In recent years extensive research in Western Europe has focused on corporatist systems of industrial relations in which collective bargaining is centralized on a national scale and organizations representing workers and employers are routinely consulted on major policy initiatives. There is by now a large literature detailing the impact of corporatist arrangements on a wide variety of social and economic outcomes. Nations with corporatist systems experience little industrial conflict and slow growth of nominal and real wages. Corporatism is frequently claimed to be a prerequisite for success with income policies. Real wage moderation leads, in turn, to superior economic performance (lower levels of unemployment and more rapid growth). At the same time, corporatism is associated with a relatively rapid growth of welfare expenditures, leading many scholars to see in corporatism a political bargain whereby unions receive extensive welfare programs in exchange for moderation in private wage negotiations. This widespread consensus about the empirical pattern does not extend, however, to a theoretical understanding. Three issues are particularly controversial or unclear: 1) the relationship between corporatist structures and union politics, 2) the impact of the structure of interest representation on the effects of government economic policy, and 3) who benefits and who loses from corporatist arrangements. On the first issue, one view holds that corporatism was imposed on workers against their will. One variant sees corporatism as representing the successful cooptation of the union movement to serve the needs of the capitalistic social order. Another variant views corporatism as the result of non-democratic collusion between labor, employers, and government. According to the opposing view, corporatist arrangements are supported by union leaders because their members benefit. With regard to the second issue, little is known about the impact of corporatism on economic policy other than demand management and incomes policies. Yet there is good reason to think there are significant differences between corporatist and pluralist systems in their responses to a variety of other economic policies, especially policies concerning investment and growth. The third issue is perhaps the most contentious in terms of resolving the question of who gains and who loses from corporatist arrangements. Four possibilities exist: workers gain and employers lose, employers gain and workers lose, both gain, both lose. All four positions have found advocates in the scholarly debate. The goal of this investigation is to develop a formal theory of corporatism, as compared with pluralism and market competition. Such a theory would specify the critical difference between centralized and decentralized bargaining, explain the empirical findings, provide tentative answers regarding the effects of policies concerning growth and investment in different institutional environments, and clarify the advantages or disadvantages accruing to groups and individuals. In addition, the investigators will generate a number of different consequences that must be true if the theory is true, thus suggesting new directions for future empirical research.
