Globalization, Labour Markets and Welfare States: A Future of ‘Competitive Corporatism’?

Abstract

The relationship between globalization and welfare states has neither been adequately theorized nor empirically investigated. Much of the literature assumes a convergence among European welfare states on a ‘lean welfare model’, given external competitive pressures and unsustainable domestic commitments, while, in the absence of a strong European industrial relations system and social dimension, the collapse of corporatist structures alongside the fragmentation of labour markets is inevitable (for a survey, see Rhodes, 1996). Despite much controversy in the literature over the origins of these changes in national institutional structures, it does seem to be the case that developments in international capitalism are reducing the ability of states to control their economic ‘borders’, in part because, as Cerny argues, the scale of goods and assets produced and exchanged has diverged from the structural scale of the nation-state, making it increasingly more difficult to provide and control particular public goods (Cerny, 1995). At the same time, these developments have altered the balance of power in domestic settings, shifting influence in favour of capital and giving it an effective veto power in certain cases through enhanced exit options via relocation to foreign markets.