Finding political capital for monetary tightening: Unemployment insurance and partisan monetary cycles

How do governments find the political capital to raise interest rates in pursuit of inflation stabilisation? Against common wisdom, this article shows that the ability of governments to exercise tight monetary policy largely depends on the level of unemployment insurance. Unemployment insurance is particularly useful to social democratic parties since their core constituency – labour – is the hardest hit by economic downturns. Empirical evidence from 17 OECD countries over thirty years demonstrates that high levels of unemployment insurance present a strong incentive for social democratic governments to respond more aggressively to positive changes in inflation. These findings resolve the puzzle of why partisan monetary cycles are not often observed in the literature and have important policy implications, given continued calls for scaling down social insurance.     

An Obituary for the Third Way: The Financial Crisis and Social Democracy in Europe

Why has the financial crisis not served as an occasion for social democratic revival? It is because, with the ‘Third Way’, European social democracy became imbricated with the financial system in crisis to such an extent that it is in no position to offer an alternative to it. The financial crisis is the crisis of the Third Way. Furthermore, the Third Way was based on the faulty premise that it was possible to replicate USA's apparent success in the 1990s, which, however, was based on very particular conditions. The argument is pursued with reference to inter alia Third Way ideology, transatlantic relations, the political economy of capitalist variety, and the political sociology of mass parties.     

Beyond the Social Market: Rethinking Capitalism and Public Policy

Despite its worthy motives, social market philosophy provides neither a useful analytical framework for understanding modern capitalism, nor the policy tools to address our present economic and social predicament. The concept of ‘market failure’, with its underlying assumption of market equilibrium, does not capture the systemically adverse outcomes of collective market forces. A more sophisticated understanding of capitalist economies, and the societies in which they exist, would recognise that the market economy is a dynamic but not self‐regulating system. It is embedded in, and impacts on, four other economies – of the natural environment, of family and care, of voluntary association, and of the public sector – which operate under different motivations and allocative principles. The role of government is central, to balance the values created by different kinds of institutions and to constrain the dynamic impacts of market forces. A number of policy conclusions are offered arising from this framework.     

Squaring the circle: domestic welfare,migrants rights,and human rights

Domestic welfare reform and the management of international migration in Britain have been described by David Cameron as ‘two sides of the same coin’. Heightened conditions and sanctions for the benefit-dependent domestic population, both in and out of work, are being harnessed as a means of promoting labour market change and reducing demand for low-skilled migrants – often EU workers, whose own access to benefit is being curtailed. Arguments about the post-national expansion of rights and associated cosmopolitan debate implicitly measure migrants rights against a normative model of citizenship as the yardstick of full social inclusion, but with little attention to how far citizenship itself falls short of this promise. Taking Britain as a case study, this paper considers how the concept of civic stratification can further advance analysis of the link between domestic welfare, migration and human rights in a context of intensifying controls for both migrants and citizens.     

Job security regulations in Western democracies: A fuzzy set analysis

This article uses fuzzy set qualitative comparative analysis (fsQCA) to examine the determinants of job security regulations – here understood as restrictions on hiring and firing – in Western democracies. Unlike previous studies, the analysis reveals three different paths to high levels of job security regulations. The first path covers the Southern European state capitalist countries. In these countries, conflicts between forces pushing for liberal democracy and groups alienated from modernisation have led to high levels of statism and crowded out other societal actors. Job security regulations were enacted relatively early in order to provide social security by means available to the state. Due to fragmented welfare states, job security regulations have remained one of the most important pillars of the social protection regime. The second path covers the Continental European managed capitalist countries and is also characterised by high levels of statism. In these countries, repressive governments employed a stick‐and‐carrot strategy to weaken the labour movement and tie the loyalties of the individual to the state. After the Second World War, these countries developed corporatist intermediation systems and encompassing and generous welfare states. Finally, the third path covers the Nordic managed capitalist countries. This path is characterised by a high degree of non‐market coordination, strong labour movements and few institutional veto points. In the Nordic managed capitalist countries, job security regulations traditionally have been subject to collective agreements. However, in the 1960s, labour movements succeeded in pushing through the public legislation of job security despite opposition from employers' associations. Methodologically, this article demonstrates that cross‐national differences in the level of job security regulations can only be explained if the methods used allow for complex causality. In contrast, methods which focus on ‘net effects’ do not offer satisfactory explanations for the cross‐national differences in the level of job security regulations.     

The Third Way: the Dutch experience

The Third Way in the Netherlands rests upon the institutionalized co-operation between the trade unions, the employers' organizations and the state. During the period of high unemployment in the 1980s this co-operation led to several agreements to moderate wage costs and to reduce statutory working hours with the object of reducing unemployment. In the 1990s,when labour became scarce, new measures were agreed upon to increase participation in the labour market and to boost productivity. Critics of the agreements suggest that the policies adopted by the socio-economic partners in the 1980s, particularly the moderation of wages and the reduction of work time to create more jobs, have a negative effect on the long-term prospects of attaining higher productivity.     

Decentralization and the post–war political economy

This paper uses cross–national data for 21 OECD nations to examine whether there is evidence of a connection between measures of political and fiscal decentralization and the major, long–term, performance parameters of the post–war political economy. Findings of what is necessarily an exploratory analysis of a wide range of policy outcomes suggest that federalism and the proliferation of constitutional veto–points have inhibited the expansion of the socially protective state and that a low level of fiscal centralization appears to have restrained post–war inflationary pressures and gone along with higher rates of post–war economic growth. No evidence is found to connect either political or fiscal measures with postwar labour market performance.     

Age‐based self‐interest,intergenerational solidarity and the welfare state: A comparative analysis of older people's attitudes towards public childcare in 12 OECD countries

When faced with the necessity of reforming welfare states in ageing societies, politicians tend to demand more solidarity between generations because they assume that reforms require sacrifices from older people. Political economy models, however, do not investigate such a mechanism of intergenerational solidarity, suggesting that only age‐based self‐interest motivates welfare preferences. Against this backdrop, this article asks: Does the experience of intergenerational solidarity within the family matter for older people's attitudes towards public childcare – a policy area of no personal interest to them? The statistical analysis of a sample with individuals aged 55+ from twelve OECD countries indicates that: intergenerational solidarity matters; its effect on policy preferences is context‐dependent; and influential contexts must – according to the evidence from twelve countries – be sought in all societal spheres, including the political (family spending by the state), the economic (female labour market integration) and the cultural (public opinion towards working mothers). Overall, the findings imply that policy makers need to deal with a far more complex picture of preference formation toward the welfare state than popular stereotypes of ‘greedy geezers’ suggest.     

The correlates of consensus democracy and the puzzle of Dutch politics

In much of the comparative literature, and in the work of Arend Lijphart in particular, the Netherlands often emerges as a ‘special case’ of accom‐modationist politics, a picture which is confirmed not only in terms of Lijphart's distinction between majoritarian and consensus democracy, but is also the case when more policy‐based indicators are considered. This is somewhat puzzling, since, in comparative terms at least, the Dutch case is now no longer especially marked by the sorts of features which are generally believed to promote a more consensual style in politics. This puzzle is partly solved, however, by a more updated analysis of the comparative data, which reveals that the Netherlands no longer actually leads the field in terms of consensualism, but has since been surpassed by several other countries. In fact, the more recent evidence now suggests that neither the conditions nor the practice of consensual politics are much in evidence in the Netherlands.     

Decentralization and the post-war political economy

Abstract This paper uses cross–national data for 21 OECD nations to examine whether there is evidence of a connection between measures of political and fiscal decentralization and the major, long–term, performance parameters of the post–war political economy. Findings of what is necessarily an exploratory analysis of a wide range of policy outcomes suggest that federalism and the proliferation of constitutional veto–points have inhibited the expansion of the socially protective state and that a low level of fiscal centralization appears to have restrained post–war inflationary pressures and gone along with higher rates of post–war economic growth. No evidence is found to connect either political or fiscal measures with postwar labour market performance.     

Polish Labour Migrants and Undeclared Work in Norway

This article identifies how labour migrants’ participation in undeclared work is triggered by a combination of voluntary exit from the formal labour market in the host country as well as structures that makes it more likely for this type of worker to be forced to accept unregistered work. The argument is built by examining how East‐West European Union migration can foster or reinforce reasons for participating in undeclared work. At the EU level, the issue of undeclared work is seen as a mounting challenge, and public discussion now associates a supposed increase in undeclared work with the EU's open borders. For this study, 74 semi‐structured interviews were conducted with Polish labour migrants in Norway – both temporary migrants and more settled ones. A substantial part of these interviews focused on undeclared work. The results indicate that immigration enhances as well as creates new reasons for participating in undeclared work. In particular, they highlight how decisions to participate in undeclared work are not just an effect of labour market dynamics, but also a question of social integration.     

Defending the organisation,not the members: Unions and the reform of job security legislation in Western Europe

European labour markets are often described as rigid with comparatively high levels of job protection that do not allow for the flexible adjustment of employment to economic fluctuations. This interpretation overlooks important sources of flexibility, however. Research has shown that recent labour market policy reforms have allowed for the creation of two‐tier labour markets consisting of insiders in standard employment relationships and outsiders in non‐standard employment. This outcome has typically been explained by pointing to the representational interests of unions or social‐democratic parties. It has been argued that rather than protecting all labour market participants, unions and social‐democratic parties focus on the interests of their members and their core constituency, respectively, most of whom are in standard employment relationships. In contrast, it is argued here that unions' institutional power resources are the crucial variable explaining this outcome. In difficult economic times, when unions are asked to make concessions, they will assent to labour market reforms, but only to those that do not fundamentally threaten to undermine their organisational interests. In the context of job security legislation, this means that unions defend the protection of permanent contracts while they compromise on the regulation of temporary employment. This ‘second best solution’ allows them to protect their organisational interests, both by retaining their institutional role in the administration of dismissals and by living up to their institutional role as one of the organisations responsible for the direction of labour market policy reform. Using fsQCA this article shows that unions' institutional power resources are more apt to explain the observed two‐tier reform pattern than the unions' or the social‐democratic parties' representational interests.     

Local community on trial

Abstract

While plenty has been written about the reinvention of the social by the Third Way as a new governmentality of control, consensus, and social integration, less has been said about its subtle elision of social and the local, and the implications of this elision for urban and regional regeneration. This is the theme taken up by this paper, beginning with a critical appraisal of the recent turn by New Labour to community cohesion and social capital as a means of overcoming local poverty and disadvantage. It shows how the social has come to be redefined as community, localized, and thrown back at hard-pressed areas as both cause and solution in the area of social, political, and economic regeneration. The second half of the paper develops an alternative designation of the local-social that is less instrumentalist, decidedly a-moral (though equally ethical), agonistically political, and geographically unconstrained. It argues for a return to ideas of agonistic democracy and the society of commitments and connections so thoroughly repudiated by new versions of market social democracy.     

Economic liberalisation,market institutions and labour rights

What effect do pro‐market economic policies have on labour rights? Despite significant debate in policy and academic circles about the consequences of economic liberalisation, little is known about the labour rights effects of pro‐market policies. Extant literature has focused only on the possible outcomes of market‐liberalising policies, such as trade and investment flows, rather than directly assessing market‐friendly policies and institutions. Moreover, this line of research has found mixed results on how these outcomes influence labour conditions. To provide a comprehensive assessment of this linkage, this article combines data on five distinct policy areas associated with economic liberalisation with data on labour rights for the period 1981–2012. The results indicate that pro‐market policies – except the ones involving rule of law and secure property rights – undermine labour rights. Thus while there are some positive economic and political outcomes associated with market‐supporting policies, economic liberalisation comes at the cost of respect for labour rights.     

Citizenship in the Netherlands: locally produced,nationally contested

The Netherlands is often considered an extreme example of individualism and multiculturalism, two factors that many politicians and social scientists consider to be the main causes for the alleged decline in citizenship. In this paper, we examine Dutch citizens' conceptions of citizenship to test these negative expectations. We found the fear that a modern, individualistic, and diverse citizenry only care for their own rights to be misplaced; citizens were willing to exert effort to uphold the society they live in. Their efforts, however, were conditional upon returns in terms of a responsive government and in improvements to their individual lives. Communitarian, local, and rather submissive notions of citizenship were deeply shared – with a liberal twist among many migrants. We also found that ‘nationalist’ republican notions of citizenship awaken latent uncertainties and divisions among citizens rather than creating ‘new’ unity. This imagination of citizenship leaves Dutch society wanting for the deliberative, political elements of citizenship.     

Competition and service quality: Evidence from Swedish residential care homes

Against a backdrop of increased levels of marketization of welfare services in OECD countries, this article aims to shed light on the separate effects of private ownership and competition for the market on service quality. Using residential elder care homes in Sweden as our case, we leverage unique panel data of ownership and competition against a set of indicators, pertaining to the structure, process, and outcome dimensions of care quality. The main finding of our analyses is that competition for the market does surprisingly little for quality: private entrepreneurs perform neither better nor worse under stiff competition and the quality of care is approximately the same in those nursing homes that are exposed to the market as in those that are not.     

Is ‘competitive’ corporatism an adequate response to Globalisation? Evidence from the low countries

The Dutch practice of negotiated wage restraint and welfare state reform is often held up as a model for effective labour market adjustment. This article examines the distribution of adjustment costs under the Dutch model to determine whether it is stable in the long run ‐ both directly and by analogy with the situation in Belgium. The conclusion is that while the Dutch have succeeded in effecting a remarkable adjustment in the distribution of value‐added, the costs of this adjustment have been skewed against increasingly large sections of society. Should these groups outside the distributional coalition find representation at the national level, the Dutch model for negotiated wage restraint and welfare state reform is likely to revert to political alternation and tit‐for‐tat economic competition.     

Differences That Matter: Overcoming Methodological Nationalism in Comparative Social Policy Research

Abstract

Welfare states are often discussed as if they were territorially homogeneous state-wide institutions measurable by state-wide expenditure averages and explained by country-level variables. It is rare in comparative policy studies to investigate the role of territorial politics in the outcomes of even federal countries. This article argues, using social policy examples in the UK and US, that the impact of intergovernmental finance and division of labour profoundly shapes social investment and redistribution – producing almost as much expenditure variance within the US as within the OECD. The findings show the importance of incorporating territorial politics and intergovernmental arrangements into comparative welfare state and policy analysis.     

The political economy of education and skills in South Korea: democratisation,liberalisation and education reform in comparative perspective

The success story of Korean economic development is intimately linked with the so-called developmental state; and education policy, as part of centrally orchestrated industrial policy, played a critical role in the country's rapid industrialisation, which allowed for high employment rates, relatively modest social inequality and remarkable social mobility. However, the Korean success story has started to show ‘cracks’ – with labour market dualisation, rising inequality and ‘over-education’. While acknowledging the importance of the East Asian financial crisis as external shock for the Korean political economy, we suggest more fundamental problems in the socio-economic and socio-political underpinnings of the developmental state and its education and skills formation system for understanding how Korea's economic and education miracle turned into ‘education inflation’, skills mismatch and social polarisation.     

Globalisation, Marketisation and Power: The Swedish Case of Institutional Change

Globalisation is often thought to threaten the autonomy of national policymaking and generous welfare policies. This article examines two decades of policy change in Sweden, often viewed as a prime example of a fully fledged welfare state. The analysis is focused on reforms within the welfare sector, which is compared with three other important areas – credit markets, the labour market, and infrastructure policy. These areas can all be seen as crucial aspects of the Swedish social democratic model.  The findings can be summarised in three parts. First, seeing the credit–market deregulation as the first phase of the internationalisation of capital in Sweden lends some support to the idea of globalisation as the result of political decisions rather than a structural change caused by technical change. Second, during the last two decades, there have been signs of marketisation of the Swedish public sector. However, this analysis does not give support to the simple hypothesis of globalisation. There are quite large variations both between and within policy areas, variations that are not easily related to international integration. Third, marketisation involves a shift in political power. An overall effect is that the government has lost some of its former direct influence. However, behind the façade of the invisible market we find the same actors as before influencing policy. Globalisation can have tremendous effects on power. Whether or not this will be the case is first and foremost the result of political decisions and individual desires.