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61. The Viability of Advanced Welfare States in the International Economy: Vulnerabilities and Options

Author:
Fritz W. Scharpf
Publication Date:
09-1999
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The paper represents a preliminary and partial analysis of the information collected in a comparative 12-country study of the adjustment of national employment and social-welfare policies to the increasing internationalization of product and capital markets. After the postwar decades, when national governments were still able to control their economic boundaries, the first international challenge came in the form of the oil-price crisis of 1973/74, which confronted industrial economies with the double threat of cost-push inflation and demand-gap unemployment. It could be met if countries were able to achieve a form of “Keynesian concertation” in which expansionary monetary and fiscal policies would defend employment while union wage restraint could be relied on to fight inflation. For this solution, “corporatist” industrial-relations institutions were a necessary but not a sufficient condition.
Topic:
Economics and Industrial Policy

62. Balancing Positive and Negative Integration: The Regulatory Options for Europe

Author:
Fritz W. Scharpf
Publication Date:
11-1997
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
During the golden years from the 1950s to the mid-1970s, the industrial nations of Western Europe had the chance to develop specifically national versions of the capitalist welfare state - and their choices were in fact remarkably different (Esping-Andersen 1990). In spite of the considerable differences between the "Social-Democratic", "Corporatist" or "Liberal" versions, however, all were remarkably successful in maintaining full employment and promoting economic growth, while also controlling, in different ways and to different degrees, the destructive tendencies of unfettered capitalism in the interest of specific social, cultural, and/or ecological values (Scharpf 1991a; Merkel 1993). It was not fully realized at the time, however, how much the success of market-correcting policies did in fact depend on the capacity of the territorial state to control its economic boundaries. Once this capacity is lost, countries are forced into a competition for locational advantage which has all the characteristics of a Prisoner's Dilemma game (Sinn 1994). It reduces the freedom of national governments and unions to raise the regulatory and wage costs of national firms above the level prevailing in competing locations. Moreover, and if nothing else changes, the "competition of regulatory systems" that is generally welcomed by neoliberal economists (Streit/Mussler 1995) and politicians may well turn into a downward spiral of competitive deregulation and tax cuts in which all competing countries will find themselves reduced to a level of protection that is in fact lower than that preferred by any of them.
Topic:
Economics, Government, International Organization, and International Political Economy
Political Geography:
Europe

63. The Revival of the Nation-State?

Author:
Susanne Lutz
Publication Date:
12-1996
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The debate on economic 'globalization' suggests that the blurring of territorial boundaries shifts the power relations between nation-states and domestic market constituencies in favour of the latter. States have lost autonomy since policies are increasingly formulated in supranational or global arenas. Market actors may use their wider choice of geographic location in order to lobby for low regulated market environments. The paper seeks to differentiate this common view considerably. It argues that economic internationalization weakens the capacity of domestic market actors to engage in self-binding agreements that formerly had solved regulatory problems. Networks of interstate collaboration in turn lack the ability to monitor and enforce negotiated agreements. Both developments impose new duties of market supervision on the nation-state. Empirical reference is drawn from the stock exchange sector that went through a process of transformation which has led to an enhanced role of the nation-state in the model of sectoral governance.
Topic:
Economics, Globalization, Government, and International Trade and Finance