Systems of Production: Markets, Organisations and Performance

Citation

Thompson, P. (2003), "Systems of Production: Markets, Organisations and Performance", Employee Relations, Vol. 25 No. 6, pp. 627-629. https://doi.org/10.1108/01425450310501342

Most social scientists studying labour markets and processes are not very impressed with the workings of British capitalism. Some, admittedly, would not be too keen on the workings of any kind of capitalism anywhere. For others, the main problem is the particular variety of capitalism, an argument popularised by Will Hutton, and strongly represented in comparative political economy literature. This volume can be firmly placed in the latter camp.

One of the virtues of such approaches is their capacity to move beyond critique to broader areas of policy. Indeed, by foregrounding analysis of the performance of particular markets‐state‐firm configurations, occupying such a territory is essential. This volume has been put together by a distinguished group of British authors associate with the International Working Group on Labour Market Segmentation and takes as its starting point Frank Wilkinson's concept of productive systems. In one sense this appears to be a neutral description of the distinctive combinations of productive forces within wider socio‐economic systems.

In reality it functions as an intellectual and practical bulwark against the advance of neo‐liberalism, promoting instead the virtues of collaboration, high trust and regulated markets. It takes us beyond traditional institutionalist categories that capture distinctive societal effects, towards multi‐levelled analysis of organisational and economic change. An emphasis on dynamically changing environments can help avoid the pitfalls of wishing that Britain was Germany, or another national beacon favoured at various times in institutionalist literatures.

In policy terms, the thrust is the need for more productive ways of working and organising, and the constraints that make this difficult to achieve. There is an overlap here to progressive HRM and high performance work system (HPWS) arguments. A solid critique can be found in some chapters of the negative effects of de‐regulation, job insecurity and work intensification on productivity and innovation. In other chapters on equal opportunities and the minimum wage, a powerful case is made that labour market reform can be instrumental in transforming employment and work organisation.

All this is valuable, if a somewhat familiar part of the progressive policy agenda. Other chapters, provide a more profound challenge to HRM and HPWS assumptions. At worst, there is still a tendency for the former to be presented as a set of techniques and policies that can and should be applied by enlightened managers to good effect irrespective of context. Even in the more sophisticated HPWS literature, advocacy of the integrated bundles of HR practices is made with little consideration of the wider backdrop of changes in the political economy of modern capitalism.

The key problem in such literatures is not the desirability of such practices, but how to explain their low take‐up and fragility. At one level, the book locates an explanation at a fairly general level: “At the heart of the problem is a fundamental contradiction between the logic of markets as an efficient mechanism for allocating resources and distributing income (as conceptualised by liberal economic theory) and the logic of the management of production as a process for effectively combining and exploiting productive forces (as conceptualised by HRM)” (Wilkinson on p. 27). But it is not just an inherent tension between the logics of markets and management. An additional layer of explanation, focused on the particular dynamics of contemporary capital markets, is mounted by Konzelmann and Forrant. I have to confess that my attraction to this chapter is partly a result of its similarities to arguments I have developed recently elsewhere (Thompson, 2003). The fragility of creative work systems is rightly explained both by internal institutional factors and the destructive effects of changes in external environments.

Using two case studies, the authors show how the dominant forms of corporate governance fail to support investments in trust and human capital. What is most challenging to HRM and HPWS is the finding that the positive effects creative work systems on productivity and market share will not necessarily insulate employees from the negative outcomes of continual restructuring. I would also draw attention to the chapter by Craypo on the decline of union bargaining power in the USA. While this sounds like conventional territory, the focus is on the changing and adverse balance between that power and employer “ability to pay”. A crucial problem for unions has been the growth of the service sector in which two thirds of new jobs are low‐wage and low‐skill.

Not all the chapters marry theory, research and policy so effectively. Some are explorations of the internal territory of productive systems analysis and largely abstract in character. Nevertheless, this remains a useful volume that offsets the optimism of HRM and knowledge economy arguments, while providing a basis for discussion of genuine policy alternatives to contemporary workplace and societal trends.