European Growth Models and Working Class Restructuring
Engelbert Stockhammer (Kingston University), CÚdric Durand (CEPN – CNRS/UniversitÚ Paris 13) and Ludwig List (Kingston University)
Abstract . This paper builds on post-Keynesian macroeconomics and a Political Economy approach to class analysis and offers an empirical analysis of European growth models and working class restructuring in Europe between 2000 and 2008. We will distinguish between the ‘East’, the ‘North’, and the ‘South’. In the East, the fall-out of the socialist system and the incorporation in international trade and capital networks allowed productivity gains and a sustained rise in wages and profits. This affluence of labour at its immediate periphery offered German capital to benefit from lower costs of inputs due to outsourcing elements of the value chain. This pressure contributed, in the North, to a retreat of the working class, which materialized in wage repression, liberalization of labor markets and increasing capitalist opt out of collective bargaining, fostering rising profits and export competitiveness. The South experienced a property and financial bubble and high inflation rates. Competitiveness decreased and large current account deficits resulted while massive capital inflows helped sustain the bubble and public deficits. Class struggle was thus partially suspended by welfare expansion, wage increases and financialisation of households. Our analysis shows that class restructuring forms an integral part in the economic process that resulted in European imbalances and the Euro crisis.