In our new book, we theorise the political economy of marketization in Europe, based on hundreds of interviews with policymakers, businesses, trade unionists, administrators, and more, from various countries and industries. We examine empirically the complex processes through which competitive exchange is organised in capitalist societies, in the contexts of healthcare, welfare-to-work services, and live music. Our central argument is that attempts to extend and intensify principles of market competition in 21st century Europe have tended to shift the balance of power in workplaces away from labour and towards capital, while also shielding market governance from democratic oversight.

Our starting point is the relationship between capitalism and markets, a direct, even seemingly naïve, inquiry that raises numerous problems. Marx gives over much of the second volume of Capital to discussing the organisation of competitive exchange in capitalist economies, and vital sections of the first and third volumes also offer important propositions about the consequences of competition. And yet, theory in and around Marxism has remained ambivalent on the issue.

In his extended critique of Marxist theory, Leszek Kolakowski writes off-handedly about the global domination of “capitalism, i.e. the market”, as if the two things are one and the same. Value theorists, while evidently more sympathetic to Marxist arguments, also link capitalist domination closely to domination by market competition — believing that the latter creates a kind of abstract compulsion which distorts and subordinates human societies. Yet, in classical Marxist political economy, market competition is seen as much less domineering. Instead, capitalist production and exchange tend towards monopolies, where competition is suppressed. Hilferding’s discussion of capitalist cartels which bring price competition to heel is a classic example, and Kumar’s Monopsony Capitalism a more recent one. What status, then, should the detailed empirical processes of competitive market exchange have in our understanding of capitalism?

The recent history of European integration provides many examples of marketization, in other words, concrete measures to create, extend, or intensify competitive exchange. We argue that it is more extensive and persistent than many political economists would credit. For example, while comparative institutionalist theory anticipates that certain “coordinated” economies (such as Germany, Japan, or the Nordic countries) are likely to rely on forms of non-market coordination and limit market competition, these countries have in fact embraced market processes in a variety of areas. And while Polanyian theorists anticipate backlashes that precipitate a pendulum swing towards greater embedding of markets, this has not occurred on a large scale. Marketization appears increasingly ubiquitous, and seems to survive even the direst crises, from the 2008 financial collapse to Covid-19.

Our book summarises findings from over a decade of research in Europe. In it, we pick apart what marketization is and what it looks like in the contexts we have studied qualitatively; seek to theorise why and how it happens; and reflect on its consequences, both for the relationship between labour and capital, as well as for democratic oversight and planning.

What is marketization?

We begin with a conceptualisation of marketization, focused on three changes in markets.

  1. In order to provide a basis for market competition, there needs to be some basis for comparing between providers in a marketplace. For instance, to marketize a hospital system, we need to define measures to quantify the cost and quality of procedures.
  2. Openness of the competitive arena. Market competition requires new market entrants. For example, in a labour market for live musicians, competition stagnates unless new artists can continually enter and seek to win gig opportunities.
  3. Frequency of transactions. Without the regular repetition of competitive transactions, market competition stagnates. For example, if an organisation is awarded a five-year contract to provide welfare-to-work services in a given municipality, competitive pressure on them is far less than if they had a six month one.

We are hoping to be more precise than catch-all notions like neoliberalism or deregulation, but our conceptualization is also applicable to a wider range of contexts than, say, privatization. Competition can be intensified through public or private regulation, and within public-sector organizations. We observe no “pure” marketization where all these processes are implemented to a maximum, and the intensification of competition can be rolled back. Our book is dedicated to picking apart empirically the structures of competition.

How does it happen?

What is quite striking, in our research, is how often marketization processes are laborious, complex, and expensive. The market is not normally a leaner equivalent to state bureaucracies; more often competition imposes costs of its own.

This is exemplified by our study of healthcare marketization in Europe. Although UK, France, Finland and Slovenia all use different market mechanisms, the principles of marketization have been an increasingly persistent and widespread influence on policymakers in healthcare. Each country has witnessed a push to create a standardised framework for competition between individual hospitals, whether this is through the imposition of payment-by-results, new purchasing methods, or attempts to include non-traditional (normally for-profit) providers in the market.

Likewise, in our study of welfare to work services, processes of standardisation and competitive commissioning have been imposed, even in countries where they might not be expected. Indeed, our research uncovered situations where government forcibly uprooted long-established networks of local service providers and replaced them with a centrally-directed framework for orchestrating competition. In other cases, local arrangements defy marketization, as in our study of welfare-to-work providers in the Parisian suburbs.

Another interesting thing about marketization in practice, however, is how often it underwhelms or fails, even on its own terms. Where new systems to purchase have to be introduced in health or welfare-to-work systems, for instance, this creates new layers of expense and bureaucracy often involving overweening central state oversight. The brittle and labyrinthine administrative processes of NHS commissioning in England is just one large-scale illustration. We also show in some detail how problematic marketization can be from the perspective of service quality. So why have market principles been so persistent as a guide for policymakers?

Why does it happen and what are its consequences?

We are careful to avoid monocausal explanations. Marketization has many causes, including the sincere beliefs of ostensibly pragmatic people that market competition leads to improvements in efficiency or solves the quality problems of public bureaucracies. It is also propagated by influential thinktanks that have for decades produced off-the-shelf policy advice. But this cannot fully explain the persistence of marketization, and the fact is that it is often not a pragmatic means to an end. In welfare states, for instance, imposing market discipline on unemployed people is often an end in itself.

We argue that marketization is often motivated by a desire to impose class discipline. By class discipline, we mean measures which make it harder for workers to collectively demand a better deal from employers, while making it easier for employers to make rapid and unilateral decisions concerning labour. While we cannot say this is always its cause, we believe that the persistence of marketization is impossible to explain without reference to class discipline. In all of our empirical studies, class discipline was a frequent outcome of marketization, but again manifested in many different forms. We tell the story of of social workers in welfare-to-work systems who are essentially deskilled in order that their employers can compete in payment-by-results programmes; hospital workers who are increasingly rushed in order to boost efficiency rates; or musicians whose rates are busted by digitalized agencies’ abilities to consolidate thousands of artists into one online space.

We set this argument in historical context. Our argument is not simply that marketization is always and inevitably a means of class discipline. Hilferding’s very different story, for instance, accurately describes a different era of capitalism. Rather, we propose that in the current period of intense global competition for investment and mobile capital, with crises caused by a lack of business investment, governments have reached for class discipline sometimes desperately, to achieve the ever-elusive goal of “business confidence”.

What is beyond the market?

We conclude the book with some thoughts on what kind of society may lie beyond the market, and the politics of marketization. We are critical of centre-left accounts. The conventional wisdom on the centre-left has been to largely accept the premises of marketization, sometimes even being their biggest advocates, while seeking to compensate the losers (as in when they propose creation of a “safety net”). Instead, we reflect on what it might mean to organise economic processes without the market in the 21st century. We reflect critically on recent experiments around ‘community wealth building’, arguing that despite their innovations, they need to more emphatically centre work and labour issues.

We argue that opponents of marketization need to focus on making what Pepper Culpepper calls “quiet” politics “noisy”. Marketization involves the creation of complex decision-making processes that operate beyond public scrutiny and without any input from workers. Campaigners can disrupt these processes through noisy protest. Marketization often fails when people politicize it and disrupt it. We hope that our book provides some of the intellectual tools to accomplish this task.

To read more, see: Ian Greer and Charles Umney. Marketization: How Capitalist Exchange Disciplines Workers and Subverts Democracy. Bloomsbury Publishing, 2022.

Charles Umney is in the Work and Employment Relations Department at the University of Leeds, focused on studying work through the lenses of marketization, technological change, and worker organisation.

Ian Greer directs the Ithaca Co-Lab at Cornell University’s School of Industrial and Labor Relations and studies labor markets, including unemployment and industry restructuring, in Germany and the US.