Journal of Management Research
Volume 1, Number 4 (September – December 2001)
ISSN: 0972-5814 Online ISSN: 0974-455X
Flexibility Paradigm and Restructuring of Labor Markets in Developed Market Economies
Vijay K Seth
| Abstract |
Developed market economies collectively experienced yet another crisis in the 1980’s, like the Great Depression of 1930s, known as stagflation. Economists believed that this crisis has emerged due to the rigidities in the supply side that have been created by the regulations and institutions to avoid reoccurrence of recession. Therefore, they suggested the restructuring of the economy by removing all regulations and institutional constraints through policy reforms. It has been argued in this paper that in the developed market economies, the technology of mass-production which developed symbiotic existence with the policies of mass-consumption (higher aggregate demand) has created
the supply side rigidities. The removal of these rigidities requires restructuring at the enterprise
level. Policy reforms provide only necessary conditions for bringing about micro-level restructuring
but do not provide sufficient conditions. Wherever, policy reforms provided enough incentive for the
restructuring at the enterprise level, those economies were able to overcome the crisis earlier than
the others. This according to the author, explains the diversity in the impact of policy reforms on the
performance of different developed market economies.
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