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The viability of advanced welfare states in the international economy. Vulnerabilities and options

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  • Scharpf, Fritz W.

Abstract

The paper presents 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 internationalisation 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 agreement’ 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. Since the second oil-price crisis of 1979–80 was met by restrictive monetary and expansionary fiscal policies in the United States, the steep increase of real interest rates in the international capital markets forced other central banks to raise interest rates accordingly. As a consequence, employment-creating investments could only be maintained if the share of profits in the national product was significantly increased. Under the pressure of rapidly rising unemployment, unions in most countries were forced to accept this massive redistribution from labour to capital. In the 1990s, finally, the international integration of product and capital markets has been constraining private sector employment as well as the financial viability of the welfare state. Now, however, institutional differences among different types of revenue systems, welfare states and employment systems – Scandinavian, Anglo-Saxon and Continental – are creating important differences in vulnerability that can no longer be met by standardised responses. This paper concludes with an examination of the specific problems faced by, and the solutions available to, the different countries included in the study.

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  • Scharpf, Fritz W., 2000. "The viability of advanced welfare states in the international economy. Vulnerabilities and options," European Review, Cambridge University Press, vol. 8(03), pages 399-425, July.
  • Handle: RePEc:cup:eurrev:v:8:y:2000:i:03:p:399-425_00
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    Cited by:

    1. Böhm, Katharina & Schmid, Achim & Götze, Ralf & Landwehr, Claudia & Rothgang, Heinz, 2012. "Classifying OECD healthcare systems: A deductive approach," TranState Working Papers 165, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    2. Siebert, Horst, 2006. "Old Europe's social model: A reason of low growth? The case of Germany," Kiel Working Papers 1291, Kiel Institute for the World Economy (IfW).
    3. Paul Pennings, 2005. "The Diversity and Causality of Welfare State Reforms Explored with Fuzzy-Sets," Quality & Quantity: International Journal of Methodology, Springer, vol. 39(3), pages 317-339, June.
    4. repec:pra:mprapa:86639 is not listed on IDEAS
    5. Genschel, Philipp, 2001. "Globalization, tax competition, and the fiscal viability of the welfare state," MPIfG Working Paper 01/1, Max Planck Institute for the Study of Societies.
    6. Kemmerling, Achim & Bruttel, Oliver, 2005. "New politics in German labour market policy? The implications of the recent Hartz reforms for the German welfare state," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2005-101, Social Science Research Center Berlin (WZB).
    7. Hartlapp, Miriam & Schmid, Günther, 2008. "Employment risks and opportunities for an ageing workforce in the EU," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2008-105, Social Science Research Center Berlin (WZB).
    8. Seliger Bernhard, 2001. "Die Krise der sozialen Sicherung und die Globalisierung – Politische Mythen und ordnungspolitische Wirklichkeit," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 52(1), pages 215-238, January.
    9. Moncel, Nathalie, 2004. "Differentiations in structures of employees' resources: a comparison of eight European countries," IRISS Working Paper Series 2004-02, IRISS at CEPS/INSTEAD.
    10. Kemmerling, Achim, 2006. "Diffusion und Interaktion in der Arbeitsmarktpolitik? Positive und negative Ansteckungseffekte am Beispiel zweier Reformdiskussionen," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2006-119, Social Science Research Center Berlin (WZB).
    11. Obinger, Herbert & Starke, Peter, 2014. "Welfare state transformation: Convergence and the rise of the supply side model," TranState Working Papers 180, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    12. Dirk J. van de Kaa, 2006. "Temporarily New: On Low Fertility and the Prospect of Pro-natal Policies," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 4(1), pages 193-211.
    13. Zapfel, Stefan & Promberger, Markus, 2011. "Gemeinschaft, Gesellschaft und soziale Sicherung : Überlegungen zu Genese und Wandel des modernen Wohlfahrtsstaats," IAB Discussion Paper 201121, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    14. Marks, Gary & Hooghe, Liesbet, 2003. "National identity and support for European integration," Discussion Papers, Research Unit: Democracy and Democratization SP IV 2003-202, Social Science Research Center Berlin (WZB).
    15. Genschel, Philipp, 2000. "Der Wohlfahrtsstaat im Steuerwettbewerb," MPIfG Working Paper 00/5, Max Planck Institute for the Study of Societies.

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