps, in the form of class domination, as abstract la-

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bour. The stance taken by De Angelis is similar, and almost identical in its use of language: 'Liberation from labour is instrumental to liberation tout court' (De Angelis, 1994: 35).

If 'the society of labour' based upon Fordist mass production is said to be in crisis, what new class composition has begun to emerge instead? While some equate 'mass intellectuality' with the massification of intellectual labour, and thus tie it to particular social strata, others see it as a dimension common to contemporary labour power in all its articulations: This form of productive activity is not limited only to more highly-skilled workers. We mean the use value of labour-power today, and, more generally, of the form of activity of every productive subject within post-industrial society (Lazzarato, 1994: 6).

What practical possibilities do the debates reviewed above hold out for the project of social transformation in Hungary today? For the time being, at least, probably very little.. In any case, the central debate has most recently concerned an altogether different form of guaranteed income - the pension. As for the social centres, many of those who run them feel caught between a growing interest in 'self-production', and the ongoing difficulties of securing the active participation of their 'consumers' in broader political projects; they too are entering a new phase which, if potentially rewarding, nonetheless remains uncertain.

There are other limits to the discourses discussed above. Perhaps the most evident of these is that there is little said in all the talk of guaranteed income about gender relations - a matter without which no serious understanding of class composition is possible (Cleaver, 1992). On the few occasions where gender is explored at length, as in Alisa Del Re's fascinating look at the welfare state, the contributions made are still too infrequently taken up within the main flow of debate. This is all the more disturbing given that any serious project aimed at reducing the paid working week will be anything but egalitarian unless it also

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confronts the profoundly gendered realm of unwaged work (Marazzi, 1994).

Then there is the question of class composition itself. However intriguing the notion might appear, talk of a 'mass intellectuality' remains contentious, to say the least. If the term has a certain suggestive ring to it, similar to that played by socialised worker within the autonomist debates of the late seventies, it continues to be more schematic than substantive in its explanatory power. At best it may offer some insight into the forms that class struggle has assumed in newer labour processes such as software design (Cleaver, 1995b: 167). At worst, it stands as yet another instance where the (supposed) reality of one layer becomes confused with the politically and culturally diverse experiences which characterise contemporary class composition as a whole.

Finally, there is the matter of the 'exodus'. This, as we have seen, has been presented in two forms: self-employment, and a more explicitly collective project of an alternative economy based upon self-production. But can individuals really escape subordination to capital through self-employment? If self-employment offers so little hope, can the collective forms of 'opting out' espoused by some within the social centres be generalised? And can this really be accomplished, as the American anarchist writer Hakim Bey suggests, in a manner invisible to capital's gaze?

How can I live a comfortable (even luxurious) life free of all interactions and transactions with Commodity World? If we took all the energy the Leftists put into "demos", and all the energy the Libertarians put into playing futile little 3rd-party games, and if we redirected all that power into the construction of a real underground economy, we would already have accomplished "the Revolution" long ago (Bey, 1993).

It is doubtful whether such a strategy would actually engender instances of social autonomy. If anything, it evokes a life

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more akin to that of rats which survive on what they can scavenge. The flight of individuals from South and East towards the perceived benefits of wage labour in the metropolis, seem equally relevant to those seeking within the West and North to flee from waged work. If they do not create places against capital at the termini of their trajectory, they will find themselves, like the pirates of the Caribbean, continually displaced and eventually exhausted and exterminated.

A recent paper by Harry Cleaver reiterates this point. Discussing Laura Miller's reflections upon gender relations and the American frontier myth (Miller, 1995), he argues that capital's relentless drive to 'colonise' all facets of human creativity continually engenders resistance, including efforts to 'break away' from its grasp. While these moments offer valuable opportunities to experiment with new, non-exploitative social relationships, they too will be crushed or incorporated unless their creativity is directed against 'the larger capitalist system' (Cleaver, 1995a).

Recognising that no space can presently exist beyond capital's reach means working towards a 'deepening of contradictions and conflict' (Plinsky, 1994: 81) in a manner that is conducive to mass self-organisation. In this respect, further debate over the autonomist discussion of guaranteed income might offer one possible way to explore the question of class self-activity within the sphere of social relations as a whole. Whether this approach has some chance of success in circumstances where 'opting out' might well appear to many as a far more plausible alternative must, in the end, await 'the closest study of the diverse directions [that] different subjectivities may pursue' within the present state of things’ (Cleaver 1992: 17).

6. Full Employment Again?

In the above formulation, the transition rate between primary and secondary activities amounts to something in the order of one percent of the labour force per year. Any imperfection in this

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transition would be of little explanatory value in the scale of existing real unemployment rates of 10% and over in Hungary. However, there is no doubt that lay-offs are often perceived as being due to productivity gains, in the sense that they are often not accompanied by corresponding falls of production.

The formulation, involving only two productivities, is a poor representation of the real situation where the mean productivity of a sector covers a wide variation within it. Moreover, it is quite imaginable that in good times industries might tend to carry their labour force unchanged, while in bad times they might be forced, or given an excuse, to identify and squeeze out redundant labour all at once, rather than in a continuous way.

It is not suggested that this might be the specific mechanism giving rise to the current wide-spread rise in unemployment, but it might be a factor superimposed on others. In any case, it does suggest that unemployment is an unacceptable way to impede the equalisation of incomes. It represents an anomaly in a system which in general rapidly spreads the fruits of innovation from the innovators to the non-innovators. It would point to an additional injustice that the people who, albeit through no merit of their own, mediate the implementation of innovation, should be those most at risk of suffering through transitional mis-matches, while service workers, equally or even more undeserving, enjoy the rewards of this innovation. Although it is logical that those who have the highest rate of productivity gain are those who most quickly work themselves out of a job, it is surely unjust.

Insofar as this is a correct perception, it would follow that a permanent cure for socially unsustainable levels of unemployment is not to be sought in regaining or increasing the rate of growth of GNP, but in administrative measures to regulate and brake the rate of lay-offs. This would automatically entail a slow down in the rise of wages of those in work. Assuming that this process could be adjusted merely to prevent people becoming

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permanently unemployed, and not to prevent transition to other employment, perhaps via temporary unemployment, it would have no effect on money measures of productivity and competitiveness. Its only effect would be to reduce the number of unemployed, and the mean level of wages per employed person. It is not suggested that this solution would be in practice easy to implement. It would tend to promote inflation, at least in cultures where social cohesion is low. But others might be even more difficult, and even less sure in their outcome.

Over the past 20 years, most European firms have invested heavily in new technology. However, for much of this period the widespread dissemination of technologies has not been accompanied by productivity gains, and there is a growing body of evidence that the application of new technologies alone is insufficient to secure such benefits. Many European firms have consequently been unable to improve their competitive position to any significant extent. Instead they have tended to make partial alterations to their working arrangements, leaving the overall organisation of work unchanged. Indeed, it has been argued that industrial and public policy in Europe has too long been preoccupied with "quick fixes".

As argued above, purely technological visions of the organisational models of the future have clear limits. Costly mistakes have been made by organisations which have spent large sums of money on high-tech systems without realising the importance of their human capital. More than ever, organisations are dependent on highly skilled and motivated workforces, and on securing their co-operation. Only a coherent and interactive process of innovation can release the full benefits of implementing new technology. Together with the introduction of hardware and software, organisational structures and practices need to be reviewed to ensure that innovation becomes an integrated process involving technological, organisational and social components.

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To benefit from their investment in new technologies, European firms need to address not only the technological environment within which they operate, but also their relationships with suppliers, customers and other trading partners, systems of production, the physical configuration of machines, and the utilisation and development of labour and skills. Organisational change should therefore ideally consist of a set of closely-related developments in the structure of firms, in production and work processes, in labour and in skill requirements, and in technological systems. Here we wish to reemphasis the importance of considering these developments as a whole, and to voice concerns regarding strategies which focus purely on the implementation of new technologies and ignore their organisational contexts. Such strategies are not only ineffective, they are also very costly.

In this context, it is clear that ICTs have the potential to improve innovation processes within organisations. To date in Europe, firms and organisations have tended to concentrate on productivity improvements at the level of the shop floor. ICTs can, however, also support improvements elsewhere in the value-added chain and promote product innovations involving closer ties between R&D and manufacturing. This particular feature of corporate behaviour could well explain the aggregate differences between European and US productivity growth, product innovation and capital/labour substitution.

In addition to facilitating the development of new working arrangements, ICTs also alter existing forms of work and work organisation. Here too, efficiency and the ability to innovate cannot be improved through isolated alterations to working patterns. For change to be successful, elements of flexible work organisation such as staff versatility, training, flexible hours, new pay systems, more teamwork and flatter hierarchies must be embedded in the broader structures of the firm. Any changes, including the introduction of new ICTs, make sense only if they

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are consistent with the overall position and environment of the firm.

Somewhat paradoxically, however, the importance of person-to-person communication requiring physical proximity has not necessarily declined in the working world - rather the reverse. New management theory stresses the importance of interpersonal contact. The decentralisation of responsibilities has increased the need for direct communication.

7. The Unintended Consequences of Labour Market Deregulation: The Firm - Welfare State Interactions

After almost 10 years, the debate about the possibilities of reconciliation at the firm level between the demands of social protection and economic flexibility in the "post-socialist" economies still continues. The social protection against the sudden termination of the employment contract enjoyed by the workers of the state-socialist enterprises was viewed as one of the primary causes determining the "rigidity" and sclerosis" of the East European labour markets - and the Hungarian's among them. In this situation in the early 90s "deregulation" of the labour markets - understood broadly as the removal of any forms of interventions and guarantees that inhibits firms' "flexible" use of their human resources - was viewed by employers and policy makers alike as major part of that all-promising cure that could remedy the inherited ills of the national economy. We cannot go into the details of the relationship between employment security concepts, labour market policies of firms and those outcomes of the market, as patterns of labour market segmentation and unemployed rates. From a theoretical point here we should pay more attention to the institutional interaction between welfare regimes and institutions of business co-ordination which operates via firm behaviour and the "post-socialist" political dynamics of the social policy making. What explains the different abilities of the firms to shift some of the burden of adjustment

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and reorganisation back to the state? What are the mechanisms by which these policies reinforce the institutionalised advantages of labour market insiders over labour market outsiders - instead to overcome some of the structural problems of the "post-socialist" economies?

Examining the institutional interaction between comparative models of political economy and social policy we focus on the micro-macro linkages. Esping-Andersen (1990) conceptualises the tendency of the welfare regimes to maximise (in the universalistic mode) or minimise (in the conservative models) labour force participation rates as expression of the hidden institutional logics of those regimes. The explanation of the differences could be connected with the uneven growth in productivity between the manufacturing and service sector. The differences in "labour market logics" among in labour market outcomes.

The cross-national differences in the mode of the three different welfare regimes are results of the failure of simplified versions of institutional arguments to account for the dramatic dissimilarities welfare state-firm interaction can be modelled, given the institutional constraints on firms set by the institutions of business co-ordination and the character of the welfare regime available to firms. The different micro-logics of firm and social policy development can account for different outcomes, as the mix between unemployment and other forms of non-employment, number of unemployment spells per worker, and duration of unemployment across those economies (Mares, 1996).

The labour market adjustments of firms in non-co-ordinated market economies with liberal welfare regimes can be approximated by using dynamic labour market demand model that estimates the change in labour inputs by firms across the same industries. Co-ordinated market economies are characterised by combinations of high level training - general and vocational, training and re-training. During periods of economic downturns,

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firms will attempt to decrease the movement in and out of unemployment that may potentially undermine the investment of employers in the skills of their employees (Mares, 1996). Most post-socialist countries are still co-ordinated market economies with conservative welfare regimes. Here flexibility during periods of economic downturns could be achieved by the use of a number of traditional tools of the welfare state as early retirement policies used by firms to settle flexibility financed by general taxation, unemployment benefits paid directly to firms using it to subsidise short-term work and employment security regulations linked to the firms' retraining practices.

8. The Natural Rate of Unemployment Debate: Interventions Unavoidable?

Economic policy recommendations on the acceptable levels of unemployment are almost in each case operating with its ‘natural rate’. But the interpretations of that natural rate differ a lot. In the mid-90s American debates on the expectations of scholars and the real labour force growth were moving on different tracks. The natural rate of unemployment come down. In 1994-95, the community of respectable economists held - though with exceptions including Galbraight, Medoff, Fair and some others - that 6 percent unemployment was as low as the economy could go without triggering inflation. This meant, in turn, that sustainable economic growth could proceed only at the long-term rate of labour force growth plus the average rate of improvement of the productivity of labour in the recent past, for a growth speed limit of, at the highest, 2.5 percent. Any attempt to push gross domestic product (GDP) growth any higher would be inflationary, or so we were constantly told.

But since the end of 1995, real GDP growth has averaged 3.6 percent annually. Employment growth and labour force growth were both about double what was expected; productivity growth was pretty much on target. Unemployment, meanwhile, has de-

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clined to below 5 percent. Confronted with these facts, the current respectable consensus among the American economists is that the natural rate of unemployment has fallen to 5.5 percent or 5 percent, or maybe even lower. Those of us who think the very idea of a natural rate should be junked have been encouraged as never before.

But what next? Natural rate devotees remain cautious. For them, the metaphor of a labour market equilibrium, where labour supply just balances labour demand, is too strong. They cannot give it up. Rather, it raises questions about the concept of the natural rate and about the methods used to calculate it. Maybe the natural rate always has been much lower than respected opinion has thought. Or maybe the whole metaphorical notion of a natural rate is misleading. We don't know the answers to these questions. The real issue, given our ignorance, is: What should we do? Should we pursue falling unemployment and probe for a limit that may or may not be there?

To natural ratters, we are like a blind person standing near a cliff by the sea (Galbraight, 1997:66). This metaphor accurately expresses the natural ratters' position on a policy for growth and employment. Cliff or beach? Gradually falling unemployment has never resulted in a rapid slide toward inflationary catastrophe. The process is, at worst, extremely gradual. Estimates by Robert Gordon, a pillar of mainstream thinking on the natural rate and a careful student of the past, confirm this (Galbraight, 1997:67). Gordon gives a scenario of inflation doubling - to around 6 percent - over eight years, on the assumption that unemployment is kept one percentage point below its estimated equilibrium point. In other words, if the natural rate is in fact 5 percent, then the Americans could enjoy 4 percent unemployment through 2005 without an intolerable increase in the inflation rate.

It therefore makes little difference, from the standpoint of inflation dangers that matter most, whether one pursues full em-

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ployment or not. The inflation costs of lower unemployment are small, tolerable, and easily reversed if necessary - and that is by using pessimistic assumptions. The dangers of an external supply shock, though much greater, are not closely related to the rate of unemployment and cannot be reduced by a slow-growth policy. The lesson to draw is that there is no benefit in failing to pursue full employment.

A second lesson is that the economy is unpredictable in the short run. Those recent high rates of labour force growth and employment growth were not widely predicted and did not result from any policy. But they happened, and had the effect of reconciling higher-than-predicted growth with low rates of wage and price change. Can they continue? Not forever, certainly.


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