File spoon-archives/marxism-international.archive/marxism-international_1997/marxism-international.9710, message 610

Date: Wed, 29 Oct 1997 21:37:35 -0500
Subject: Re: M-I: Re: labor's bargaining room

Louis R Godena wrote:

>Brief response to Doug:  In five years that saw 12 million new US jobs,
>Europe had no net increase.  This seems to be a fairly straightforward
>endorsement of flexible labor markets and well developed capital markets,
>which include the creation of job-producing start-up businesses.  If this is
>not the case (I'm not sure what Doug is suggesting here; that these new jobs
>are a mirage?  that Euro-sclerosis is a figment of the World Bank?), then
>how to explain this summer, as unemployment in Europe reached a postwar
>high, while in the US it fell to a 24-year low.

It's a lot more complicated than this. To start with, Europe has been under
the punishing Maastricht regime, with groaningly tight fiscal and monetary
policies. Comparative studies of European labor markets show no relation
between wages/benefits/"rigidity" and (un)employment. It's also a fact that
start-ups don't produce that many net new jobs, after their job-losing
proclivities are deducted, and that "well developed capital markets" have
almost nothing to do with financing startups. I'm beginning to read more
deeply in this literature, so I'll get back to you when I have more info.

Besides, is rapid job creation necessarily a sign of strength, if lots of
those jobs are of the low-wage, low-productivity sort?


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