Rethinking Internal Labor Markets: New Insights from a Comparative Perspective

Internal labor markets take different forms in the capitalist and the socialistfirm as the distinctive organizational problems in each economic system produce differing but comparable institutional solutions. Analysis of systemic uncertainties and the organizational responses of workers and managers yields a comparative model of mirrored opposition: in economies in which the firm operates in a market environment, systemic uncertainties regarding labor are reduced through internal bureaucratic rules operating according to a classificatory logic. In the socialist economy, by contrast, where systemic uncertainties are produced by a bureaucratic environment, the firm responds through internal market transactions based on affiliative ties. The market-like character of these internal mechanisms is brought into even sharper relief in an analysis of the recent establishment in Hungary of semi-autonomous subcontracting units inside the enterprise.