Conclusions

New context, same orthodoxy spirit

In order to globally assess the changes in approach that have been taking place in the economic theory and especially with regards to labour and employment theories, it is important to bear in mind the conflictive social environment in which they have taken place. In fact, history has shown that paradigm shifts always occur alongside important economic transformations derived from the different interests of different social groups and to which economic analysis can never be and has never been alienated from.

In recent years there have been very important transformations in the nature and organisation of labour and also in the general economic conditions that influence it: the technological base has been modified almost radically, the nature of the financial systems and their relationship with the real economy have changed, a new system of rights appropriation and different regimes for the use and mobility of resources have been established. The regulatory system and other institutions, conventions, and social values that structure society and economic relations in general have changed. Regarding work, the conditions for training the supply and demand for work have changed, the age pyramids, the composition of the active and inactive population, working times, levels and conditions of training, all of which have also changed. 

All these changes are the result of various factors whose specific combination is different in each territory depending on the social conflict originated, and the degree of success or failure occurred from previous models of regulation and intervention. But what characterises the currently dominant approaches is not precisely the recognition of these differences but rather a view of a generality with which their main political-economic postulates are assumed. 

The basic “consensus” that today dominates economic thought, or in other words the current orthodoxy is under the ideas of the “Washington consensus” a model  that prescribed to the countries of the periphery a series of proposals that state what the greatest economic and political powers see that they need to be economically acceptable. These proposals are embodied in a series of postulates that constitute the essential referents of the Neoliberal doctrine:

1.  The need to reduce the distorting intervention of the government as much as possible
2. Price stability should be the central objective of macro policies
3. The main task of the government must now be to make markets function as freely as possible, without regulatory constraints.

In the unique case of Europe, this consensus has also materialised in another relevant aspect from the point of view of work and employment. Since the monetary union is built with great limitations to the mobility of labour for very diverse reasons, the balance must be achieved through the flexibility of prices and wages, which has led to the strengthening of flexibility strategies, especially in the labour market, to promote competitive tax strategies and the progressive dismantling of the Welfare State.

The Theoretical Approach of the New Orthodoxy in Labour Economics

As we have shown, contemporary approaches have developed in different lines and magnitudes. Nevertheless, what can be understood as today’s orthodoxy presents characteristics that have found global consensus regarding the instruments that should govern labour. The main ideas are:

1. employment or unemployment problems have more to do with the existence of inadequate individual strategies than with aggregate (social-collective) problems, 
2. introduction of an ideological structure that makes labour disappear as a productive factor and transforms it into a specific type of capital and workers into capitalists. In this way, labour becomes capital in the purest neoclassical sense and the class conflict disappear,
3. that the level of employment is a constant and not a variable on which it is necessary to try to influence through the instruments of macroeconomic regulation. On the contrary, the level of employment (and therefore, unemployment) is given by the natural rate. The unemployment problem is once again seen as voluntary.

A final characteristic of the new orthodoxy is that it has acquired extraordinary political influence without its adherents having found the minimum empirical evidence that they should have to be considered scientific. It has not been possible to demonstrate that greater flexibility in labour reforms are effective instruments to influence the level of employment. Nor can it be demonstrated that increased influence from labour unions is the cause of unemployment, as the academic orthodoxy repeatedly points out or that which is pronounced by institutions such as the International Monetary Fund.

Considering all the above, it is urgent to question: to what extent does it make sense for the economy to ignore the problem of the effective welfare of workers or of society in general when it addresses the problem of unemployment? When the International Labour Organisation points out that in 2019 the lowest 20 percent of income earners – around 650 million workers – earn less than 1 percent of global labour income, and that currently we are reaching the highest unemployment rate of the last 30 years one should wonder: is it reasonable to maintain that this situation occurs simply because such workers have decided not to invest enough in themselves or that they are voluntarily unemployed because they insist on not accepting lower wages?

In short, the final balance about the knowledge that different schools of economics have added to the study of work and employment is quite frustrating. As we have seen, current dominant analyses prevent us from contemplating the necessarily more global-social nature of the unemployment problem. These limitations are precisely those that indicate, in turn, the great challenges that economic analysis faces in order to understand and explain the problems of labour. Challenges that definitely will be aggravated by the current health global crisis that started in 2020 and that is already showing main changes in the labour structures and organisation.