Restructuring the Economy: The Market-Based Conservative Strategy, 1981–92

Abstract

Seeking to reverse the economic decline of the 1970s, raise the average rate of profit and improve the overall productive efficiency of the economy, the Reagan administration, having a conservative Republican bent, pursued a policy agenda designed to restructure the economy by freeing up market forces. Ideologically, the federal government was attacked as the most important cause of the economic problems facing the United States, both domestically and internationally. Programmatically, this attack on the state, on the one hand, translated into reducing tax and regulatory burdens faced by businesses along with taxes on the wealthy. On the other hand, it also led to a weakening of the minimal social protection policies benefiting workers in general and the poor in particular. Two thrusts of state labor market policies were apparent. The first was to increase competition in the labor market at a given level of unemployment, by reducing the social wage and lowering the effective minimum wage. The second was to reduce union power through higher aggregate levels of unemployment, increased labor market competition and the reinterpretation of existing industrial relations legislation in a pro-business manner.