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31. Challenging Varieties of Capitalism's Account of Business Interests: The New Social Market Initiative and German Employers' Quest for Liberalization, 2000–2014

Author:
Daniel Kinderman
Publication Date:
11-2014
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Do employers in coordinated market economies (CME’s) actively defend the non-liberal, market-constraining institutions upon which their strategic coordination and competitive success depends? This paper revisits the debate over firms’ employer preferences with an in-depth examination of employers in Germany – a paradigmatic CME and crucial “test case” for Varieties of Capitalism. It is based on interviews with key officials and an in-depth examination of a large-scale campaign – the New Social Market Initiative or INMS – founded and funded by German metalworking employers to shape public opinion. The paper argues that German employers have a strong preference for liberalization: they have pushed hard for the liberalization of labor markets, the reduction of government expenditures, the expansion of market-oriented freedoms, and cuts to social protection, employment protection and benefit entitlements. I find no empirical support for the claim that the INSM is an attempt to appease discontented firms within employers’ associations. On the contrary: for many employers, the Agenda 2010 reforms did not go far enough. Following the discrediting of the Anglo-American model in the financial crisis, far-reaching concessions by employees, and the unexpected revitalization of the German economy, employers have moderated their demands – but liberalization remains their default preference. This paper also addresses the role of ideas and the conditions under which employer campaigns can influence policy.
Topic:
Economics, Markets, Labor Issues, and Capitalism
Political Geography:
Europe and Germany

32. Monetary Disunion: The Domestic Politics of Euroland

Author:
W. Streeck and L. Elsässer
Publication Date:
10-2014
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Regional disparities within the European Union have always been perceived as an impediment to monetary integration. This is why discussions on a joint currency, from their very beginning, were linked to compensatory payments in the form of regional policy payments. Structural assistance to poor regions and member states increased sharply at the end of the 1980s. Today, however, fiscal support has to be shared with the new member states in the East. Moreover, due to the financial crisis, the cheap credit that poor EMU member countries enjoyed as a result of interest rate convergence is no longer available. We predict that in the future, some sort of financial aid will have to be provided by rich member countries to poor ones, if only to prevent a further increase in economic disparities and related political instability. We also expect long-lasting distributional conflict between payer and recipient countries far beyond current rescue packages, together with disagreement on the extent of aid required and the political control to be conceded by receiving countries to giving countries. We illustrate the dimension of the distributional conflict by comparing income gaps and relative population size between the center and the periphery of Europe on the one hand and on the other, between rich and poor regions in two European nation-states characterized by large regional disparities, Germany and Italy. While income gaps and population structures are similar in the two countries to those between Northern Europe and the Mediterranean periphery, regional redistribution is much more extensive in the two nation-states. We conclude that this presages a difficult future for the domestic politics of Euroland.
Topic:
Economics, Politics, Financial Crisis, and European Union
Political Geography:
Europe

33. Europe Meets Asia: The Transnational Construction of Access and Voice from Below

Author:
Sabrina Zajak
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper contributes to the debate on the role of democratic participation in complex systems of governance. It takes a process-oriented constructivist approach asking how transnational activism over time contributes to the construction of access and voice from below and uses the Asia-Europe Meetings (ASEM) to analyze how interactions between civil society and global governance institutions shape concrete forms of participation. The paper shows that transnational activism triggers both discursive and institutional changes within the official ASEM process leading to an informal, fragmented, and fragile institutionalization of civil society participation. However, the paper reveals a division between civil society organizations with some, such as business representatives, having preferential access and voice in comparison to more contentious organizations. The paper explains this fragmented form of democratization as the result of three interrelated processes: the particular history and economic origins of the ASEM; international developments particularly in the ongoing economic crisis; and domestic developments within individual countries (in particular China) which have begun to favor controlled access for civil society participation.
Topic:
Civil Society, Democratization, Economics, History, Governance, and Developments
Political Geography:
Europe and Asia

34. Warum betreibt der Europäische Gerichtshof Rechtsfortbildung? Die Politisierungshypothese

Author:
Martin Höpner
Publication Date:
02-2010
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Scholars from law, political science and sociology agree that the European Court of Justice (ECJ) interprets European law extensively and that the Court has become an “engine of integration” that, de facto, conducts integration policy. On the basis of ten landmark ECJ decisions, this paper discusses whether the politicization hypothesis can help to explain this development. The politicization hypothesis posits that ECJ judges make their decisions based on the political interests of either the countries they come from or the parties they sympathize with. The party-based variant of the hypothesis does not seem to have any explanatory power. Similarly, the country-based variant delivers no systematic explanation that could supersede alternative explanations. However, the country-based variant fits quite well with some of the cases observed. I conclude that while situationally motivated acts of politicization may actually occur at the ECJ, which does not imply that the judicial code is being totally replaced by political considerations.
Topic:
International Law and Law
Political Geography:
Europe

35. German Companies Engaging in China: Decision-Making Processes at Home and Management Practices in Chinese Subsidiaries

Author:
Geny Piotti
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper attempts to explain why internationalization processes to China are growing despite the significant difficulties that foreign direct investments into China encounter. The answer to this question can be found in the processes of decision-making on internationalization at the company level and how these affect management practices in Chinese subsidiaries. The argument I put forward in this paper is that for the small and medium-sized enterprises the study focuses on, the decisions concerning investment in China are mainly the product of structural and legitimation pressure. Structural pressure can encourage cognitive mechanisms and behavioral consequences similar to those occurring when individuals (and organizations) cope with threat. Legitimation pressure can foster wishful thinking, which pushes actors to believe that desired options are good despite evidence to the contrary. These pressures have an impact on how well companies are prepared when they internationalize and can particularly affect some crucial management practices, leading to inefficiencies and problems in subsidiaries.
Topic:
Economics and International Trade and Finance
Political Geography:
China, Europe, Asia, and Germany

36. Of Knowledge and Work

Author:
Ben Dankbaar and Geert Vissers
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The idea of the knowledge economy has brought with it a new paradigm of work that espouses the professionalization of all work. This new paradigm is now affecting the organization of work throughout the economy. However, not all work is knowledge work, whatever definition is used. The number of “professionals” may rise, but many workers still face rather traditional working conditions. Moreover, we argue, the expected growth in the share of knowledge work may be less than expected: along with the forces pushing for an increase in knowledge work, there are also forces counteracting these. We develop a simple typology of work that takes autonomy and frequency of external contacts as dimensions. Workplaces with high autonomy and frequent external contacts (with customers and other stakeholders) are considered “paradigmatic” for knowledge work. Using data from the European Working Conditions Survey (EWCS), we analyze the distribution of the European workforce across different types of work. Analysis of EWCS data (1995, 2000, 2005) shows that “paradigmatic” knowledge work is actually shrinking. We offer a first, tentative explanation of this remarkable trend.
Topic:
Disaster Relief
Political Geography:
Europe

37. The Double Asymmetry of European Integration Or: Why the EU Cannot Be a Social Market Economy

Author:
Fritz W. Scharpf
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Judge-made law has played a crucial role in the process of European integration. In the vertical dimension, it has greatly reduced the range of autonomous policy choices in the member states, and it has helped to expand the reach of European competences. At the same time, however, “Integration through Law” does have a liberalizing and deregulatory impact on the socioeconomic regimes of EU member states. This effect is generally compatible with the status quo in liberal market economies, but it tends to undermine the institutions and policy legacies of Continental and Scandinavian social market economies. Given the high consensus requirements of European legislation, this structural asymmetry cannot be corrected through political action at the European level.
Topic:
Economics, Markets, and Regional Cooperation
Political Geography:
Europe

38. Legitimacy in the Multilevel European Polity

Author:
Fritz W. Scharpf
Publication Date:
02-2009
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
In order to be simultaneously effective and liberal, governments must normally be able to count on voluntary compliance – which, in turn, depends on the support of socially shared legitimacy beliefs. In Western constitutional democracies, such beliefs are derived from the distinct but coexistent traditions of “republican” and “liberal” political philosophy. When judged by these criteria, the European Union – if considered by itself – appears as a thoroughly liberal polity which, however, lacks all republican credentials. But this view (which seems to structure the debates about the “European democratic deficit”) ignores the multilevel nature of the European polity, where the compliance of citizens is requested, and needs to be legitimated by member states – whereas the Union appears as a “government of governments” which is entirely dependent on the voluntary compliance of its member states. What matters primarily, therefore, is the compliance-legitimacy relationship between the Union and its member states – which, however, is normatively constrained by the basic compliance-legitimacy relationship between member governments and their constituents. Given the high consensus requirements of European legislation, member governments could and should be able to assume political responsibility for European policies in which they had a voice, and to justify them in “communicative discourses” in the national public space. This is not necessarily true of “non-political” policy choices imposed by the European Court of Justice. By enforcing its “liberal” program of liberalization and deregulation, the ECJ may presently be undermining the “republican” bases of member-state legitimacy. Where this is the case, open non-compliance is a present danger, and political controls of judicial legislation may be called for.
Topic:
Civil Society, Democratization, Government, Politics, and Political Theory
Political Geography:
Europe

39. Uncertainty and the Market for Patents

Author:
Irene Troy and Raymund Werle
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Modern societies regard knowledge as a production factor in its own right. The market is the prevailing governance mode of their economies, and it is supposed to be the most appropriate mode of trading and allocating knowledge assets, too. But socio-economic research has revealed that knowledge markets are far from functioning smoothly. Building on ongoing qualitative research into patent trading we suggest that the emergence of a well-functioning market for patented new technological knowledge is confronted with several obstacles, which can be characterized as different facets of uncertainty. They are included in the process of creation of innovative knowledge, in its transformation into a fictitious knowledge commodity (patent), in its uniqueness, in the strategy of transaction partners, in the estimation of the future market potential of final products (based on the patent), and generally in the problem of incomplete and asymmetric information. Also a commonly accepted method of determining a patent's value is missing. We analyze structural and organizational responses to the problem of uncertainty. Potential traders often rely on contractual options, especially licensing agreements, and complementary procedural principles facilitating the trade of patents.
Topic:
International Relations, Economics, and Markets
Political Geography:
Europe

40. Der kollektive "Buddenbrooks-Effekt"

Author:
Christoph Deutschmann
Publication Date:
05-2008
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper views the current financial crisis in light of long-term structural socioeconomic changes in advanced industrial societies. In Western Europe, the United States and Japan, the period of economic prosperity after the Second World War led to a remarkable accumulation of wealth among the middle class that had surprisingly little effect on the substantial fortunes of the wealthiest upper class. This affluence gave rise to pension and investment funds emerging as a new type of collective actor in global financial markets, while the economy was marked by increasing instability, declining growth rates and financial crises. The paper tries to clarify the interconnections between these phenomena using the framework of a multilevel analysis that culminates in a model I call the “collective Buddenbrooks effect” (“Buddenbrooks” being a family saga by Thomas Mann): Structural upward social mobility will lead to an increasing imbalance in capital markets, since the volume of financial assets looking for profitable investment will rise as the social reservoir of solvent debtors and promising investment opportunities decline. Advanced industrial economies are thus characterized by a bias towards capital export and excessive financial liquidity, with the well-known consequences of low economic growth rates and the danger of speculative bubbles on global capital markets. The middle class that originally benefitted from postwar prosperity is negatively affected, too. I argue that the current crisis cannot be understood sufficiently without taking this structural socioeconomic background into account.
Topic:
Economics, International Political Economy, International Trade and Finance, Political Economy, and Political Theory
Political Geography:
United States, Japan, and Europe