سرمایه داری پایدار : رشد انعطاف پذیری اشتغال کامل با انعطاف ناپذیری دستمزد واقعی

In this paper we present a model of flexicurity capitalism that exhibits a second labor market with the government as an employer of first resort, where all workers not employed by firms in the private sector find meaningful employment. We show that the model exhibits a unique interior steady state which is asymptotically stable under real wage adjustment dynamics of the type considered in Blanchard and Katz (1999), and under a type of Okun’s Law that links the level of utilization of firms to their hiring and firing decision. The introduction of a company pension fund can be shown to contribute to the viability of the analyzed economic system. However, when credit is incorporated in the model, in place of savings-driven supply side fluctuations in economic activity, investment-driven demand side business cycle fluctuations (of a probably much more volatile type) can take place.

In the US unemployment rates had been relatively low until the beginning of the financial crisis in the late 2000s, in contrast to Europe where a great many countries have been suffering from high and persistent unemployment over the last decades. But there are also European countries that were successful in maintaining high employment rates. These are, on the one hand, the Netherlands and the Nordic Welfare states, such as Denmark, Finland and Sweden, and, on the other hand, Great Britain and Ireland. While Great Britain and Ireland have pursued an Anglo-Saxon approach with respect to their economic policy, mainly characterized by flexible hiring and firing conditions and by little social spending, the Nordic Welfare states and the Netherlands have followed a different policy. The latter allows flexible hiring and firing, too, but they have adopted high standards of social security. Thus, these countries demonstrate that flexibility and security need not be contradictory but may well be compatible and that social security does not necessarily lead to high unemployment rates or instability of the economic system. Often, the Nordic welfare system is referred to as the flexicurity model, with the term flexicurity obtained by merging the terms flexibility and security. It is in particular in public debates that the flexicurity model has attracted great attention, although there is no clear consensus on its definition (cf. Zhou, 2007). According to Wilthagen (1998) the concept of flexicurity was launched by the sociologist and member of the Dutch Scientific Council for Government Policy Hans Adriaansens in speeches and interviews. According to Adriaansens flexicurity means a shift from ‘security within a job’ towards ‘security of a job’ (cf. Wilthagen, 1998, p. 13). In any case, an important aspect as regards flexibility on the labor market is that there is both external flexibility, i.e. hiring and firing, as well as internal flexibility, such as flexible working hours and the possibility of working overtime and part-time work (see Wilthagen and Tros, 2004; Wilthagen et al., 2004). Essential characteristics with respect to security are income security (that is income protection in the event of job loss and after retiring from work) on the one hand, and the ability to combine paid work with other social responsibilities and obligations, on the other hand. Our goal in this paper is to integrate some ideas of the flexicurity model into the basic neoclassical growth model as presented by Solow (1956) and to analyze the resulting model with respect to its dynamic properties. Solow’s (1956) model of economic growth provides the basis for a variety of subsequent models analyzing the phenomenon of economic growth in Western capitalist economies. An important aspect in Solow’s growth model is the assumption of a neoclassical production function with smooth factor substitution characterizing the input–output relationship that determines the laws of motion of the economy, in place of a fixed proportions technology. Solow assumed full employment and considered homogenous labor as one of the factors of production. In contrast to that, Goodwin’s (1967) growth cycle model had quite a different starting point (Marx’s reserve army mechanism): it assumed – as in Marx (1954, ch. 23) – a real wage Phillips curve and considered its interaction assuming an extreme variant of classical savings behavior in a technological framework with fixed proportions in production. Instead of monotonic convergence to the steady state, the Goodwin model gave rise to persistent cycles around its steady state position of a structurally unstable center dynamics type that could be easily modified towards the occurrence of stable limit cycles (as in Rose’s (1967) employment cycle model).1 It is not difficult to combine the Solow growth model with the Goodwin growth cycle model, since the latter introduces only real wage rigidities into the Solovian framework (or smooth factor substitution into the Goodwin growth model). The resulting model features damped oscillations (close to Goodwinian cycles if the elasticity of substitution between capital and labor is low) and even monotonic convergence of the state variables (labor intensity and real wage) to the steady state in the opposite case. However, one problem of this integrated model is – if it creates periods of mass unemployment – that it implies the possibility of unemployed workers losing their skills and, thus, leading to labor market segmentation, with older workers subject to long-term or never ending unemployment and workers’ families becoming degraded in their social and emotional status (a situation that is difficult to reverse). Further, there may be counteracting unemployment benefits, low wages for the degraded part of the work force and more that must be analyzed with respect to their consequences for the evolution of capitalist economies. In this paper we will not engage into such an analysis of the consequences of mass unemployment but we will augment the above Solow-Goodwin synthesis by an employer of first (not last) resort, where all workers (and even pensioners) find reasonable employment if they are temporarily dismissed from the private sector of the economy, the sector of capitalist firms. In our model economy, that is to be seen as ideal in that respect, we only allow for two types of skill characteristics: skilled and high-skilled labor instructed in primary/secondary education and in tertiary education, respectively. Thus, by speaking of an employer of first resort we intend to underline that the skilled or high-skilled work profiles are employed in the public sector as well as in the private sector. Hence, we abstract from an employer of last resort and from the corresponding labor market where all labor is employed that is either unwilling or unable to work as skilled or high-skilled worker. By modeling the government as an employer of first resort we want to emphasize that the government needs qualified employees in order to organize the complex social security system in a flexicurity economy. This fact holds true for industrialized countries and, therefore, for Nordic countries as well so that one cannot call the government an employer of last resort. The model we build on this basis is providing a stylized theoretical basis for the Nordic Welfare approach to flexicurity, but one that is not subject to the pejorative reformulation of flexicurity as ‘flexploitation’ as it is sometimes referred to in evaluations of the concept of flexicurity in the political debate. Instead, we use the Solow model with the Goodwin real wage rigidity to construct full employment in this framework by means of (decentralized) government actions, with wage bargaining in the private sector and with two implied laws of motion (for employment and for the real wage) that will guarantee even monotonic convergence to the steady state in such a framework with flexible hiring and firing. We view this model as an ideal economic system that a democratic and egalitarian society should aspire to, and towards which progress paths have to be found, confirmed by elections in a democratic society introducing ratchet effects when some parties propose to abolish such an evolution (if it has been by and large successful). It is ideal in that it combines flexible hiring and firing (and job discontinuities in the first, the private labor market) with income and employment security through a pension scheme and a second labor market that preserves the skills of the workforce and prevents their human degradation. Although being an ideal system, some elements have already been integrated in real-world economies. For example, in Europe the three main pillars on which the social security system rests are the health care system, the unemployment insurance and the pension system. In our model we will take into account two of these pillars, the unemployment insurance and the pension system while neglecting health insurance. Thus, we present a model where the aspect of income security is modeled with respect to unemployment and with respect to old age. By demonstrating that our model economy is stable, meaning that it converges to a steady state, we can show that an economy with a relatively elaborate social security system may well be a sustainable one. We think that modern market economies are currently experiencing progress paths towards the flexicurity model, sometimes on a very low pace as the current discussion about minimum wages in Germany demonstrates. Yet, even such a discussion can be reflected from the perspective of the concept of flexicurity and may be interpreted as a step forward towards flexicurity if a general minimum level of (real) wages can be established in Germany. We have shown in Flaschel and Greiner (2009) in the context of Goodwin’s growth cycle mechanism that minimum and also maximum wages (of workers) could dampen the employment fluctuations of the economy and could thus contribute to its stability after a transitory period of low employment. Flexicurity – properly understood – may be the modern equivalent to Solow’s growth model and may – in the same ideal way – provide a perspective for the future of capitalism which is compatible with the social structure of democratic societies. To demonstrate the working of flexicurity capitalism we will provide in Section 2 the accounting framework for such an economy. In Section 3 we will consider the behavior of the agents in such a framework in very basic terms and show on this basis the global asymptotic stability of – and even monotonic convergence to – its steady state position with respect to its central state variables, the real wage in the first labor market and the utilization rate of the workforce of firms. In Section 2 we study the law of motion and the steady state positions of the (extra) company pension payments this model type allows for and, thus, consider conditions for the viability of the economy (which should allow for pension payments above the level of base pension payments). Yet, if we consider credit financing in nominal terms the investment behavior can depart from savings behavior such that the coordination of these two magnitudes leads to Keynesian effective demand problems giving rise to demand driven business cycles. This is the stage where flexicurity capitalism must prove its superiority, since there are existing business cycle fluctuations of a much larger extent than those that can originate from supply side driven full capacity growth. Such problems must however be left for future research here.

We have shown in this paper that a model of flexicurity capitalism can be formulated, exhibiting a second labor market (and an employer of first resort) where all workers not employed by private firms find meaningful employment. This economy is characterized by viable and attracting balanced reproduction schemes. Hence, we have been able to demonstrate that a capitalistic system which is characterized by both flexibility and social security is a stable and, thus, sustainable system. Social security in our model means that retired workers get pensions from a pay-as-you-go system and from firms that administer a pension fund that is built up through savings of active workers. In addition, workers not employed by firms receive solidarity payments and meaningful occupation from the government. This shows that our social security system is rather complex but, nevertheless, allows convergence to a steady state. In case of a sufficiently flexible labor market the convergence is even monotonic implying that transitory business cycle fluctuations can be avoided. In technical terms, the model exhibits a unique interior steady state which is globally asymptotically stable. We could show this by concentrating on the private sector of the economy, the dynamics of which are characterized by insider real wage adjustment dynamics of the type considered in Blanchard and Katz (1999),9 and on a type of Okun’s Law that linked the level of utilization of the insiders of firms to their hiring and firing decision. Since both of these laws of motion refer only to the first labor market and, thus, only to a part of the whole workforce, the fundamental equation of the Solow (1956) growth model has appeared only as an appendix to this core dynamics, describing the evolution of the total labor supply per unit of capital in addition. A further fundamental law concerning the viability of the economy was the law of motion of company pension funds per unit of capital which was shown to lead to a viable steady state level of it when the labor-supply capital ratio is bounded by above in an appropriate way. The existence of such pension funds allows in principle to add credit (out of these funds) to the considered flexicurity model which, when such credits are delivered in physical form, would not question the supply side orientation of the model; see Flaschel et al. (2008b) for details. This, however, changes when paper credit is added to the model implying that investment demand can now depart from the supply of savings in which case we get an IS-equilibrium on the market for goods that generally differs from the supply of goods through profit-maximizing firms. In place of savings-driven supply side fluctuations in economic activity we then have investment driven demand side business cycle fluctuations of a probably much more volatile type. This situation is modeled and analyzed in Flaschel et al. (2008a). It represents one litmus test for the proper working of flexicurity capitalism, since supply side growth may be too stable a situation in order to really test the strength of economies that are designed on the basis of the flexicurity approach. In such a situation it has to be tested in detail, also numerically (since the resulting 5D dynamics are of a fully interdependent type), how the hiring and firing parameter βe influences the performance of the economy. In addition, prudent fiscal and monetary policy may then be needed in order to preserve the stability features we have shown to exist for our supply side version of flexicurity growth in this paper. The investigation of such topics must be left for future research however.