Reassessing the political dimension of the labor market: Power relations,recommodification,and epistemic reflexivity

In recent decades, labor markets in advanced capitalism have undergone a great transformation. The origin of these changes dates back to the crisis of the 1970s: according to conventional wisdom, unemployment was the effect of labor market rigidities, and the solution was to remove them. “Deregulation” or “flexibilization” of labor markets thus appeared as the inevitable horizon. With significant domestic differences, most countries seem to be bent on that direction. This conventional wisdom rested on questionable assumptions (Baker et al., 2005), but this has not prevented its influence from spreading over much of the scholarship on the labor market. The result was a certain disregard or inattention to power in the labor market.

The starting-point of this article is that the labor market is based on power relations, and that these power relations should be taken seriously to properly understand labor market institutional changes. Such an idea may seem to be a truism but, as we shall see, it is not so. Mainstream economics—to use the most flagrant example—is based on the assumption that power is antithetical to markets (for a critique, see Bartlett, 1989). Even some open-minded economists do not easily get rid of this idea: Robert Solow, for instance, holds that “reforms have a better chance of surviving if they do not, and do not seem to, take sides between employers and workers” (Solow, 1990: 76). One could ask whether such an option is even possible at all.

Certainly, the rest of the social sciences are more prone to consider the power relations in the labor market. However, the result is not always satisfactory, as illustrated by the example of two of the most exciting contemporary research programs on this subject. The “new economic sociology” has successfully dismantled the idealized view of disembedded markets, but has often neglected the role of power in its accounts of economic life, despite including it in most of its programmatic statements (Portes, 2010). The approach to the study of the labor market by Mark Granovetter (1992) could serve as a good example. Other works that have openly considered the role of power in the labor market lose sight of the structural asymmetries between employers and workers and seem to place them on an equal footing in the shaping of employment regimes, as is the case of Neil Fligstein's ambitious synthesis (2001). Though anecdotal, it is illustrative that in the first edition of the best-known handbook of economic sociology (Smelser and Swedberg, 1994) the word “union” appears not even once.

In a neighboring region, the “varieties of capitalism” literature (Hall and Soskice, 2001) has received the baton of a comparative tradition attentive to the domestic political and economic institutions where actually existing capitalism is embedded. The approach has offered a shared conceptual terrain for a growing body of literature. Nevertheless, it has tended to stress cooperation or efficiency-seeking at the expense of the existing sources of conflict between labor and capital (Pontusson, 2005). The result is that labor as an actor with opposing interest to those of capital virtually disappears (Howell, 2003). The existence of these and other similar examples has led Wolfgang Streeck to complain bitterly about this intellectual landscape, pointing out that the main concern of the study of the labor market has shifted from “how to make the economy adjust to a steady expansion of social rights [to] how to adapt working conditions and workers to the evolving needs of capitalist enterprise” (2008: 11).

This cursory overview is incomplete but does not reflect cherry-picking. Of course, exceptions can be found; for instance, there are whole areas of study (e.g., the sociology of work) or research traditions (e.g., Marxism) where attention to power in labor relations has remained. However, in line with Streeck's argument, it does seem that the neoliberal Zeitgeist's influence has long blurred the role of power beyond such exceptions. A final and revealing example is that of Gøsta Esping-Andersen, a one-time advocate of the power resources approach and popularizer of the concept of decommodification, which will be used later. In his ambitious comparative research with Mario Regini (Esping-Andersen and Regini, 2000)—titled Why Deregulate Labor Markets?—the discussion of the results of labor market deregulation is restricted to its effects on the levels and structure of unemployment, but does not mention a single word about the impact on the power relations between employers and workers.

What these examples show is not an open rejection of power, but rather a recurring neglect. According to the Burke's Theorem, “a way of seeing is also a way of not seeing; a focus on object A involves the neglect of object B.” The focus on power fades in the way of seeing of the mentioned works, which for their influence are illustrative of a widespread standpoint. None of these authors would deny that power plays a key role in the labor market, but most of them tend to leave this aspect aside or it remains unclear in their analysis.

This article aims to address the elusive role of power in the labor market and offer some theoretical insights for both empirical research and public debate. The article is structured in five sections. First, I briefly present the conceptual map that will guide my argument by defining “power” and explaining its levels (situational, institutional, and structural) and dimensions (material and symbolic). Second, I analyze the situational power relation in the employer–worker labor relation at the workplace in terms of a “contested exchange.” Third, I address the institutional power around labor market regulation and argue for the heuristic potential of the concept “decommodification” for both capturing the link between power relations and market logic and studying the power effects and determinants of labor market institutions. Fourth, I go back to the analysis of contemporary changes in the labor market and illustrate the insights of the previous argument by untangling two topics in vogue: the insiders–outsiders divide and the activation policy. Fifth, I suggest that what is at stake with the recommodification of labor market institutions is freedom as nondomination for workers. Finally, some concluding remarks are offered.

A conceptual map of power

The conceptualization of “power” is essentially contested (Lukes, 2005). As Gianfranco Poggi points out, the concept of power “stands out as one whose definition is particularly contentious and unstable” (2006: 464). There is no room here to address the endless controversies about this concept in depth (for recent overviews, see Lukes, 2005). The aim of this section is merely to clarify how this concept is used in the article, where the focus is on power as domination. For the sake of my argument, I understand that A exercises power over B when A has the capacity to affect B in a manner contrary to B's interests (Lukes, 2005). While sympathizing with Lukes’ three-dimensional approach, I do not follow it to the letter and use the term “dimension” in another sense.

I distinguish three “levels” where power takes place (Alford and Friedland, 1985). The situational level refers to the relations of authority between easily identifiable actors who confront each other directly, the institutional level refers to the way in which certain changing arrangements and rules favor the interests of particular groups at the expense of others, and the structural level refers to the systemic properties of a social structure that constrain, compel, or enable people according to their position. Using a game metaphor: structural power stems from the nature of the game itself; institutional power corresponds to the specific rules of the game; and situational power is deployed in the specific plays made within a given set of rules. The nature of the game constrains the range of possible rules, and these rules, in turn, affect the choice of moves and their potential results (see Wright, 1994).

In exploring the political dimension of the labor market, attention will be directed toward the institutional level, encompassing labor market institutional arrangements and the political conflicts surrounding it. However, to fully understand the effects of such arrangements, it is imperative to first examine the situational power dynamics between employers and workers at the workplace, paying attention to the mechanisms through which the former exercises power over the latter. Finally, while not delved into extensively here, it is crucial to acknowledge the structural power inherent to capitalism as a system, as this aspect underpins the other two levels of analysis and should not be overlooked.

In addition to these three levels, a symbolic dimension should be distinguished: power is not just about the material or effective relations but also about its symbolic or ideological representation. In other words, one of the key aspects of power relations is the manner in which they are socially represented and how this contributes to hide or make them visible and amendable. As Pierre Bourdieu notes: “power relations are also present in people's mind, in the form of the categories of perception of these relations” (1985: 729). In this sense, it is crucial whether power relations appear naturalized or as a historical outcome, whether they are considered fair or unfair, or whether they are perceived as something inevitable or susceptible to be changed.

There are three broad questions around which these ideological perceptions are articulated: What exists? What is good or fair? And what is possible? (Therborn, 1980). As we shall see, these questions are readily applicable to our topic. The manner in which these three questions are answered will make up the dominant representation of different power relations and, in this way, will contribute to shaping people's preferences, beliefs, and desires—something akin to Lukes’ (2005) third dimension of power. That is, the responses given not only will express power relations, but also will simultaneously have effects on them, concealing or legitimizing such power relations. As Michael Foucault remarks: “[power's] success is proportional to its ability to hide its own mechanisms” (1980: 86). As we will see later on, social research itself can also contribute to concealing those mechanisms, and there are reasons to believe that this is what has happened with many analyses of labor market deregulation and its implications for the institutional level of power. However, before delving into that, we must begin by looking at how power is exercised at the situational level of the workplace.

The situational level: the contested exchange at the workplace

According to the neoliberal Zeitgeist, the labor relation between employer and worker would be a free and voluntary market exchange like any other. To parry the common objection that this is a peculiar, intuitively asymmetrical relation, some economists have gone as far as to compare the labor relation to that which a grocer has with his client: the client may acquire a product from his grocer but he may cease to buy from him if he is not satisfied; the employer entrusts a task to his worker and may fire him if it is not correctly carried out (Alchian and Demsetz, 1972). The nerve of neoclassical economists would seem to be incredible to flesh-and-blood workers, the majority of whom feel that someone has power over them and experience this as something negative. ¹ This blindness recalls Marx's dictum: “the Roman slave was held by fetters, the wage-laborer [was] bound to his owner by invisible threads” (Marx, 1954: 574).

The “contested exchange” model (Bowles and Gintis, 1990) renders these threads visible, shedding light on the exercise of power within the labor relation. A contested exchange is an economic transaction whose content is not transparent, which makes an exogenous enforceable comprehensive contract impossible and gives rise to an agency problem regulated by endogenous claim enforcement. This type of exchange is but the rule in the labor market. The labor relation involves an agency problem: the employer hires a worker to carry out a task; however, the former cannot ensure the pace and quality of the effective work done. The employer must therefore arrange the situation in order to be able to extract the maximum labor-effort from the worker through certain endogenous mechanisms that include the exercise of power.

How is this contested exchange resolved in a capitalist firm? The employer basically has two tools at his disposal for extracting the maximum effort from his workers: on the one hand, he can develop devices for surveillance and control in order to ensure that workers carry out their tasks correctly and do not waste time; on the other hand, he can threaten, with sanctions, those who sneak off and do not complete the ordained tasks. These mechanisms are complementary: without the possibility of sanctions, surveillance serves no purpose; and without surveillance it would be impossible to apply sanctions. What kinds of sanctions can an employer resort to? Mainly to one: dismissal—insofar as the worker executes his tasks in a satisfactory manner, the employer will maintain his job; however, if the worker's labor-effort is not sufficient, he runs the risk of being fired. As Joan Robinson wittily remarked once: “under capitalism the only thing worse than being exploited by capitalists is not to have anyone to exploit you.”

Faced with this possibility, the worker must consider the costs and benefits of working harder or not. The threat of being fired will be believable and effective only if the value of employment is greater than the fallback position (whether this consists in an unemployment benefit, a future job, or any other source of income): the more the worker is set to lose on being dismissed, the more effort he will make to avoid it. What the worker would lose in the case of being fired is known as the “employment rent” and its magnitude will be determined by the strategies adopted by the employer and by the workers: the former must value the most cost-effective combination when investing in surveillance systems and employment rents, while the latter will have to consider the level of effort that is in her best interest. And such strategies will be interweaved in a power relation in which the employer is capable of affecting worker's actions, by imposing or threatening to impose sanctions on him, in ways that further the former's interests, while the worker lacks this capacity with respect to the employer.

In any case, the threat of dismissal is not the only power mechanism at work in this relation. On many occasions the looming threat of firing is not even necessary to ensure that the worker carries out his task with greater intensity than necessary. There are also “hegemonic” mechanisms based on consent rather than on coercion thanks to which the cooperation of the worker in the production process is obtained (Burawoy and Wright, 1990). These mechanisms are primarily based on social norms: the habit of obedience, the belief in the legitimacy of authority, a sense of responsibility, or ideas about what is just. The hegemonic mechanisms are closely related to the abovementioned symbolic dimension of power, because their effectiveness depends on how the employer–worker relation is symbolically represented (whether power is visible or not, and whether it is considered fair or perceived as inevitable). These mechanisms are complementary, rather than contrary, to the coercion of surveillance and the threat of dismissal—as Gramsci put it, “hegemony protected by the armor of coercion.”

The employer's ultimate goal is not capriciously to feed his “will to power,” but rather to maximize profits: exercising power is a means to extract the maximum labor-effort from the workers. Thus, the power balance in the contested exchange has significant distributive effects: it affects wage setting and labor's share of income. In other words, domination is linked to exploitation (understood as “the acquisition of economic benefits from the labor of those who are dominated” [Wright, 2015: 9]). Furthermore, the power relationship between employer and worker transcends the workplace walls and pervades other social spheres. As E. P. Thompson noted, “the pressures towards discipline and order extended from the factory … into every aspect of life: leisure, personal relationships, speech, manners” (1964: 401). The echo of these power relations spreads in all these directions in “a more spontaneous, unconscious, decentered way,” which is how Michael Mann (1986: 8) characterizes “diffuse” power.

Heeding Marx's advice to abandon the sphere of the market and “follow both [the capitalist and the worker] into the hidden abode of production” (Marx, 1954: 172), labor studies and the sociology of work have directed their attention to the unfolding of contested exchange at the situational level of the workplace, where power and conflict are plainly visible—the paradigmatic case in point is the labor process theory (e.g., Braverman, 1975; Burawoy, 1985; for an overview, see Vallas, 2012). However, as we move away from the situational level and toward the institutional one, power becomes more elusive and tends to be overshadowed by the discourse of efficiency (Berman, 2022). Let us now trace the invisible threads of power at the institutional level of the labor market.

The institutional level: de-commodification and power conflicts in the labor market

The employer–worker contested exchange is embedded in labor market institutions beyond the workplace. These are the institutional arrangements that have been swept away by the neoliberal storm. The forms adopted by these institutions will determine the degree of power wielded by employers over workers, thereby either bolstering or undermining their respective positions and subsequently influencing their ability to engage in collective action, particularly on the part of workers. The notion of “workers” is, of course, a useful abstraction for our theoretical argument, and it needs to be nuanced. Alongside institutional determinants, there are individual determinants (such as differences in workers’ skills, gender, race, or industry) that are key to understanding the shaping of this power relationship. Back to the institutional level, five factors emerge as particularly salient:

Employment protection, provided by labor law on dismissal rules and costs, diminishes the employer's capacity to use the firing weapon. The greater the compensation and the less arbitrary the procedure, the stronger the worker's fallback position and the less discretionary the employer's authority.

The forms this exchange takes in the real world depend on these multiple institutional arrangements, whose effects and variations can be addressed with the Polanyi-inspired concept of “decommodification.” According to Esping-Andersen, it designates “the degree to which [social rights] permit people to make their living standards independent of pure market forces, [strengthening] the worker and weakens the absolute authority of the employer” (1990: 3–22). This concept captures the link between market and power, as revealed by its twofold effect: it reduces workers’ dependence on market forces and, thereby, empowers them vis-à-vis the employer.

However, such a definition is somewhat ambiguous and has driven some authors (Huo et al., 2008; Janoski, 1998; Pontusson, 2011) to equate decommodification with staying out of the labor market. On the contrary, I contend that it is more fruitful to understand labor decommodification not as the exit from the labor market but as the lessening of the subordination to the market logic; that is, the extent to which labor relations are more or less governed by market-based, profit-driven rules, even when someone remains in a wage relationship. What matters is not the share of people in the labor market but the degree to which such labor relations either equate to a pure market exchange or, conversely, respond to a nonmarket logic based on norms of social justice.

Of course, decommodification is a question of degree: labor power does not cease to be a commodity, and power does not disappear from labor relations, but both aspects are attenuated under the effects of a decommodifying labor market institutional regulation. ⁴ Since the situational power relation of the employer over the worker is grounded in the market mechanism (characterized by certain properties at the structural level of power: the employer has the prerogative of hiring and firing, and the worker is compelled to sell his workforce), the labor market institutional arrangements—materialized in the five abovementioned factors—has the twofold effect of limiting the pure market mechanism of supply and demand and empowering workers vis-à-vis employers. It is worth clarifying that not all regulation is decommodifying, but depends on its characteristics and effects: what matters is not how much regulation there is, but what kind of regulation. The changes in the five abovementioned factors can follow the opposite direction and represent a recommodifying regulation—as has indeed happened in recent decades.

As noted, these arrangements at the institutional level of the labor market not only shape the power relationship in the contested exchange at the workplace, but are also the outcome of power conflicts between collective actors. Since where there is power, there is resistance, attention must be paid to collective action and its effects on institutional arrangements, as well as to the way in which these may feed back into, or hinder, collective action. While both employers and workers resort to collective action, in the latter case it is more important insofar as it is the only weapon at their disposal. As a British Labour slogan went: “The rich man has his money, the poor man has his politics”; an idea that the organizers of the first general strike in the city of Barcelona expressed even more starkly—“Association or death.”

Collective resistances to the commodification of labor and domination over workers can be interpreted in terms of the influential Polanyian idea of the “double movement”: each expansion of the market is followed pendulously by a movement of society to protect itself from its destructive effects (Polanyi, 1944). However, this theoretical framework presents certain problems and ambiguities, such as the idea of society, the spontaneity and scale of the movement, and, of particular importance for our argument, the role of the labor movement and the question of power (Webster et al., 2008). In Beverly Silver's view: “the concept of ‘power’ is largely missing from Polanyi” (2003: 18; see also Fraser, 2014).

Two approaches have contributed to filling this gap and allow us to better understand the dialectics between institutional power at the labor market and power conflicts between collective class actors. The first is Silver's own study (2003) on the global dynamics of industrial militancy throughout the 20th century. She draws on Wright's (2015) distinction between workers’ “associational power” and “structural power.” The former results “from the formation of collective organizations” and the latter from the “location of workers within the economic system” (Wright, 2015: 190–191), and includes bargaining power both in the labor market (determined by institutional protection, but also by individual skills) and in the workplace (e.g., by strategic location in a key industrial sector or in integrated production processes).

These distinctions allow us to better capture the sources and mechanisms of labor conflict in connection with systemic capitalist dynamics—as Silver points out, different forms of structural power require different forms of associational power. For our argument, suffice it to note that this approach opens a way to unravel the links between forms of institutional power in the labor market and power conflicts between collective class actors: on the one hand, institutional arrangements can directly shape workers’ “structural power” (with greater social and employment protection, or a full employment policy) and thus favor their associational power by making collective organization less risky or difficult; and on the other hand, this collective action (or lack thereof) can disrupt the institutional arrangements of the labor market.

The second approach that allows us to understand the connection between institutional power and collective action is the theory of power resources. The core of this approach is that the development of social and labor policies depends on class power resources: the greater the working-class power, the more decommodifying and egalitarian the institutional arrangements of the employment regimes (Gallie, 2007; Huber and Stephens, 2001; Korpi, 1983; Kristal, 2010). The structural, unequal distribution of resources between employers and workers in the market sphere leads the latter to organize collectively in unions and parties and to shift the conflict to the political arena, giving rise to what has been called the “democratic class struggle” (Korpi, 1983). As the power-resources balance varies historically, the development of social and employment regimes do too. In this sense, institutional arrangements should be seen as residues of past conflicts and structurations of power (Korpi, 2001). As Bo Rothstein states, “institutions are created in order to give the agent … an advantage in the future power game” (Rothstein, 1998: 285).

The power resources approach allows us to grasp the “iceberg of power” below the surface of policy (Korpi, 1998). In this sense, the fact that the “democratic class struggle” has blurred at the institutional level (as it is admitted by some advocates of the aforementioned approach, such as Huber and Stephens, 2001) does not mean that class power has disappeared. As Korpi and Palme mockingly remark, it will amount to believing that “the absence of strong and vocal feminists in Saudi Arabia [implies] that in this country gender is irrelevant for structuring life chances of men and women” (2003: 440). Rather the opposite: according to the aforementioned symbolic dimension, the displacement of class conflict could signify the concealment of conflicting power relations regarding the labor market in the prevalent ideological representations, with consequent effects on the representation and discussion of social and employment policies–including the narrowing of what is perceived possible and the alteration of what is considered desirable.

The great transformation of the labor market: the institutional power and its symbolic dimension

Where does this leave us? In recent decades the labor market has been in the bull's eye of the political economy of advanced capitalism. The key rationale of neoliberal policy has been the discourse of flexibility: since high levels of unemployment were the result of labor market institutional rigidities, the recipe to solve this problem was “labor market flexibility.” The treatment applied has included the reduction of employment protection, cuts in unemployment benefits and welfare provision, the spread of atypical or precarious employment, the subordination and decline of unions, the decentralization of collective bargaining, and the priority of monetary stability over employment as policy goals. This process has varied in every country, but a common neoliberal trajectory can be detected (Baccaro and Howell, 2017).

How should this process be conceptualized? In light of the argument developed here, the widespread discourses of “flexibility” or “deregulation,” despite their different connotations, seem equally misleading. While the “flexibility” rhetoric tends to erase the traces of power imbalances in the labor market, presenting the changes that reinforce it as desirable and inevitable, the “deregulation” discourse loses sight of the new regulation or re-regulation of the labor market, in which the state has not ceased to intervene (Howell, 2016). Of course, the problem is not in the categories themselves, but rather in the “way of seeing” they express and encourage, in how they may “delimit the thinkable and predetermine the thought” (Bourdieu and Wacquant, 1992: 75). Too often, the use of these concepts—in particular, the former—has led to the misrecognition of the power relations.

The argument developed here invites us to pay a more explicit and distinct attention to power when exploring both the effects and the determinants of the labor market regulation and its de/recommodifying character. If we look at the changes in those five factors determining the relation employer–worker mentioned earlier, and consider how they re/decommodify labor–power, the result is that there has been an overall recommodification—and, accordingly, an intensification of employer–worker power relations. As Baccaro and Howell conclude in their comprehensive empirical study: “[the] common direction in the form and functioning of industrial relations institutions is toward greater employer discretion” (2011: 551). Confirming the mentioned distributive effects of the contested-exchange balance—the link between domination and exploitation—the outcome of this general process has been the pervasive decline of labor's share in national income and the rise of social inequalities (Kristal, 2010).

However, the most striking facet of this labor recommodification is that it has been naturally presented as an inevitable economic imperative, narrowing the limits of the (perceived as) possible to the type (or degree) of “flexibility” or “deregulation” policy. In this way, the prevailing discourse on labor market regulation—as found in oecd or imf reports and as amplified by the mass media—has systematically excluded the consideration of reasons other than “competitiveness” or “efficiency”; for example, the effects over employer–worker power balance, that might call into question the inevitability (and desirability) of these policies.

Returning to the symbolic dimension of power, this neglect of power relations in the labor market in the hegemonic discourses and imaginaries has tended to reinforce such relations, by concealing and naturalizing them. It has ended up—often inadvertently—biasing the public debate on labor market policies. If a given policy paradigm “is influential precisely because so much of it is taken for granted and amenable to scrutiny as a whole” (Hall, 1993: 279), we could wonder to what extent social research has not succumbed also to the subtle influence of the neoliberal paradigm.

This concern (and the insights of a power-centered approach) can be illustrated with the example of two influential subjects: the insiders–outsiders divide and activation policy. The insiders–outsiders approach aimed to explain unemployment as the outcome of the employed workers’ ability to successfully defend their interests to the detriment of the unemployed (Lindbeck and Snower, 1988). It was also used for explaining labor market segmentation as the outcome of the permanent workers’ defense of their “privileges” against temporary workers (Saint-Paul, 1996). This approach has inspired a scholarship on the sociopolitical articulation of this divide (Rueda, 2007). While valuable, this research risks being flawed by the ideological biases of the original economic construct.

By focusing in the insiders–outsiders divide, this theoretical construct leaves employers in the background (e.g., Saint-Paul, 1996), despite their conflicting power relation with both worker groups. It assumes a zero-sum game between insiders and outsiders to distribute a given stock of labor precariousness, as if it were not deliberately pursued by the employers. The resulting picture exaggerates the divergent interests of insiders and outsiders, assuming a direct causal link between the former's gains and the latter's losses, thus erasing the employer–worker power relationship examined here. This picture would change if employers’ power were taken into account.

This bias is projected in the analysis of labor market institutions. As it is about a zero-sum game, the interests of both groups will unavoidably conflict, so “power-reducing policies” for insiders, such as relaxing job security, are in the interest of outsiders (Lindbeck and Snower, 2001). According to our argument, this conclusion is dubious: even if outsiders gain some short-term benefits, it may lead to an unstable equilibrium that would then slide into greater power on the part of employers, ultimately harming outsiders (Tsakalotos, 2004). Indeed, it is the fear that outsiders themselves seem to have: they support employment protection (Emmenegger, 2009) and reject “power-reducing” policies (Amable, 2014).

“Activation” policy has become a buzzword, favored by its positive connotations. The brand refers to a policy hodgepodge aiming to re/enter workers into the labor market but differing significantly. For instance, the old Swedish model of active labor market policies (almp) was a twofold effort to protect workers and enhance efficiency against labor market up-and-downs by retraining, job placement services, and direct job creation (Rehn, 1985), while the Anglo-Saxon workfare model sought to remove work “disincentives” by cutting social benefits (Weishaupt, 2011).

The inventory of labor market activation policies is so varied that addressing them as a whole equates “mixing apples with oranges” (Vlandas, 2013). It seems preferable to disaggregate the different groups of policies in order to capture its nature and effects. While some distinctions have been proposed to capture the key difference between them (“offensive/defensive,” “liberal/universalistic,” or “workfare/enabling policies”), our argument offers another standpoint: the activation policies can be distinguished according to their effects on the employer–worker contested exchange, by examining whether they weaken or reinforce the worker's position. For instance, direct job creation or work retraining favors the workers, while cutting unemployment benefits harms them. We can appreciate how some policies reinforce the market logic (e.g., removing the protection for the unemployed) or buffer it (e.g., providing training outside of the market).

The focus on power relations also helps to study activation policy determinants: support for each distinct policy depends on its character and effects. Left-wing parties are likelier to support job creation over others work incentives (Vlandas, 2013). In studying the political economy of almp, it is not only appropriate to disaggregate these policies (Bonoli, 2010) but also to go a step further and to examine the effects they have on power relations between employers and workers, as well as the way they counteract or reinforce the market logic.

In sum, our analysis opens the door to critically examine the way in which the “insiders–outsiders” or the “activation” rhetoric contribute to conceal power in labor relations. In the first case, it runs the risk of neglecting the role of the employers and the power wielded over both groups of workers. The resulting ideological depiction of the insiders’ labor rights as “privileges” justifies a recommodifying policy whose likeliest beneficiaries will be the employers. In the second case, it uses “activation” rhetoric to hide the strengthening of power relations resulting from the workfare, punitive policies, and it individualizes the scourge of unemployment, excluding structural solutions better suited to combat it.

The overall effect of these influential discourses—from the language of flexibility to these last two examples—is a certain depoliticization of the public debate on the labor market, by excluding concerns for the power relations in this arena. Thus, normative questions about equality, freedom, or justice are eclipsed by the seemingly technical concern for efficiency (Berman, 2022). Before concluding, I will briefly sketch the normative direction that an alternative view to the neoliberal conventional wisdom, based on the preceding argument, could take.

Coda: power, decommodification, and freedom

The founding motto of the International Labor Organization (ILO) in 1944 was “labor is not a commodity.” The neoliberal offensive since the end of the 20th century has aimed to dismantle the institutional barriers to the commodification of labor, under the banner of freedom (Harvey, 2005). According to the widespread liberal (or negative) view of “freedom,” it grows as interference decreases (Berlin, 1988). Thus, removing limits to employers’ prerogatives and other institutional arrangements ensured the “freedom to choose” for economic agents in the market. However, there is another way to understand freedom—sociologically richer and politically more demanding—that does not simply identify it with the absence of interference but as the absence of domination, understood as the capacity to interfere in others’ affairs on arbitrary basis (Pettit, 1999).

This republican view of freedom as nondomination has been revitalized in recent decades (Pettit, 1999; Skinner, 1998; Viroli, 2002; De Francisco, 2007). In classical language, it is captured by the opposition between being liber or being servus at the mercy of others’ will. This vision differs from the liberal one in that its opposite is not mere interference, but also the capacity to interfere, and only arbitrary interference that lacks a public justification considering the common good. The twofold corollary that follows from this difference is that to judge the justification of interference (e.g., by the State) and to understand the capacity to interfere, one should consider the institutional and material background of the (power) relations at play. The conclusion is that formal freedom in the capitalist labor market is rather a fictio iuris (Marx, 1954; Pettit, 1999) compatible with real domination: in the absence of a reasonable alternative to selling their labor power, workers are at the mercy of potential arbitrary interference from their capitalist employers (however benevolent they may be), who can give them orders in the labor process and punish them with dismissal at their discretion.

This relation of domination has structural roots, in the sense that it originates in property relations that exclude workers from controlling the productive assets and, in the absence of a reasonable alternative, make them dependent on the labor market for their livelihood, thus exposing them to the potential arbitrary interference of employers (Gourevitch, 2014). Yet emphasizing the structural character of the labor market domination should not blind us to the arrangements that can reduce (or strengthen) such domination at the institutional level. In this sense, as mentioned earlier, decommodification fostered by different institutional arrangements—from limiting employers’ prerogatives to generous social protection—not only reduces dependence on the market (and the market logic itself) but also diminishes the power and domination relationship suffered by workers.

For our purposes, the key point is that this approach allows us to discern the normative implications underlying the study of the “labor market” and helps us to envisage other alternatives (Schaffer, 2016). If we embrace the idea of freedom as nondomination, the picture looks different from the conventional view: the array of institutional arrangements involved in labor market decommodification now appears as a way to promote workers’ freedom by reducing the power as domination relationship, both increasing their fallback position, restricting employers’ arbitrary power, and fostering workers’ collective action. Indeed, limiting employers’ power and promoting workers’ freedom also contributes to the development of their capabilities at the workplace and beyond (see Alexander, 2010 for the points in commonality of republicanism and Amartya Sen's theory). These considerations can contribute both to reformulating questions and approaches in empirical labor market research and to reframing the terms of public debate on desirable policies.

Conclusion

This article aimed to explore the role of power in the labor market to better understand and re-politicize the analysis of the great transformations it has experienced in recent decades. To this end, we examined how the institutional arrangements of the labor market shape the power relationship between employers and workers in the workplace, clarifying the connection between the situational and institutional levels of power. These institutional arrangements should be understood in the light of the concept of decommodification, which allows us to illuminate the link between market logic and class power. Indeed, the neoliberal recommodification offensive has targeted this array of institutional arrangements, which should be seen primarily as the result of power conflicts between collective actors. Attention to the symbolic dimension of power has allowed us to appreciate how many approaches and representations of these labor market transformations have tended to conceal the changes in power balances they have brought about. Engaging with the neo-republican theoretical debate has helped us to understand that what is at stake in these power relations is the workers’ freedom as nondomination. Beyond this brief summary, I would like to conclude with some remarks.

First, as noted at the outset, stating that the labor relationship is a power relationship might seem a truism and is certainly not novel—on few things have the classics of sociology agreed so widely (Streeck, 1992). However, the multiple examples mentioned throughout the article suggest that it is worth revisiting this point because the relevance of power in the labor market is often overlooked in numerous research programs and empirical studies. In any case, the aim of the article was not so much to reiterate that the labor relationship is a power relationship but rather to theoretically clarify the mechanisms at play and their implications.

Second, related to this, the article has focused on the institutional level of power, the level to which the labor market's institutional arrangements disrupted by the neoliberal offensive pertain. In this level there is a greater danger that the efficiency-centered economic style of reasoning (Berman, 2022) overshadow the power dimension and other concerns. Another risk is that the inevitable academic specialization tends to disconnect analyses of workplace dynamics at the situational level from changes at the institutional level of the labor market. In this sense, one of the article's purposes was to clarify how the decommodification provided by institutional arrangements is key to understanding power relationships in the workplace as well.

Third, the latter implies reconsidering what we understand by decommodification. As noted, decommodification is often equated with staying outside the labor market, but this is a misleading view that overlooks the character and effects of this “countermovement.” The point is not so much that workers can remain outside the market (with unemployment or sickness benefits), but rather that market dependence is reduced (also for accessing certain needs) and the dominance of market logic over society recedes. Both outcomes have a direct effect on power and domination relationships: the worker will reinforce their position vis-à-vis the employer insofar as they become less dependent on market logic and this logic is less dominant.

Fourth, in addition to the levels of power, I have distinguished a symbolic dimension: the extent to which these power relations remain invisible, are considered fair, or are perceived as inevitable will reinforce power and reduce the capacity for challenging it. In this sense, it has been emphasized that social researchers also participate in the symbolic representation of the labor market by concealing or shedding light on power relations and contributing to shape the prevailing responses to what is considered to exist, to be desirable, or to be possible. For this reason, it is necessary to exercise an “epistemic reflexivity” to detect the assumptions, biases, and omissions in the concepts and approaches we use, as well as to envision alternatives that illuminate the parts of reality that remain in the shadows. This is what this article has endeavored to do.

Fifth, to clarify the practical importance of the previous argument—and since debates about power are “driven by a commitment to human freedom and political equality” (Hayward and Lukes, 2008: 9)—it has been connected to the neo-republican philosophical approach to illuminate the normative implications at stake. No matter how much labor market issues are presented as a technical matter of efficiency-seeking, attention to power shows that what is at stake is, among other things, the freedom as nondomination of workers. This point should serve to refocus academic studies and shift the public debate.

Finally, one caveat is in order: owing to its theoretical nature and space limitations, the argument has relied on certain abstractions that, in empirical reality, take on more complex forms. This is the case, for example, with the new firms of platform capitalism and the gig economy, as well as with the ongoing mutations of neoliberalism. However, the greater complexity of reality does not invalidate the theoretical argument developed here but invites us to apply it creatively and cautiously. Rather than creating a complete map of power in labor relations, the aim of this article has been to contribute to building a kind of compass to discern the traces of power in the labor market.