Growth and Welfare in Advanced Capitalist Economies : How Have Growth Regimes Evolved?

This chapter charts the shape and movement of the growth strategies of the developed democracies since 1945 across three periods: an era of modernization, one of liberalization, and an era of knowledge-based growth, with an emphasis on the relationship between developments in the political economy and changes in the character of electoral politics. It argues that economic policy-making always entails assembling coalitions for policy in both the arenas of electoral politics and of producer group politics. Accordingly, economic policy responds, not only to secular economic developments, but also to shifting political conditions and notably to changes in the cleavage structures underpinning electoral politics, which are themselves influenced by preceding economic developments. Growth strategies are conditioned by how an evolving “economic gestalt” portrays the problems of the economy and by processes of coalition formation in the electoral arena. The chapter devotes special attention to the growth strategies of the UK, France, Germany, and Sweden Cover Growth and Welfare in Advanced Capitalist Economies: How Have Growth Regimes Evolved? Copyright Preface Contents List of Figures List of Tables List of Contributors Part I: The Evolution Of Growth Regimes And Strategies 1: Tracking the Transformation of Growth Regimes in Advanced Capitalist Economies 1. Introduction 2. The Dynamics of Capitalist Development 2.1 Neoliberalism and Liberalization of Capitalist Political Economies 2.2 Entering the Knowledge-Based Economy 2.3 Tracing National Trajectories of Growth Regimes 3. Growth, Regimes, and Strategies 4. Challenges to Growth Regimes 4.1 The Rise of the Service Economy 4.2 Finance as a New Engine of Growth—How Far Have Various Countries Gone Through Financialization? 4.3 Innovation, Digitalization, and the Knowledge-Based Economy 4.4 Export and Demand-Driven Growth in the Twenty-First Century 4.5 The Five Growth Regimes of Contemporary Advanced Capitalist Economies 5. Plan of the Book References 2: How Growth Strategies Evolve in the Developed Democracies 1. The Approach 2. The Era of Modernization, 1950–75 2.1 The Economic Gestalt 2.2 Growth Strategies 2.3 Electoral Politics 3. The Era of Liberalization, 1980–2000 3.1 The Economic Gestalt 3.2 Growth Strategies 3.3 Electoral Politics 4. An Era of Knowledge-Based Growth, 2000– 4.1 The Economic Gestalt 4.2 Growth Strategies 4.3 Electoral Politics 5. Conclusion Acknowledgments References 3: European Growth Models Before and After the Great Recession 1. The Crisis of Wage-Led Growth 2. Post-Fordist Growth Models: A Framework 3. Post-Fordist Growth Models: Illustrative Evidence 4. The Impact of the Crisis 5. Policy Responses to the Crisis 6. Wage and Sectoral Trends 7. Some Final Remarks References 4: Cross-National Variation in Growth Models: Three Sources of Extra Demand 1. Introduction 2. A new taxonomy of economic growth models 2.1 Motivation 2.2 The Conceptual Framework 2.3 The Range of Growth Models 3. Data and Method 4. Mapping the Growth Models 5. The Performance of Growth Models 6. Conclusion References 5: Forced Structural Convergence in the Eurozone 1. Introduction: Multilevel European Government in Comparative Policy Research 2. The Monetary Union: Failure of an Asymmetric Regime 2.1 The EMU Destroys Existing Governing Capacities 2.2 The New Euro Regime: Convergence through Austerity and Supply-Side Reforms 2.3 Structural Differences of Northern and Southern Political Economies 3. The Asymmetric Impact of the Present Euro Regime 4. The Political Economy of Forced Convergence 4.1 Forced Convergence May Work 4.2 Is the Prize Worth Winning? 5. A Disaster of Political Legitimacy 5.1 Legitimacy on the National Level 5.2 Legitimacy on the European Level 5.3 The Specter of Politicization References Part II: The Politics Of Growth Strategies 6: Transitions to the Knowledge Economy in Germany, Sweden, and the Netherlands 1. Introduction 2. Diverging Political-Economic Profiles 3. Explaining Divergent Trajectories 4. The German Growth Strategy: Doubling Down 5. The Swedish Growth Strategy: Branching Out 6. The Dutch Growth Strategy: Transitioning Back 7. Conclusion References 7: Growth Strategies and Employers’ Coalitions: Renewing Welfare States 1. Introduction 2. Growth Strategies and Social Policies 3. Growth Strategies, Producer Interests, and Welfare State Preferences 4. Refining our Conceptions of Producer Preferences 5. Labor Market Organization and Policy Coalitions 6. Coordination and Adjustment to the Financial Crisis 7. Employers’ Coordinating Capacities and Investment in Skills 8. Conclusion References 8: Strategies for Growth and Employment Creation in a Services-Based Economy: Skill Formation, Equality, and the Welfare State 1. Introduction 2. The New Economic Environment 2.1 Deindustrialization and the ICT Revolution 2.2 Variations in the Characteristics of Service Production 3. Supplyand Demand-Side Strategies for Employment Creation in Low Productivity Services Sectors 4. Strategies for Growth in a Digitized Post-Industrial Economy 5. Dynamic Service Expansion and the Institutions of Skill Formation 5.1 The ICT Revolution and the Demand for High-Skilled Labor 5.2 Cross-National Variation in Skills Policy: Sweden, Germany, and the UK Compared 5.3 The Impact of Changes in Skills Demand on Labor Markets: Sweden, Germany, and the UK Compared 6. Conclusions References Part III: Growth Strategies And Welfare Reforms 9: Always a Winning Strategy? Wage Moderation’s Conditional Impact on Growth Outcomes 1. Introduction 2. Stylized Assumptions within Supply-Side Comparative Capitalism: The Link between Wage-Setting Institutions, Wage Moderation, 2.1 Wage Moderation Performance by Wage-Setting Regime: Do Coordinated Labor Markets Out-perform Non-coordinated Ones? 3. The Conditioning Effect of Wage Moderation and Wage-Setting Institutions on Macroeconomic Outcomes: A Growth Model View 4. The Empirical Relationship between Wage-Setting Institutions, Wage Inflation, and Growth: An Analysis of Eighteen OECD Countr 5. Results 5.1 The Export Share, Wage Inflation, and Growth 5.2 Wage-Setting Institutions, Wage Inflation, and Growth 6. Conclusion References 10: Housing Finance Between Social Welfare and Growth Strategies 1. Introduction 2. Housing Finance and the Welfare State 3. Linking Growth and Welfare: Housing Finance Policy as Growth Strategies 4. Growth Strategies and Housing Finance in the United States and Germany 4.1 United States: Financializing Housing Markets 4.2 Germany: Reforming Housing Finance 5. Conclusion References 11: Fighting Youth Unemployment: Growth Strategies and Youth Welfare Citizenship 1. Introduction 2. Theoretical Framework: The Transformation of the Transition to Adulthood, Youth Welfare Citizenship, and Growth Strategies 2.1 Youth Welfare Citizenship 2.2 The Effects of Growth Strategies 3. Growth Strategies, Youth Citizenship Regimes, and ALMP Reforms in Sweden, Germany, the UK, and France 3.1 Sweden 3.2 Germany 3.3 The United Kingdom 3.4 France 4. Conclusion References 12: Growth Strategies and Welfare Reforms in Europe 1. Introduction 2. Growth Strategies and Welfare State Reforms: The Theoretical Linkages 2.1 Manufacturing Export-Based Growth Strategy and the Dualization of Welfare 2.2 Exports of Dynamic Services Growth Strategy and Social Investment 2.3 FDI-Financed Export-Led Growth Strategy and Fiscal and Social Attractiveness 2.4 Financialization-Based Growth Strategy and Commodification of Welfare 2.5 Publicly Financed Domestic Demand-Based Growth Strategy and Social Protectionism 2.6 Overview of the Five Growth Strategies 3. Tracing the Linkages through Country Cases 3.1 Manufacturing Exports and Dualization of Welfare in Germany 3.2 Export of Dynamic Services and Social Investment in Sweden and Denmark 3.3 FDI-Led Export Growth and Fiscal and Social Attractiveness in Eastern Europe 3.4 Financialization and Commodification of Welfare in the United Kingdom 3.5 The Fate of Wage-Led Growth and Social Protectionism in Southern Europe: From Public Debt to “Competitive Impoverishment” 3.6 The EU-Imposed “Competitive Impoverishment” Strategy 4. Conclusions: The Politics of Growth and Welfare Reform in Advanced Capitalist Countries 4.1 The Key Role of Existing Regimes and Producer Groups in Shaping Growth Strategies and Welfare Reforms 4.2 The Electoral Challenge 4.3 Political Salience as a Determinant of Path-Dependent versus Path-Breaking Reform Trajectories Appendix References Name Index Subject Index Growth and Welfare in Advanced Capitalist Economies takes stock of the major economic challenges that advanced industrial democracies have faced since the early 1990s and the responses by governments to them. It has three goals: firstly, to further our understanding of how political economies have transformed over the past decades; secondly, to analyse the contribution of governments to these changes, by looking at their growth strategies and thirdly, to highlight and analyse the role of the reforms of welfare systems in this transformative change. In a nutshell, this book maps and provides general understanding of the evolution of growth regimes in advanced capitalist countries. It identifies five main growth regimes in contemporary advanced capitalist economies (three export-led and two domestic demand-led ones). To do so the book combines a supply side approach to economic growth as advocated by the Varieties of Capitalism Literature (OUP, 2001) with a demand side perspective as the recent discussion on growth models has exemplified. It argues that all political economies consist of growth regimes, which are based on a set of institutions that shape the supply side of the economy as well as on demand drivers such as government spending and private consumption. Both supply and demand are heavily shaped by the welfare state which provides for skills through education systems and stimulates demand through high social spending and private pension funds. The book focuses on the analysis of welfare reforms as growth strategies pursued by governments in an era characterised by financialization and the rise of the knowledge economy. Growth and Welfare in Advanced Capitalist Economies takes stock of the major economic challenges that advanced industrial democracies have faced since the early 1990s and the responses by governments to them. It has three goals: firstly, to further our understanding of how political economies have transformed over the past decades; secondly, to analyse the contribution of governments to these changes, by looking at their growth strategies and thirdly, to highlight and analyse the role of the reforms of welfare systems in this transformative change. 0In a nutshell, this book maps and provides general understanding of the evolution of growth regimes in advanced capitalist countries. It identifies five main growth regimes in contemporary advanced capitalist economies (three export-led and two domestic demand-led ones). To do so the book combines a supply side approach to economic growth as advocated by the Varieties of Capitalism Literature (OUP, 2001) with a demand side perspective as the recent discussion on growth models has0exemplified. It argues that all political economies consist of growth regimes, which are based on a set of institutions that shape the supply side of the economy as well as on demand drivers such as government spending and private consumption. Both supply and demand are heavily shaped by the welfare state which provides for skills through education systems and stimulates demand through high social spending and private pension funds. The book focuses on the analysis of welfare reforms as growth strategies pursued by governments in an era characterised by financialization and the rise of the knowledge economy This book takes stock of the major economic challenges that advanced industrial democracies have faced since the early 1990s and the responses by governments to them.