The last decade and a half was a critical period for the working class in the advanced capitalist countries. Beginning in the early 1970s, the rate of economic growth declined throughout the advanced capitalist world, while unemployment and inflation increased dramatically. The crisis marked the end of the long postwar boom of the 1950s and 1960s, in which sustained and rapid economic growth combined with relatively full employment and price stability, and during which workers in most advanced capitalist societies succeeded in extracting rising real wages and increasing shares of national income.

While labor unions and the political movements of the working class made impressive economic and political gains during the boom, there is general consensus that the crisis has turned the tide against labor; labor unions and working-class political parties have been placed on the defensive, their bargaining power has been eroded, and the movements themselves have become fragmented and isolated (Bowles 1982; Armstrong, Glyn, and Harrison 1984; and Griffin, O'Connell, and McCammon 1989). It has also been observed, however, that while all of the advanced capitalist countries shared in the experience of sluggish growth and inflation since the early 1970s, nations responded to the crisis in very different ways, resulting in a greater degree of variation between countries in macroeconomic performance than could have been observed during the previous expansionary period (Cameron 1984; Goldthorpe 1984).