Negotiating for Social Justice
Edited by Susan Hayter
Chapter 10: New Roles for Unions and Collective Bargaining Post the Implosion of Wall Street Capitalism
10. New roles for unions and collective bargaining post the implosion of Wall Street capitalism Richard Freeman 10.1 INTRODUCTION I regard the growth of collective bargaining as essential. I approve minimum wage and hours regulation. (John Maynard Keynes, 1938, “Letter of February 1 to Franklin Delano Roosevelt, on policies to recover from the Great Depression) Ages ago – or was it just months before Wall Street imploded? – Keynes’ 1938 statement on the role of labour institutions and regulations in economic life seemed a historic relic from the museum of discarded economic thinking. Collective bargaining – essential? Minimum wages and hours regulation – something to laud? Policies to recover from a Great Depression – doesn’t everyone know that laissez-faire is ideal? Before Wall Street imploded, macro-economists believed that monetary policy with some automatic stabilizers tossed in had produced an era of great moderation in economic fluctuations.1 Adherents to real business cycle theory argued that cyclic ups and downs reflected changes in technology and tastes in the real economy, not the vagaries of markets. Financial economists asserted that the efficient market hypothesis fit global finance, give or take a few minor anomalies not worth troubling over. Wall Street’s “best and brightest” had developed mathematically sophisticated financial instruments that spread risks efficiently around the world. The World Bank and IMF touted the US model of capitalism as the poster economy of the modern world. The crown jewels of the model were the weakly regulated capital market and a highly flexible labour market with a minimal role for...
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