The Political Economy of Labour Market Reforms

The capitalist world has passed through a significant change since the early 1970s. The collapse of the Bretton Woods system and the end of the gold standard regime influenced the global relations of political economy and overthrown the economic relations of power. The dissolution of the Soviet Union in 1989 has declared the collapse of communism as an alternative to capitalism, and even announced the end of history. The new era was associated with the rise and consolidation of monetarism.

The capitalist mode of production is based on the sur plus-va lue accumulated by the worker selling his or her labour-power to the capitalist and producing more than required for him or her to live. In this process, labour is detached from the means of production and the labour-power is sold as a commodity in the market. The capital aims to produce more surplus-value in less time, with a smaller amount of labour-power and lower labour cost, whereas the labour intends to improve his or her working and living conditions, decrease working time and increase wages. Hence, capitalism has class antagonism at the core of the production process.

The formation and development of the working class and the capitalist class in Greece naturally occurred in parallel with the rising level of industrialisation. Greece had very limited industrial activity in the 19th century and failed to make an industrial take-off until 1920 (Close, 2002, p. 5). Migrations from Anatolia in 1922 resulted in significant changes in the economic field that they induced a labour surplus, which marked the beginning of a period of rapid industrialisation and urbanisation (Ioannou, 2007, p. 2). Yet, even the rapid industrialisation was not sufficient for the absorption of the ‘labour surplus’ and workers witnessed a weakening of bargaining power and negative effects on unionisation (Katsanevas, 1985, p. 102). The working class that started to grow and get organised under the influence of the Bolshevik Revolution was overshadowed for years by the surplus population of workers.

Following the 1967–74 military dictatorship regime, démocratisation took place under the hegemony of the bourgeoisie, which led to a functional bourgeois democratic system with all its institutions. However, the class movements marking the end of dictatorship and the cooperation between the domestic bourgeoisie and the working class contributed to the working class in gaining some advantages in terms of rights and freedoms during démocratisation. These concessions were also perceived compulsory for the sustainability of the hegemony.

Greece experienced the transition from Keynesianism to monetarism later than most of the other countries of the capitalist world. It was primarily caused by the collapse of the military dictatorship defeated by the alliance between the local industrial capital and the working class in 1974. This encouraged local market-oriented capital accumulation and a protectionist economic policy. Therefore, Greece maintained the Keynesian policies in response to the periodic needs of the local industry even after becoming an EU member. Reforms suggested to Greece in the early 1980s towards the targets of harmonisation with the EU and the Common Market were repelled on the basis of the priorities of the Keynesian economic policy.

With the monetarist economic policy prevailing in Greece and Turkey, labour market reform process began for increasing competitiveness at the national/international levels. Due to the increase in the level of organisation and the capacity of resistance of the working class during Keynesianism, labour market reforms were started by reducing the organisational capacity of trade unions and suppressing collective bargaining rights. It was initially aimed to limit the resistance of the working class organisations in Greece and Turkey.

Deregulation and flexibilisation policies followed the deunionisation and suppression of collective bargaining rights in the transition from the Keynesian to the monetarist economic policy in Greece and Turkey. In parallel with the limited extent of policies for reducing the organisational capacity of trade unions and preventing collective bargaining in Greece, deregulation and flexibilisation policies were pursued on a far more limited scale in comparison to Turkey, and working class organisations resisted the process at trade union and political party levels. Whereas the organised resistance of the working class compelled the capital to introduce institutional-legal changes towards deregulation and flexibilisation in Greece, the constraints imposed on the working class enabled the controlling of the labour market without resorting to institutional-legal changes in Turkey. Hence, an overall assessment of the post-1980 period points to an ‘optional flexibilisation’ of the labour market in Turkey (Köse and Æncü, 2000: p. 84).

Policies for the restriction of social security (social security and pension system reforms) topped the agenda from the early 2000s in Greece and from the late 1990s in Turkey, whereas privatisation policies were put on the agenda in the 1990s in Greece and from the second half of the first decade of the 2000s in Turkey.

Since the economic crisis of the 1970s, the surplus value accumulated in the real economy has been shared by the financial market in order to decrease the organic composition of capital by limiting investment into constant capital and to achieve higher returns of profit. Real profits accumulated at the productive market have been transferred to the financial market rather than being utilised in production (Tonak, 2009: p. 37). This capital transfer has downsized the real economy. It has circumvented the tendency for the rate of profit to fall, and hence, over accumulation, for a certain period of time. Capital has fled from the risky and low-profit real economy to the high-profit financial market, and growing levels of financialisation have postponed and/or limited dévalorisation of capital. In this respect, ‘capital’s agony to survive’ necessitated it to become ‘more aggressive, global and expansionist’ (Fouskas and Dimoulas, 2013: p. 21).

Since the emergence of capitalism, the capitalist mode of production has passed through different stages of development. There have been phases of economic crises that necessitated the introduction of different economic policies prioritising the sus ta inability of capital accumulation. The rises and falls in the average rates of profit at the international level have had their reflections at the national level that similar economic policies dominated both the world capitalism and capitalisms in different parts of the world. Therefore, the capitalist mode of production had gained a more global structure with each challenge it faced, and the national economic policies have showed parallelisms with the international rule of money.