individuals or as members of collectives which shape their interests and options.
One element in this broad distinction between individualism and collectivism
is the contrast (dating from the nineteenth century) between contract and
status. In pre-capitalist societies, rights and obligations largely derived from the
positions and identities which an individual acquired by birth or by achieve-
ment. The distinctive feature of the rise of capitalism, for many observers, was
that rights and obligations were increasingly defined by market transactions.
The degree to which contractual obligations established through economic
exchanges pervade social relations was one important criterion for Albert’s dis-
tinction between Anglo-American and Rhineland capitalism. In the specific
case of labour, as already noted, there are important variations within countries
(and also firms) as well as between them in the extent to which employees are
treated as disposable commodities to be hired and fired at will, or as stake-
holders within a social community.
Many nineteenth-century (and indeed later) writers on the transition from
status to contract saw this as an enlargement of human liberty. The growing
prevalence of contractual relations was however a source of ambiguous free-
doms. The dissolution of the previous fixity of rights and obligations based on
traditionally defined status offered new opportunities for choice and achieve-
ment; but the beneficiaries were principally those with the economic power
derived from superior market resources (a thesis as self-evident to Weber as to
Marx). For those less advantaged, the principal outcome was accentuated inse-
curity. And at a macroeconomic level, while the rise of a contract-based econ-
omy undoubtedly facilitated an unprecedented expansion of production, it
also encouraged an ‘opportunism’ in economic relationships corrosive of the
trust which underpinned former status-based interactions. This posed major
difficulties for the new capitalist entrepreneurs: if the relationship with
employees was purely market-based, the latter might well prove recalcitrant in
providing the desired performance once the employment contract was struck.
Concerns of both social welfare and economic efficiency underwrote
resistance – its strength, again, varying cross-nationally – to the pervasiveness of
contractual relations. They also led, in the twentieth century, to a reassertion
of non-market principles as a basis for regulating employment (Polanyi, 1957).
In the phrase made famous by Marshall (1950), the rise of political citizenship
was followed by the creation of an ‘industrial citizenship’ which reinforced
workers’ status within the labour market and within the employing organisa-
tion. To this extent, the shift from status to contract was reversed (though
status was redefined in very different forms from the old).
Exit and voiceThis distinction between status and contract links to another, that between exit
and voice. The concept of voice was used by Hirschman in 1970 as a metaphor
418 International Human Resource Management