Market Liberalism and the Change of Western Societies. Government Preferences and the Impact on Welfare Generosity, Tax Burden, Inequality and Economic Performance.

Ostensibly, cumulated evidence points to fading partisan impacts on major socio-economic policies and higher aggregated outcomes. These findings are problematic in terms of democratic theory which assumes substantial alternation to be a basic element of representation.

I argue, these findings are rooted in a twofold mismatch of theory and measurement. Conventional measurements of party preferences and the temporal specification of partisan influence. If we replace left and right measures with government preferences towards market liberalism and changes on a yearly basis with cabinets as the temporal unit of analysis, the statistical results reveal strong partisan influence on the most important socio-economic policy fields.  

I test the impact of government preferences towards the market on four major dimensions: economic performance, social policy, tax burden, and economic equality. Based on panel regressions over 35 countries from 1960-2012, market liberalism explains the liberalization of Western societies significantly over the whole period. In line with conventional wisdom, market liberal governments reduce the generosity of the welfare state, the progressivity of the tax system, and thereby increase the economic inequality systematically. Surprisingly, economic performance is not systematically affected by market liberal governments in comparison to their more interventionist competitors.