Global Capital, Political Institutions, and Policy Change in Developed Welfare States

In the preceding chapters, I have assessed the argument that internationalization, especially the dramatic increases in international capital mobility over the past 25 years or so, has contributed significantly to the retrenchment of the welfare state in the developed capitalist democracies. As I have discussed, the heart of the globalization thesis is an argument about “diminished democracy, ” or the general diminution of the ability of democratically elected governments to pursue social policy goals that depart from market-oriented principles. I have also offered and assessed an alternative theory about the relationship between internationalization of markets and contemporary social welfare policy change. In this alternative view, the domestic policy impacts of internationalization vary notably across political contexts. The institutional structures of the polity and welfare state shape the structure of opportunities for representation of pro–welfare state interests (i.e., programmatic coalitions, collective actors, and national alliances). Institutions also have long-term structural effects on the relative political capacities of pro–welfare state interests and on the prevailing norms and values embedded in the policy process. Hence, configurations of national institutions play a large role in determining the ways in which national policy makers respond to the economic and political pressures associated with globalization.¹ Overall, the evidence has been disproportionately in favor of this latter view.

In the subsequent pages, I state my principal conclusions about the relationships between international capital mobility and policy change in

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