TCS Daily

The Next Proletariat?

By Steven McMullen - September 21, 2005 12:00 AM

Since the peak of the Industrial Revolution, the nature of work in western capitalist economies has been changing. The massive factory manufacturing model of employment is giving way to more specialized skill and knowledge based employment, as technology replaces labor on the factory floor, factory jobs move to less wealthy countries, and computers make human organizational activity more productive.

These technological changes are embodied in the service industries, which have been growing across the Europe and North America. While this shift is not complete, and is not universal, it is wide enough to have had a significant impact on the political and institutional landscape in the US and Europe. The social and labor market policies of European countries like France, Germany, and Austria, were shaped primarily as a reaction to the challenges of an industrial-manufacturing labor force. Similarly, labor unions are most effective in an industry structure similar to manufacturing. For this reason, the shift to service industries in the western world has already begun to undermine the labor union movement, as well as the continental European economic model.

Labor unions have experienced declining membership rolls and diminished influence almost universally throughout the western world, and it is no secret that in most countries unions have not been very successful moving into industries other than manufacturing, agriculture, and the government sector. There are two reasons for this: first, these three industries often have a clear delineation between management and labor such that bargaining is useful. Second, the manufacturing industry largely maintains the structure developed in the Industrial Revolution. It is this structure that Karl Marx was addressing when he wrote his Economic and Philosophical Manuscripts of 1844:

In what, then, consists the alienation of labor? First, in the fact that labor is external to the worker, i.e., that it does not belong to his nature, that therefore he does not realize himself in his work, that he denies himself in it, that he does not feel at ease in it, but rather unhappy, that he does not develop any free physical or mental energy, but rather mortifies his flesh and ruins his spirit.

Marx's critique of labor during the Industrial Revolution was fitting given the demeaning nature of much employment of the time, in which workers were needed primarily to do menial tasks in a production line. The service sector, however, includes a growing number of jobs that have a more fluid and nuanced hierarchy, and do not fit Marx's description, because they tend to involve the worker's creativity, intelligence, and social skills. As a result it has been much harder for unions to characterize work and employers as the enemy. Finally, as people begin to compete for jobs based on skill level, employers have an incentive to offer benefits packages and higher wages in order to retain the individual, and thus collective bargaining becomes unnecessary.

For these reasons, the union density rate is falling in many nations. According to the International Labor Organization in the period between 1985 and 1995, France's trade union density fell 37 percent, Germany's fell 17 percent, Austria's fell 19 percent, and similar trends occurred in the majority of nations throughout the western world. This process has largely continued over the last decade, at least as far as data is available. Similarly, the service sector in each of these nations has been rising as a proportion of the workforce over the last 20 years. That said, since most countries lump all non-agricultural and non-manufacturing employees into the "service sector" the statistical category is not perfect for the purposes of this argument.

The falling union participation rates have also brought with them significant political changes. Unions have been far less militant over the last 10 years than they had been previously, and despite efforts to coordinate better, their political clout is failing. This change does not simply mark the end of some political advocacy groups. It also means that governments are finding themselves under much less pressure to take an adversarial stance toward industry, markets, and trade. Despite the loud anti-globalization movement, political and market forces are making the economic model of the US and Britain much more palatable to workers than it had been when employment and humane treatment needed to be fought for through organized labor movements.

This does not mean that the French social insurance system will come crashing down in the near future, nor that the Swedes will all start reading Milton Friedman, but it does indicate that future reforms will likely move governments closer toward a model which gives workers more flexibility to compete on their own merits. This is the case not because it will allow them to compete globally (though it may), but because their citizens will find the antagonistic rhetoric of Marx and his modern allies to be foreign and unappealing.

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