Socio-Economic Review - recent issues

Asset specificity, institutional complementarities and the variety of skill regimes in coordinated market economies

Busemeyer, M. R. — 2009-06-24

The concept of asset specificity has become very prominent in the literature on skill formation, welfare states and labour markets. Building on the varieties of capitalism (VoC) school, this paper points out three distinct shortcomings of this literature: first, the VoC approach does not fully account for the variation of skill regimes in coordinated market economies (CMEs); second, the VoC approach underestimates the importance of authoritative certification in determining the real portability of vocational skills; and third, the complementarities between skill formation and social policies are different from what is expected in the VoC contributions. I argue that the variation of skill regimes in CMEs covers not one, but two separate dimensions: firms' involvement in skill formation and the vocational specificity of the education system. On the basis of three case studies, I demonstrate the existence of three distinct skill regimes in CMEs: the segmentalist (firm-based) skill regime of Japan, the integrationist (school-based occupational) skill regime of Sweden and the differentiated (workplace-based occupational) skill regime of Germany.

Specificity versus replaceability: the relationship between skills and preferences for job security regulations

Emmenegger, P. — 2009-06-24

This article explores the relationship between skills and preferences for job security regulations. Two contrasting arguments are examined: the relative skill specificity thesis advanced by Iversen and Soskice [Iversen, T. and Soskice, D. (2001) ‘An Asset Theory of Social Policy Preferences’, American Political Science Review, 95, 875–893] and the replaceability thesis propounded by Goldthorpe [Goldthorpe, J. H. (2000) On Sociology. Numbers, Narratives, and the Integration of Research and Theory, New York, Oxford University Press]. Both arguments are based on the concept of asset specificity from transaction cost economics. However, they offer conflicting expectations. Iversen and Soskice expect employees with relatively specific skills to demand more job security regulations so as to increase the likelihood that there will be a return on investment. In contrast, Goldthorpe's reasoning implies that employees with very specific skills are difficult to replace. Consequently, they are less concerned about their job security than employees with few specific skills. Analysis of survey data lends support to Goldthorpe's replaceability thesis.

Taxation and the worlds of welfare

Prasad, M., Deng, Y. — 2009-06-24

We use Luxembourg Income Study (LIS) data to compare the progressivity of the tax structure in the USA and Europe. LIS data allow a comparison of tax rates that attempts to take different starting rates, thresholds and exemptions into account. Our study supports the argument others have made that the USA has more progressive taxes than the European countries. However, we find that Britain's tax structure is more regressive than those of the continental welfare states, making the mapping of tax structure onto the ‘three worlds of welfare’ imperfect. We also show that it is a mistake to assume that income and property taxes are always progressive: regressive examples of both are common in the data. But sales taxes are regressive wherever they are found, and we suggest that the proportion of tax revenue raised through sales taxes can serve as an index of overall progressivity in situations where the detailed data examined here are not available. We close by outlining several possible explanations for the inverse correlation between tax progressivity and welfare state effort.

Where do innovations come from? Transformations in the US economy, 1970-2006

Block, F., Keller, M. R. — 2009-06-24

This article seeks to reconnect to scholarship from the 1970s and 1980s that emphasized significant discontinuities in the development of the US economy. Drawing on a unique data set of prize-winning innovations between 1971 and 2006, we document three key changes in the US economy. The first is an expanding role of inter-organizational collaborations in producing award-winning innovations. The second is the diminishing role of the largest corporations as sources of innovation. The third is the expanded role of public institutions and public funding in the innovation process. This leads us to the surprising conclusion that the USA increasingly resembles a Developmental Network State in which government initiatives are critical in overcoming network failures and in providing critical funding for the innovation process.

Falling fertility rates: new challenges to the European welfare state

Vos, A. E. — 2009-06-24

One of the biggest issues currently plaguing many advanced industrialized countries is the persistence of below-replacement fertility rates (fewer than 2.1 children per woman). Decreasing fertility rates threaten economic growth, while government budgets have to accommodate more pension and health services, as the number of adults of working age who contribute to older generations' pensions diminishes. In addressing the dilemma of low fertility in Europe, we are inevitably confronted with a combination of institutional and human factors: while governments can attempt to put into place institutions and policies that will encourage childbirth (such as subsidies for children, family leave policies, and day care facilities), population reproduction is fundamentally a micro-level decision. The crux of the matter is that women and men must choose to have children; no number of institutional configurations will by themselves result in the birth of babies. Rather, it is the combination of systems of welfare provision, people's ability to provide for their well-being, and the choice of women and men to conceive children, that will likely result in increased fertility rates across Europe. This article examines several factors that influence the makeup of state, market, and family decisions, surveying literature in the field of work and family reconciliation and fertility decisions. The article concludes by highlighting several issues of societal polarization that are related to family policy and indicates avenues for future research on fertility and government policies.

On Suzanne Berger 'How We Compete: What Companies Around the World Are Doing to Make it in Today's Global Economy', New York, Doubleday, 2005: Panel at the SASE 2008 Annual Meeting, San Jose, Costa Rica

Streeck, W., Thelen, K., Whitford, J., Zeitlin, J., Berger, S. — 2009-06-24

Neil Fligstein Euroclash: The EU, European Identity and the Future of Europe. Oxford, Oxford University Press, 2008

Hay, C., Ross, G., Streeck, W. — 2009-06-24

Prize for best submitted article in 2008

2009-03-24

Institutional embeddedness and the strategic leeway of actors: the case of the German therapeutical biotech industry

Lange, K. — 2009-03-24

This article aims at examining the strategic leeway of firms pursuing business strategies incompatible with the dominant institutional environment in a given market economy. In order to evaluate this question, we focus on the therapeutic biotech industry and draw a German–British comparison. Proponents of the varieties-of-capitalism (VoC) approach assume that German firms underperform in this industrial sector in comparison to British firms due to the institutional framework in which German firms operate; this framework is assumed to provide them with hardly any strategic latitude. The VoC approach is challenged by two alternative perspectives, in both of which it is believed that firms can have a high level of strategic leeway; in the first approach this is possible due to institutional heterogeneity within national market economies; and in the second approach, the above can be seen as the result of economic internationalization. Our empirical findings show that British firms are indeed more competitive in the therapeutical biotech industry, but only to a limited extent. German firms perform better than projected by the VoC approach because they operate in an institutionally heterogeneous environment and due to the impact of internationalization. Thus, we argue for the integration of these three perspectives in one explanatory approach.

Can new technology firms succeed in coordinated market economies? A response to Herrmann and Lange

Casper, S. — 2009-03-24

The contested institutionalization of policy paradigm shifts: the adoption of inflation targeting in Israel

Maman, D., Rosenhek, Z. — 2009-03-24

This article explores the political dynamics that have led to the adoption of inflation targeting in Israel, within the context of a broader process of policy paradigm shift. We consider inflation targeting as an institutional arrangement with far reaching consequences for the distribution of power between different state agencies. Therefore, like other processes of institutional change, its adoption is not the simple outcome of smooth processes of learning and acceptance of more rational and efficient practices. Rather, it is the result of political conflicts among state actors seeking to improve their positions in the political–economic field. On the basis of a detailed study of the political conflicts that emerged around the adoption of inflation targeting in Israel between the central bank and the Ministry of Finance, we illustrate the contested character of the institutionalization of the neo-liberal policy paradigm and highlight the actions of local political actors as a major mechanism through which worldwide diffusion of institutional practices takes place.

The downside of participatory-deliberative public administration

Baccaro, L., Papadakis, K. — 2009-03-24

This article provides an empirically grounded critique of ‘Participatory-Deliberative Public Administration’, based on an in-depth study of three participatory fora in South Africa: the National Economic Development and Labour Council, the Child Labour Intersectoral Group and the South African National AIDS Council. Drawing freely on Habermas' Between Facts and Norms, the article argues that coordination through deliberation is unlikely to occur in formal settings, where discourses are mostly about the accommodation of existing interests, and is more likely to be found in the informal public sphere, where the preferences of citizens are still malleable and where it is possible for civil society groups to build communicative power by articulating moral arguments that motivate and mobilize the public. This form of power can then be used by civil society groups to counterbalance other forms of (non-communicative) power that impinge on the formal decision-making sphere.

The global construction of development models: the US, Japan and the East Asian miracle

Taniguchi, R., Babb, S. — 2009-03-24

During the heyday of the ‘Washington Consensus’ in the 1980s and 1990s, the Japanese government became an increasingly vocal critic of its market-liberalizing prescriptions. Drawing on documents produced by the Japanese development bureaucracy, this paper analyses the origins of the Washington–Tokyo controversy, and suggests that it provides new insights into the nature of models of economic development. Such models are based on post hoc social constructs—interpretations of past events forged in part by development experts, but also by states, which can play a major role in selecting, interpreting and packaging development facts. Washington's ‘Anglo-Saxon’ model and Tokyo's ‘East Asian’ model were based on distinct interpretations of development facts, but were not as far apart as they seemed on the surface. We conclude that although development models may draw on local materials, they are also very much global products, constructed in the context of transnational networks and organizational fields.

Flexicurity and welfare reform: a review

Viebrock, E., Clasen, J. — 2009-03-24

The notion of ‘flexicurity’ has recently become a buzzword in European labour market reform. It promises to deliver a magic formula to overcome the tensions between labour market flexibility on the one hand and social security on the other hand by offering ‘the best of both worlds’. This article gives a state-of-the-art review on flexicurity. The development of the concept is set against the background of changed economic circumstances in the last two decades. The components of flexicurity are presented in more detail, followed by a review of ‘real worlds of flexicurity’ in selected European countries, with Denmark and the Netherlands as the most prominent examples. The third section considers the transferability of flexicurity policies across borders. Finally, we concentrate on collective actors involved in promoting the idea of flexicurity at European, supra-national and national levels. We conclude with a discussion of some tensions within and criticisms of the concept.

Old ideas in modern times: Is Keynes obsolete? Panel at the SASE 2008 Annual Meeting, San Jose, Costa Rica

Duran, C. R., Gourevitch, P., Hicks, A., Milberg, W. — 2009-03-24

Nina Bandelj From Communists to Foreign Capitalists: The Social Foundations of Foreign Direct Investment in Postsocialist Europe. Princeton and Oxford, Princeton University Press, 2008

Spillman, L. P., Kahancova, M., King, L. — 2009-03-24

Markets and knowledge: a review of Robert Shiller's The Subprime Solution and George Soros's The New Paradigm for Financial Markets

Major, A. — 2009-03-24

Editorial

Streeck, W., Beckert, J., Zeitlin, J., Feick, J. — 2008-12-04

Introduction

Amable, B. — 2008-12-04

Institutional change in varieties of capitalism

Hall, P. A., Thelen, K. — 2008-12-04

Contemporary approaches to varieties to capitalism are often criticized for neglecting issues of institutional change. This paper develops an approach to institutional change more extended than the one provided in Hall and Soskice (in Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford, Oxford University Press, 2001) but congruent with its varieties-of-capitalism perspective. It begins by outlining an approach to institutional stability, which suggests that the persistence of institutions depends not only on their aggregate welfare effects but also on the distributive benefits that they provide to the underlying social or political coalitions; and not only on the Pareto-optimal quality of such equilibria but also on continuous processes of mobilization through which the actors test the limits of the existing institutions. It then develops an analysis of institutional change that emphasizes the ways in which defection, reinterpretation and reform emerge out of such contestation and assesses the accuracy of this account against recent developments in the political economies of Europe. The paper concludes by outlining the implications of this perspective for contemporary analyses of liberalization in the political economy.

Legal origin, juridical form and industrialization in historical perspective: the case of the employment contract and the joint-stock company

Deakin, S. — 2008-12-04

The timing and nature of industrialization in Britain and continental Europe had significant consequences for the growth and development of labour market institutions, effects which are still felt today and which are visible in the conceptual structure of labour law and company law in different countries. However, contrary to the claims of the legal origin hypothesis, a liberal model of contract was more influential in the civilian systems of the continent than in the English common law, where the consequences of early industrialization included the lingering influence of master–servant legislation and the weak institutionalization of the juridical form of the contract of employment. Claims for a strong-form legal origin effect, which is time invariant and resistant to pressures for legal convergence, are not borne out by a growing body of historical evidence and time-series data. The idea that legal cultures can influence the long-run path of economic development is worthy of closer empirical investigation, but it is premature to use legal origin theory as a basis for policy initiatives.

German economic performance: disentangling the role of supply-side reforms, macroeconomic policy and coordinated economy institutions

Carlin, W., Soskice, D. — 2008-12-04

Since unification, the debate about Germany's poor economic performance has focused on supply-side weaknesses, and the associated reform agenda sought to make low-skill labour markets more flexible. We question this diagnosis using three lines of argument. First, effective restructuring of the supply side in the core advanced industries was carried out by the private sector using institutions of the coordinated economy, including unions, works councils and blockholder owners. Second, the implementation of orthodox labour market and welfare state reforms created a flexible labour market at the lower end. Third, low growth and high unemployment are largely accounted for by the persistent weakness of domestic aggregate demand, rather than by the failure to reform the supply side. Strong growth in recent years reflects the successful restructuring of the core economy. To explain these developments, we identify the external pressures on companies in the context of increased global competition, the continuing value of the institutions of the coordinated market economy to the private sector and the constraints imposed on the use of stabilizing macroeconomic policy by these institutions. We also suggest how changes in political coalitions allowed orthodox labour market reforms to be implemented in a consensus political system.

Electoral rules, class coalitions and welfare state regimes, or how to explain Esping-Andersen with Stein Rokkan

Manow, P. — 2008-12-04

It has been recognized since the publication of Esping-Andersen's Three Worlds of Welfare Capitalism that the advanced Western welfare state comes in—at least—three variants: as a Nordic social-democratic regime, a conservative regime on the European continent or as a liberal welfare state regime in the Anglo-Saxon countries. Why exactly welfare states fit into this three-regime typology remains controversial, however. This article presents an argument which provides the three-regime heuristic with a historical foundation. The argument combines insights into the importance of electoral rules for the representation of socio-economic interests (of the lower and middle classes) with insights about the different cleavage structures which left their imprint on the party systems of Western Europe. This article's central claim is that a majoritarian electoral system leads to a residual-liberal welfare state, whereas in countries with proportional representation, either a red–green coalition between Social Democracy and agrarian parties (Scandinavia) or a red–black coalition between Social Democracy and Christian Democracy (on the European continent) was responsible for the build-up of the Nordic and continental welfare state, respectively.

A neorealist approach to institutional change and the diversity of capitalism

Amable, B., Palombarini, S. — 2008-12-04

This article proposes a theoretical approach to the political economy of institutional change and comparative capitalism. It argues that the firm-based approach of the Varieties of Capitalism literature cannot satisfactorily integrate the political aspects of institutional change and must in one way or another rely on some type of economic functionalism. By linking explicitly political strategies and demands for institutional change, a neorealist approach can exploit the concepts of complementarity and hierarchy of institutions. Different types of institutional change may take place in situations of political equilibrium, political crisis or systemic crisis.

Jens Beckert Inherited Wealth. Princeton, Princeton University Press, 2008

Alstott, A., Fourcade, M., Steiner, P. — 2008-12-04

SASE Annual Meeting 2008, San Jose, Costa Rica: Second thoughts: on economics, sociology, neoliberalism, Polanyi's double movement and intellectual vacuums

Piore, M. J. — 2008-12-04

Thanks to our reviewers in 2008

2008-12-04