Although industrial sociology’s origins lie in the ideas of Marx, Weber and Durkheim, and perhaps beyond, as a discrete subject it really began only between the world wars, came to fruition in the late 1960s and early 1970s, and subsequently fragmented into myriad forms. Industrial sociology still remains important, though it often masquerades under different labels, such as the sociology of work and organizational behaviour, or has become merged along with some elements of industrial relations into Human Resource Management.
The history of industrial sociology can be read against the changing backdrop of the founding authorities. It might seem obvious that Marx, with his theory of proletarian revolution generated by alienation and exploitation, would prevail during the interwar period, when mass unemployment and economic crisis prevailed, but in fact Marx’s influence was minimal: the limited success of the communist revolutions shifted the focus of many Marxists from industry to culture. Paradoxically, the contemporary Marxist approach to industrial sociology, the Labour Process perspective (Thompson 1983), traces its roots to the same period when Taylor’s ‘scientific management’ theory suggested that managers should separate the conception of work (a managerial task) from its execution (an employee’s task). Taylor also suggested that economic incentives, channelled through individuals not groups, were the ‘one best way’ to motivate workers, and that, wherever possible, jobs should be deskilled to enhance productivity and reduce labour costs. It was Braverman’s (1974) seminal work, Labor and Monopoly Capital, which argued that managerial control, premised upon Taylorism, was the benchmark of capitalist management, and from this point Marxists became increasingly interested in the employment relationship. The hegemony of the Labour Process approach disintegrated during the 1980s, with the new right’s political dominance, but it still remains an important strand of industrial sociology.
Earlier on, the ideas of Durkheim, particularly his Division of Labour (1933) with its notion of norms and solidarity, were more influential than Marx’s. It was also the issue of social solidarity that led Elton Mayo (1946) to interpret the results of the interwar Hawthorne experiments as evidence of an irrational desire on the part of workers to form small groups. These experiments comprised a series of experimental, survey and anthropological approaches to worker behaviour. The results, considerably criticized then and now (Gillespie 1991), were nevertheless instrumental in the development of the Human Relations approach. Taylor’s assertion, that the best way to manage people at work was by keeping them isolated from one another, had apparently been dealt a death blow, but since individual contracts and payment systems came back into favour during the 1980s and 1990s we must assume that Taylorism’s death was much exaggerated. So too was Durkheim’s, for although his influence waned during the 1970s it was never extinguished, finding a home in the writings of Fox and Flanders (1969), and also proving an important foundation for the development of organizational symbolism in the writings of Turner (1990).
The interpretation of industrial phenomena, including symbols, was also at the heart of Weber’s approach to industrial sociology. Disputing Marx’s materialist explanation of the rise of capitalism, Weber (1948) argued that ideas also played a crucial role, particularly those associated with the Protestant work ethic. However, Weber’s most telling analysis was reserved for his account of bureaucracy, and the crucial significance of rationality in the domination of ‘legal rational’ forms of authority, that is, those where legitimacy was rooted in formal rules and procedures. Subsequently challenged, originally by Gouldner (1954), and later in the attempts to de-bureaucratize work by reducing managerial hierarchies during the 1980s and 1990s, Weber’s dire warnings about the decreasing significance of the individual within the ‘iron cage of bureaucracy’ still remain pertinent. Weber’s triple heritage, in which ideas, interpretation, and domination by experts prevail, later formed the crux of a series of non-Marxist approaches, ranging from the more phenomenologically oriented work of Silverman (1970) through to the rather more middle line taken by Goldthorpe et al. (1969).
Since the early 1980s, four new themes have emerged. First, the patriarchal overtones of much traditional industrial sociology have stimulated the rise of a feminist line of research. In this approach the assumption that ‘work’ can be reduced to blue collar men employed in factories is sharply contrasted to, and linked with, both the unpaid domestic work of women and the rise of part-time women employed in clerical or service jobs. Furthermore, the very idea of technology as neutral and deterministic is shown to be an important element in the perpetuation of patriarchy (Cockburn 1983; Wajcman 1991). Second, the collapse of communism, the globalization of industry, the shift from Fordism to post-Fordism, the developments of surveillance technology and the rise of unrestrained individualism in the 1980s, ushered in a renewed concern with the roles of expertise, norms and self-domination, often explicitly linked to the ideas of Foucault and other post-modernists (Reed and Hughes 1992). Third, developments in information technology, and their applications to manufacturing and financial trading in particular, have encouraged a renewed concern to apply the social constructivist ideas from the sociology of science and technology to the sociology of work and industry (Grint and Woolgar 1994). Fourth, the assumption that occupation and production are the keys to social identity have been challenged by counter-arguments suggesting that consumption patterns are the source of individual identity (Hall 1992). Industrial sociology has certainly been transformed from its origins, but it retains an axial position in explaining contemporary life.
Keith Grint
University of Oxford
References
Braverman, H. (1974) Labor and Monopoly Capital, London.
Gockburn, C. (1983) Brothers, London.
Durkheim, E. (1993) The Division of Labour, New York.
Fox, A. and Flanders, A. (1969) ‘The reform of collective bargaining: from Donovan to Durkheim’, British Journal of Industrial Relations 2.
Gillespie, R. (1991) Manufacturing Knowledge, Cambridge, MA.
Goldthorpe, J.H. et al. (1969) The Affluent Worker, London.
Gouldner, A.W. (1954) Patterns of Industrial Bureaucracy, New York.
Grint, K. and Woolgar, S. (1994) Deus ex Machina, Cambridge, UK.
Hall, S. (1992) ‘The question of cultural identity’ in S.Hall D.Held and A.McGrew (eds.) Modernity and its Futures, Cambridge, UK.
Mayo, E. (1946) The Human Problems of an Industrial Civilization, London.
Reed, M. and Hughes, M. (1992) Rethinking Organization, London.
Silverman, D. (1970) The Theory of Organizations, London.
Thompson, P. (1983) The Nature of Work, London.
Turner, B. (1990) Organizational Symbolism, Berlin.
Wajeman, J. (1991) Feminism Confronts Technology, Cambridge, UK.
Weber, M. (1948) From Max Weber, H.H.Gerth and C.W. Mills (eds), London.
Inflation is generally taken to be the rise of all or most prices, or (put the other way round) the fall of the general purchasing power of the monetary unit. Since the mid-1930s, inflation has been continuous in the UK and nearly continuous in the USA. Over that period, consumer prices rose thirty-fivefold in the UK and more than twelvefold in the USA. Only the official prices in some centrally planned economies escaped the worldwide trend, until these regimes collapsed.
The corresponding sense of deflation—the general fall of prices is less familiar because it has not been experienced for some time, though deflation prevailed in most countries from the early 1920s to the mid-1930s, and in many for long periods in both the earlier and the later nineteenth century. Deflation is perhaps more often used to refer to a fall in total money income or in the total stock of money, or, more loosely, to falls in their rate of growth. Inflation is sometimes used in corresponding, looser senses.
The idea that the value, or purchasing power, of money depends simply on the amount of it in relation to the amount of goods goes back in a fairly clear form at least to the mid-eighteenth century. So long as money consisted wholly or mainly of gold and/or silver coins, the application of this doctrine was easy. A reasonably convincing account of the main changes in price-trend even in the nineteenth century can be given in terms of the gold discoveries of the mid-century and those (together with the ore-processing innovations) of the 1890s, set against the continuous rise of physical output of goods. From early on, however, paper claims on trusted debtors began to constitute further means of payment, and such claims, in the form of liabilities of banks and quasi-banking institutions, have now replaced ‘commodity money’ (coined gold or silver, circulating at virtually its bullion value) almost completely. This makes the definition of money harder—and inevitably somewhat arbitrary. Moreover, the supply of money, though subject also to other influences, has always been to a considerable extent responsive to the demand for it, so that it cannot be taken as independently given.
The simplest kind of modern inflationary process is that where a government, perhaps for war purposes, needs to acquire an increased flow of goods and services, and pays at least partly for it with newly printed money (in practice, borrowed from the banking system). If the economy was fully employed to start with, and if we exclude the possibility of the need being met by imports, the effect is to raise prices in proportion to the increase in total (government and non-government) expenditure. As the money spent by the government goes into private hands, private expenditure rises, and the government can get an increased share of the national real output only by printing money faster and faster to keep ahead in the race. In the absence of complications from price rigidities and taxation, an indefinite, exponential inflation is generated. In practice, such complications exist and slow the process down; governments often try to increase price-rigidity by price control, which has usually to be supplemented by rationing. Inflation can, however, become completely explosive in the extreme cases of ‘hyperinflation’, like that in Germany in 1923, and the even bigger one in Hungary in 1946, when prices eventually doubled (or more) each day. These hyper-inflations were assisted by special circumstances; their very speed made revenue collection ineffective, so that nearly all government expenditure had to be financed by new money, expectations of their continuation made for very rapid adjustment of wages and salaries to the rate of inflation, and the disruption of the economy (by a general strike in one case, foreign occupation in the other) reduced the real flow of goods for which the government and other spenders were competing. True ‘hyperinflation’ has occurred only where something like this last condition has been present.
More usually, inflation has to be considered in the light of the fact that prices are formed in different ways. The prices of many raw materials and foodstuffs, in the world market, are flexible and strongly and quickly influenced by supply and demand conditions. The great upward surge of these prices in 1972–4 was induced partly by the boom in industrial production and demand (which, however, was no greater in relation to trend than the one in the late 1960s), partly by particular conditions affecting mainly cereals—the breakdown a few years earlier of the World Wheat Agreement, the widespread running down of stocks thereafter, and the failure of the harvest in the USSR. Petroleum, the price of which quadrupled, is a special case; its price is ‘administered’ rather than formed in the market, but the administration of it had passed from the international oil companies to the Organization of Petroleum Exporting Countries (OPEC). In addition, the outlook both for future discoveries of oil and for alternative sources of energy (on which a rational pricing of oil largely depends) had worsened. The immediate occasion for the biggest oil price increase was the Arab-Israeli War of 1973. (Events in Iran caused another increase in 1979.)
In contrast, the prices of manufactures, though also largely administered rather than determined on ‘auction’ principles in free markets, seem to be governed fairly closely by costs of production, which depend on wages, raw material and fuel costs, and labour productivity.
The determination of wages is more complex. They are hardly anywhere formed on the ‘market-clearing’ principle that unemployed workers will underbid current rates until they get jobs; labour solidarity and the need for a minimum of security and trust in the relations of employers with existing employees are too great for that. In fact, collective bargaining determines most wages in some countries (three-quarters of them in the UK), and even where the proportion is lower, as in the USA, the main collective agreements exercise widespread influence as ‘price-leaders’. The result is that wage claims—and settlements—show considerable sensivity to rises in the cost of living, but that they also show a tendency to creep upward in response to the natural ambitions of trade unionists and their leaders, and sometimes as a result of jockeying for relative position between different trades.
The most noteworthy attempt to generalize about wage-inflation was that of A.W.Phillips (1958), who derived empirically, from British data, a negative relation between the level of unemployment and the rate of wage increases, which was for a time thought by some to be practically usable evidence of a possible policy trade-off. Unfortunately, within ten years of its formulation current data began to show that the Phillips Curve in the UK (and also in the USA, though the same is not true, for instance, of Germany) was shifting rapidly upwards—the unemployment rate needed to keep wage-inflation down to a given level was rising. At the same time, Milton Friedman (1968) argued that such a relation was inherently implausible; experience of wage-inflation would lead people to expect more of the same, and so raise bids and settlements. The curve would become vertical, only one rate of unemployment (the natural rate) being consistent with a rate of wage-inflation that was not either accelerating upwards or accelerating downwards. Examination of evidence from a number of countries suggests that the extent to which experience leads to expectations which have this effect varies greatly, and the time taken to convince people that inflation will continue, rather than subside, is also variable, but has often been a matter of years or even decades rather than months. Attempts to explain the formation of wages econometrically have been only partially successful.
From early in the post-war years, various governmental attempts were made to curb the tendency towards inflationary wage increases in conditions of low unemployment. Exhortation, informal agreements with trade unions or employers’ organizations, legislative limits, temporary wage freezes, conferences in which potential negotiators were confronted with the average increases the economy was estimated to be able to bear without inflation, have all been tried some-where, singly or in combination, sometimes in succession, in the USA and the countries of western Europe. The results have been mixed. The more drastic policies have sometimes been successful, but only temporarily, and there has been some rebound afterwards. Nevertheless, some countries, notably Austria and Germany, have achieved relatively high degrees of wage-restraint and low average levels of inflation over a long period with the help of their institutional arrangements. Japan has also been successful (with one or two lapses), mainly because in the large firms, guarantees of employment reconcile employees to arrangements which make their earnings sensitive to conditions in the product markets.
It is important to distinguish between inflation which arises from demand for a country’s final output (‘demand-pull’) and that which comes, immediately at least, from rises in its import prices or in its labour costs of production (‘cost-push’). The former tends to increase output, the latter to depress it.
It is natural to ask how cost-push can raise prices in a country without a concomitant rise in the supply of money; indeed, some writers do not recognize cost-push as a useful concept in explaining inflation, and the monetarist school, associated with Milton Friedman (but with many and various subdivisions) holds, generally, that the price level varies with the supply of money, and could be controlled, without detriment to the level of real output and employment, by increasing the money supply uniformly in line with the estimated physical capacity of the economy.
The relevant facts are complex. Controlling the supply of money is not easy; money is created by commercial bank lending, which will normally respond in some degree to demand, and central banks cannot fail to act as lenders of last resort to the commercial banks without risking collapse of the monetary system. The need for increased money payments, whether created by a rise in import prices or by an increase in physical output, can be and normally is met, to a substantial extent, by more rapid turnover of money (increase in the velocity of circulation) rather than by increase in the stock of money—though this is a short-term accommodation, normally reversed eventually. ‘Tightnesss’ in the supply of money curtails spending plans, and normally reduces physical output and employment before (and usually more than) it reduces prices, at least in the short run of two to four years. In the longer run, tightness of money tends to induce a proliferation of ‘quasi-monies’, the liabilities of institutions outside the banking system as for the time being defined.
Since the mid-1970s, control of the growth of the money stock as a means of controlling inflation has been much in vogue. Experience has shown the difficulty of hitting the target rates of increase, for the reasons just stated, and has demonstrated, not for the first time, that monetary stringency, sometimes combined with parallel fiscal policies, reduces inflation only at the cost of severe unemployment and the reduction of growth in real living standards.
In contrast with the damage to output which seems to be inseparable from deflationary policies (though its severity varies greatly with the institutional arrangements in the country concerned), it is hard to demonstrate any comparable material damage from, at all events, moderate demand-pull inflation (or moderate cost-push inflation which is accommodated by sufficient creation of purchasing power). It can cause arbitrary changes in income distribution, but they are not normally of a kind to depress output (rather the contrary) and they are mostly avoidable by suitable indexing arrangements. The worst aspect of any prolonged inflation is its tendency to accelerate, through the conditioning of expectations, and this is a serious problem, even though, as already noted, the extreme phenomenon of hyperinflation has occurred only where the economy has been disrupted by some external cause. Inflation is, however, unpopular even with those to whom it does no material harm; it is certainly inconvenient not to be able to rely upon the real value of the money unit, and it may create an illusion of impoverishment even when money incomes are periodically and fairly closely adjusted to it.
In the present writer’s view, some, at least, of the main market economies can avoid inflation without the depressing concomitants of deflationary policies only if they are able to develop permanent incomes policies, or modify their wage- and salary-fixing institutions, so as to enjoy reasonably full employment without upward drift of labour costs such as became established in them at least by the end of the 1960s. But it must be remembered that the severest general peacetime inflation on record, that of the 1970s, was also largely propelled by supply and demand maladjustments in the world economy, plus special circumstances in the oil industry. This experience points to the need for better co-operation between the main industrial countries to stabilize the growth rate of their total activity, and for some co-ordinated forward planning of aggregate supplies of the main raw materials, fuels and foodstuffs. This would require a programme of international co-operation perhaps even more ambitious than that which, from the end of the Second World War, made possible a generation of unparallelled economic progress.
A.J.Brown
University of Leeds
References
Friedman, M. (1968) ‘The role of monetary policy’, American Economic Review 58.
Phillips, A.W. (1958) ‘The relationship between unemployment and the rate of money wage-rates in the United Kingdom, 1861 1957’, Economica 25.
Further reading
Bosworth, B.P. and Lawrence, R.Z. (1982) Commodity Prices and the New Inflation, Washington, DC.
Brown, A.J. (1955) The Great Inflation 1939–51, Oxford.
—(1985) World Inflation since 1950, Cambridge, UK.
Bruno, M. and Sacks, J.D. (1985) Economics of Worldwide Stagflation, Oxford.
Fleming, J.S. (1976) Inflation, Oxford.
Organization for Economic Co-operation and Development (1977) Towards Full Employment and Price Stability (McCracken Report), London.
Trevithick, J.A. (1977) Inflation: A Guide to the Crisis in Economics, Harmondsworth.
