How Greece and Ireland have been positioned in the world developments since 1945: a French Regulation Approach.

Author:Vasiliadis, Lavrentios
Position:Report
 
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INTRODUCTION

In a time period where Foreign Direct Investment (FDI) inflows have reached historic highs, Greece's performance on that field has not followed the same direction. On the contrary, FDI in Greece continue to decrease, contrary to what happens to other developed countries of the EU, like Ireland and Portugal. This tendency has resulted to discussions among scholars (11), (14), (28) regarding the roots of this cause. In this respect, this research gives a different approach regarding the causes of this downward tendency, based on the French Regulation approach.

More precisely, this research analyses some major developments of the world economy and production since 1945 (end of World War II), by following the approach of the Regulation School. At the same time, the situation of European regional economies (notably Greece and Ireland) in each phase of world transformation is also analysed. The restructuring analysis of the production systems is divided into three broad periods: the first one, called Fordist period, took place from the end of World War II (1945) to the end of 1960s. The second period, called Post-Fordist, took place during the 1970s and 1980s. The last period, called New Economy or even Globalisation era, took place from 1989, with the fall of the Berlin Wall and lasts until today. Although, the analysis of this research has no intention to follow the exact periodisation of the French Regulation School, this is used as a benchmark in order to develop the above mentioned periodisation (Fordism, post-Fordism, New Economy). This effort tries to give flexibility and to avoid the stiffness of any approach that is used as the basis for the development of an analysis.

The objective of this analysis is to demonstrate the weakness of Greece to understand the dynamics of capitalist development. This will take place by describing how the states of Greece and Ireland have responded to the evolutions of the global economy since the end of World War II, giving an explanation why Ireland has advanced a more sophisticated understanding of capitalist development and therefore was able to identify and give preferential assistance to growing sectors (e.g. IT sector) and policies (pro FDI). The hypothesis is that Ireland very early realised the importance of FDI as a key element for the development of its economy and followed a consistent policy in favour of it, contrary to Greece that has not managed yet to develop a long-term strategy in favour of FDI.

MATERIALS AND METHODS

In order to answer the question of this research I draw upon French Regulation theory in order to understand the world development and the differential positioning of Greece and Ireland, paying particular attention to peripheral Fordism. For this purpose the literature related to French Regulation School, as well as to the economic and political history of Greece and Ireland, has been thoroughly reviewed. By this way I try to combine theory and reality trying to explain major evolutions in Greece and Ireland, caused by international events. The French Regulation School has been adopted as it emphasises the restructuring of the production systems and how this has influenced the positioning of countries in the world power system. At the same time, it considers the state both as a subject involved in regulating the economy and as an object of regulation in its own right (41).

RESULTS AND DISCUSSION

In order to understand the economic structure of the today world, it is essential to comprehend the developmental logic of the post-war period. The economic boom just after the end of World War II was an illustration of the supremacy within the main advanced capitalist countries of a peculiar pattern of development and of the constancy of a world of configuration that linked them together. Recognising the difficulties of combining theory and history, this research will track the approach developed by the French Regulation School, which first took up this challenge when it tried to understand the rise and demise of Fordist growth regime (16), (24). This school put emphasis on the restructuring of production systems, which intensified during the 1980s, indicating an all-embracing shift between two historical periods: Fordism and Post-Fordism. It maintains that the processes shaping industrial organisation are broader patterns of development within both core and peripheral countries. More precisely, they consider the history of capitalism as a succession of phases, each differentiated by certain historically developed, socio-institutionally defined structural forms that give rise to distinctive economic trends and patterns (17), (33). The framework rests on four key concepts: regime of accumulation, i.e. a recorded set of regular macroeconomic interactions, which includes the critical economic conditions for the operation of the productive system (technology, organisation of the labour process, relations between the departments of production) (1), mode of regulation, when any uncertainty of the investors about the future coherence of the regime of accumulation is eased by regulatory mechanisms, institutions, compensatory mechanisms and information systems (44), (49), mode of socialisation, i.e. the establishment and consolidation of a mode of regulation, which is heavily dependent on the political sphere. This means that different social groups, regardless of the divergences in their interests and their economic inequalities, over the long-run make up a nation in which power relations are perpetuated without major dispute. This stable system of relations of domination, or for some others, of concessions among different social groups (dominant and subordinate) is called social block (44) and the role of the state, which is vital because it reinforces the institutionalised compromises, asserts its monopoly of institutionalised violence, defends the currency, enforces legislation and manages relations with other nations (44).

According to Boyer (15), a prominent regulationist, institutional differences at the nation-level are very important, but, in the long-run, economic developments depend upon the dominant mode of regulation in each historical era. Thus, whereas, especially OECD countries, operate under a common environment, differences at the mode of regulation at the national level may explain their relative competitiveness and growth rates (15). This is a very important argument for the evolution of this research, as at the end our intention is to clarify how, through different modes of development, the different national institutional regimes of Greece and Ireland were driven towards the dominant mode of regulation, which was their more and more integration into the world capitalist system. Thus, the following structure of this research has two tasks. The first one is to describe the world developments, driven mainly by USA and some large European countries, since the end of WWII. The second task is to describe how the two countries in question and particular their institutional regimes, were affected by these developments and what were their (re) actions to them.

Thus, the immediate post-1945 era was characterised by the Fordist mode of development originated in the United States. More precisely, the Fordist industrial paradigm included the Taylorist principles of rationalisation, plus constant mechanisation. Aglietta (1) defines Taylorism as the sum total of those relations of production internal to the labour process that tend to speed up the completion of the mechanical cycle of movements on the job and to fill the gaps in the working day. Taylorist rationalisation was based on a separation of the intellectual (i.e. research and development, design and the scientific organisation of work) and manual (i.e. unskilled operational tasks) aspects of labour. The establishment of the Taylorist-Fordist labour process was supported by a transition in the mode of regulation of capital-capital relations away from full competition towards oligopoly. A qualitative increase in the intensity of capital, the rise of finance-dominated trusts and the emergence of modern firm allowed for greater inter-capitalist control of competition, markets and in general of the overall investment environment (17).

After the end of WW II, Taylorist management techniques were incorporated in most industries both in the USA and Western Europe. This was also favored by the implementation by the USA of the Marshall Plan. The Plan aimed to give to the countries of Western Europe (and Japan) that had suffered from the war those financial and technical means that would allowed them to catch up (67). As a result of these new management techniques a vast deposit of homogenous and mobile labour-force, both controlled and submissive to capitalist labour discipline, was created. The mass migration of workers particularly contributed to the growth of this pool of labour. Additionally, there was a relatively regular rise in real wages, which was the result of a constant fall in real social wage costs due to the increase in productivity (1).

Whereas this was the case for the United States and the large European countries (and Japan), what about peripheral Europe and particularly Greece and Ireland which are at the focus of this research? As mentioned above Fordism contributed to Taylorism by incorporating the collective knowledge of the labour force into the machine system itself. Additionally, the Fordist regime of accumulation stimulated not only a rapid increase in the volume of investment per head but also a growth in per capita consumption. Within this context, the role of peripheral countries was very limited. The reason was that Fordism was based on the principles of mass production and mass consumption. The less wealthy peripheral countries could not fulfil this principle. They could not produce massively, because they could not consume massively. The United...

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