IR Theory Built on the Founders’ Principles with Empirical Application to Australia

The authors identify 10 core principles of industrial relations (IR) theory and policy, based on the writings of British IR founders Beatrice Webb and Sidney Webb and U.S. IR founder John Commons. These principles are then represented diagrammatically in an expanded IR version of the Marshallian demand/supply (DS) model. The DS and IR models, representing on one side the merits of abstraction and parsimony and on the other realism and complexity, are applied to a case study: an analysis and explanation of the reasons behind the formation of the Australian IR system in the 1890s and its evolution to 2010. Although the DS model captures important forces behind the shift from a centralized and unionized employment system in the early period to a significantly decentralized and deunionized system in the latter period, the evidence indicates the extra structural and behavioral elements in the IR model are important for a full and accurate explanation.