http://understandingsociety.blogspot.com.br/2014/06/thelen-on-prospects-for-egalitarian.html?utm_content=bufferb9457&utm_medium=social&utm_source=twitter.

com&utm_campaign=buffer
Page 1 of 3 Jul 07, 2014 06:30:24AM MDT
Thelen on the prospects for egalitarian capitalism
blogspot.com.br
source: Kathleen Thelen, (kl Varieties of Liberalization
3310)
There is a version of economic historical thinking that we
might label as "capitalist triumphalism" -- the idea that the
institutions of a capitalist economy drive out all other
economic forms, and that they tend towards an
ever-more pure form of unconstrained market society.
"Liberalization," deregulation, and reduction of social
rights are seen as economically inevitable. On this view,
the various ways in which some countries have tried to
ameliorate the harsh consequences of unconstrained capitalism on the least well off in society are
doomed -- the welfare state, social democracy, extensive labor rights, or universal basic income (link).
Through a race to the bottom, any institutional reforms that impede the freedom and mobility of capital will
be forced out by a combination of economic and political pressures.
The graphs above demonstrate the current structural differences among Denmark, Sweden, Germany,
Netherlands, and USA when it comes to training and income support for the unemployed and
underemployed. It is visible that the four European economies devote substantially greater resources to
support for the unemployed than the United States. And on the triumphalist view, the states demonstrating
more generous benefits for the less-well-off will inevitably converge towards the profile represented by the
fifth panel, the United States.
Kathleen Thelen is a gifted historical sociologist who has studied the institutions of labor education and
training throughout the past twenty years. Her book How Institutions Evolve: The Political Economy of
Skills in Germany, Britain, the United States, and Japanis an important contribution to our understanding
of these basic economic institutions, and it also sheds important light on the meta-issues of stability and
change in important social institutions. With James Mahoney she also edited the valuable collection
Explaining Institutional Change: Ambiguity, Agency, and Power on this topic.
Thelen's most recent book, Varieties of Liberalization and the New Politics of Social Solidarityaddresses
the question of capitalist triumphalism. (That isn't a term that she uses, but it seems descriptive.) She
locates her analysis within the "varieties of capitalism" field of scholarship, which maintains that there is
not a single pathway of development for capitalist systems. "Coordinated" capitalism and neoliberal
capitalism represent two poles of the space considered by the VofC literature.
From the beginning, the VofC literature challenged the idea that contemporary market
pressures would drive a convergence on a single best or most efficient model of capitalism. (kl
228)
Thelen is interested in assessing the prospects for what she calls "egalitarian" capitalism -- the variants of
capitalist political economy that feature redistribution, social welfare, and significant policy support for the
less-well-off. She focuses on several key institutions -- industrial relations, vocational education and
http://understandingsociety.blogspot.com.br/2014/06/thelen-on-prospects-for-egalitarian.html?utm_content=bufferb9457&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
Page 2 of 3 Jul 07, 2014 06:30:24AM MDT
training, and labor market institutions, and she argues that these are particularly central for the historical
issue of the development of capitalism towards harsher or gentler versions.
Different varieties of liberalization occur under the auspices of different social coalitions, and
this has huge implications for the distributive outcomes in which many of us are ultimately
interested. (kl 243)
This point is key to her view of the plasticity and path-dependency of basic economic institutions: these
institutions change as a result of economic imperatives and the strength of various social groups who are
in a position to influence the form that change takes. "The conclusions I reach here are based on a view of
institutions that emphasizes the political-coalitional basis on which they rest" (kl 259). But there is no
simple calculus proceeding from power group to institutional outcome; instead, the results for institutional
change are a dynamic consequence of strategy, coalition, and constraint.
I suggest that the institutions of egalitarian capitalism survive best not when they stably
reproduce the politics and patterns of the Golden Era, but rather when they are reconfigured --
in both form and function -- on the basis of significantly new political support coalitions. (kl 330)
A key finding in Thelen's analysis is that "coordinated" capitalism and "egalitarian" capitalism are not the
same. Coordinated capitalism corresponds to the models associated with social democracies of the 1950s
and 1960s, the "Nordic" model. But Thelen holds that egalitarian capitalism can take more innovative and
flexible forms and may be a more durable alternative to neoliberal capitalism.
Is a more "egalitarian" capitalism possible? The data on labor markets that Thelen presents shows that
there are major differences across OECD economies when it comes to wage inequality. Here is a striking
chart:
Source: Thelen, Figure 3.3. Share
of Employees in Low-Wage Work,
2010
Fully a quarter of US workers are
employed in low-wage work in
2010. This is about double the rate
of Denmark and quadruple the rate
of low-wage workers in Sweden.
Plainly this reflects a US economy
that is creating substantially greater numbers of low-income people than any other OECD country. And yet
all of these countries are capitalist economies, some with rates of growth that are higher than the United
States. This demonstrates that there are institutional and policy choices available that are consistent with
the imperatives of a capitalist market economy and yet that give rise to more egalitarian outcomes than
we observe in the US, Canada, and the UK.
A key element in common among the more egalitarian labor outcomes that Thelen studies (Netherlands,
Denmark, Sweden, Germany) is the expansion of part-time work, mini-jobs, and "flexi-curity". This
http://understandingsociety.blogspot.com.br/2014/06/thelen-on-prospects-for-egalitarian.html?utm_content=bufferb9457&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
Page 3 of 3 Jul 07, 2014 06:30:24AM MDT
phenomenon reflects a combination of liberalization (relaxation of work rules and requirements of long
labor contracts), with a set of arrangements that allows a smoother allocation of labor to jobs and an
improvement in income and security for the lower end of the labor market. This trend is part of what
Thelen calls a strategy of "embedded flexibilization", which she regards as the best hope for a pathway
towards equitable capitalism.
Thelen closes with a realistic observation about the uncertain coalitional basis that is available in support
of the policies of embedded flexibilization. Xenophobic tendencies in countries like the Netherlands and
Denmark have the potential for destroying the social consensus that currently exists for this model, and
the leaders of nationalistic anti-immigrant parties have made this a key to their efforts at political
mobilization (kl 5541). Maintenance of these policies will require strong political efforts on the part of
progressive coalitions in those countries, and organized labor is key to those efforts.
This analysis is deeply international and comparative, but it has an important consequence for the political
economy of the United States: where are the coalitions that can help steer our economy towards a more
egalitarian form of capitalism?
(Readers may be interested in an earlier discussion of the Nordic model; link.)