Reassuring the Markets: The New Politics of Social Concertation in Acute Crisis Times

Why do governments facing economic crises sometimes engage organized producer groups in policymaking through social concertation, and sometimes proceed unilaterally? I argue that governments’ choices to exclude or include unions and employers’ organizations from policymaking can be underpinned by a motivation overlooked by prior corporatist theory: reassuring the markets. Under conditions of financialized globalization, international economic actors—creditors, credit rating agencies, investors, and international institutions—acquire a novel role as audiences to which policymakers seek to send signals to abate intensity of exogenous economic pressures. The article puts forward a novel theoretical account to explain governments’ choice of signaling strategy—concertation or unilateralism—for the purpose of reassuring the markets. The argument is substantiated through a comparative analysis of policymaking in labor market, industrial relations, and pensions policy in Portugal, Italy, and Ireland during the Eurozone sovereign debt crisis (2010–14), drawing on seventy-three qualitative interviews and in-depth process tracing.