Institutional Complementarity: Labour Markets and Finance
Bruno Amable, University of Lille 2
Stefano Palombarini, University of Paris
The article is a contribution to the theory of institutional complementarity. Its aim is to analyse the persistence and transformation of national models of industrial relations by considering the relevant historical and institutional context. Our argument is that the specific features that a system of industrial relations possesses in one country are not only the consequences of the particularities of the institutions pertaining to the realm of capital/labour relationships, but are also influenced by some other institutions not directly connected with the ‘labour market’. More precisely, the type of influence that labour market institutions have on the capital/labour compromise are partly determined by other important institutional features of the economy, in areas which, though not directly concerned with the social compromise, exert an influence on the outcome of this compromise. In other words, institutions do not exert an influence on political economy equilibria one at a time, but jointly. Moreover, the joint influence of institutions from different areas cannot be reduced to the different, separate influences, because institutions are linked by complementarity with one another. This complementarity means that certain institutional patterns exert certain influences jointly with other institutions in order to drive the political economy equilibrium in a certain direction. This theoretical scheme may be applied to the systems of industrial relations. National strategies of labour unions and employer organisations bear the influence of history. One may speak of a certain “style” of industrial relations which sharply characterises countries. In this respect, the different national models observable in Europe have emerged some time between the end of the 19th and the beginning of the 20th century, and have endured until now without major changes. The concept of institutional complementarity allows for a theoretically grounded interpretation of the fact that there exists a persistent diversity of "models" of industrial relations. If the strategies of labour unions and employer associations are connected to the institutional parameters that characterise the whole economic system, reasons related to systemic coherence could indeed thwart the tendency to the convergence which would derive from a possible "superiority" of a model on the others.
We shall explain the persistence of a variety of "styles" of industrial relations with the links between the trade-union and employers' strategies and the relative power of labour and capital on the one hand, the mode of financing of the economy on the other hand. The formalisation which we present is very simple: it concerns a limited number of institutional factors, while the concept of complementarity which we discussed concerns the whole institutional architecture. The model, which was conceived to indicate the operating character of the concept of institutional complementarity, aims less at being an exhaustive explanation of the reality than an exercise in method: it is more about showing how the concept of "institutional complementarity" can intervene in a formal treatment of the topic of institutional diversity than to propose a comprehensive treatment of the relations between labour unions employers' associations.