University of Greenwich Business School: Work & Employment Research Unit
Abstract
This paper develops a theoretical framework for analyzing the social effects of marketization. We define marketization as the imposition or intensification of price-based competition. It includes a wide range of phenomena, such as outsourcing, privatization, active labor market policies, and the international integration of markets for goods services, capital, and labor. Our central proposition is that the diverse forms that marketization takes have the common effect of increasing economic and social inequality via their effect on non-market institutions. We propose two mechanisms of institutional change. First, the means used by economic elites to seek influence shifts from voice to exit, leading to the 'disorganization' of the non-market institutions of industrial relations and welfare provision, or the erosion of their democratic and redistributive functions. Second, economic activity shifts away from production and toward extraction, leading to the expansion of new forms of undemocratic private and public regulation. We conclude that assumptions of efficiency seeking and societal embedding commonly used to analyze the expansion of markets need to be loosened in order to study this process
