Sunday, March 16, 2014
Diplomat (Omni Shoreham)
Is there a “winner take all” politics in the affluent democracies of Northern Europe? We explore this question through a comparison of two cases of “regulated capitalism,” Sweden and Germany, asking whether these institutions continue to produce equitable outcomes in the face of globalization and financial crisis. Both countries have experienced significant increases in income inequality since 1990, and their labor markets have begun to display signs of dualism, demonstrating the weakened capacity of regulated capitalism to secure equality. We argue that the shift to the right, even among social democratic parties, is an important cause of increased inequality in both countries, and we highlight the role of organized business and organized finance in driving these processes. We also show how the EU’s market-building process has helped business and pro-business political parties to dismantle or weaken some of the key features of regulated capitalism.
Our analysis also points to the political effects of decades of welfare state building in both countries: a striking feature of both Swedish and German political development in the past decade is that non-socialist parties have re-fashioned themselves either as a “workers’ party”(The Conservative Party in Sweden) or renewed their commitment to welfare capitalism (The CDU in Germany). The popularity of the welfare state and other institutions of regulated capitalism among the electorate constrains the ability of governments to pursue a radical liberalization agenda. In other words, remnants of egalitarian capitalism remain in both Sweden and Germany, but things are not what they used to be.
