Duane Swank

POLITICS, INSTITUTIONS, AND WELFARE SPENDING IN INDUSTRIALIZED DEMOCRACIES, 1960-82

electoral turnout, as well as left and center governments increase welfare effort; that the welfare efforts of governments led by particular types of parties show significant differences and vary notably with the strength of oppositional (and junior coalitional) parties; and that relatively neocorporatist, centralized, and traditionalistic polities are high on welfare effort. Overall, our findings suggest that contrary to many claims, both partisan and nonpartisan facets of democratic politics and political institutions shape contemporary social welfare effort.

The New Political Economy of Taxation in Advanced Capitalist Democracies

Earlier versions of this paper were presented at the 1999 Annual Meeting of the American Political Science Association, September 1-5, Atlanta, GA, and the 2000 Annual Meeting of the Midwest Political Science Association, April 27-30, Chicago, IL. The authors thank Steffen Ganghof, Philip Genschel, Mark Hallerberg, Alex Hicks, William Keech, Dennis Quinn, and the anonymous reviewers and editor of this journal for many helpful comments and Dennis Quinn for generously sharing data. Duane Swank thanks the German Marshal Fund of the United States and Marquette University for support of work incorporated in this paper. Data utilized in this paper are available from duane. swank@marquette.edu.

Funding the Welfare State: Globalization and the Taxation of Business in Advanced Market Economies

Theorists assert that international capital mobility creates substantial pressure for all democratically elected governments to decrease tax burdens on business. I explicate and critique the general version of this theory and offer an alternative view. Empirically, I explore whether or not the globalization of capital markets has resulted in decreases in business social security, payroll, and profit taxes. I also investigate whether or not capital mobility has intensified government responsiveness to domestic investment and profitability. Evidence suggests that business tax burdens have not been reduced in the face of rises in capital mobility nor is tax responsiveness to profitability and domestic investment intensified by more open capital markets. To the contrary, analyses indicate that business taxation has become subject to new ‘market conforming’ policy rules that developed in tandem with liberalization of markets. These new policy orientations reduce the economic management roles of business taxation while leaving the revenue-generating roles intact. In conclusion, I discuss the implications of the findings for questions concerning the structural power of internationally mobile capital, redistributive policies, and the autonomy of democratically elected governments in a global economy.

Tax Policy in an Era of Internationalization: Explaining the Spread of Neoliberalism

I offer an explanation for the widespread diffusion of neoliberal tax policies in the developed democracies. After accounting for the policy influences of commonly experienced domestic and international forces, I consider several plausible paths of diffusion of neoliberal tax structure. My central argument is that the highly visible 1980s market-conforming tax reform in the United States should be especially important in shaping subsequent tax policies in other polities. There are substantial reasons to believe, however, that domestic political and institutional forces will shape policymaker assessment of the benefits and costs of neoliberal reforms: the strength of right parties and the degree to which the median voter has moved right should condition adoption of neoliberal tax policy; the institutions of national and sector-coordinated capitalism should also slow the enactment of neoliberal tax reforms. I assess these arguments with empirical models of 1981–98 tax rates on capital in sixteen nations. I find that changes in U.S. tax policy influence subsequent reforms in other polities; in the long term, all nations move toward the U.S. neoliberal tax structure. Analysis also shows, however, that the short-term responsiveness to U.S. tax reforms is notably greater where uncoordinated market institutions are dominant. Theory and extensive qualitative and quantitative evidence indicate that pressures to compete for mobile assets, as balanced against the economic and political costs of adoption, anchor the process of diffusion of neoliberal tax policy. There is little evidence for the view that systematic policy learning or social emulation drove tax policy diffusion.Earlier versions of this article were presented at the Center for European Studies and Weatherhead Center for International Affairs, Harvard University; Center for International Studies, UCLA; and Yale University as well as the 2002 Annual Meetings of the American Political Science Association. An earlier version was published as Minda de Gunzburg Center for European Studies, Harvard University, Working Paper #120. I thank Alex Hicks, Rob Franzese, Torben Iversen, Andy Martin, Cathie Jo Martin; participants in the Yale, UCLA, and Harvard conferences, especially Geoffrey Garrett, Helen Milner, Dennis Quinn, and Beth Simmons; and two anonymous referees and the editors of International Organization for helpful comments. I also gratefully acknowledge the contribution of Sven Steinmo that comes by way of our past collaborative work on tax policy.

On the Political Economy of Welfare Expansion A Comparative Analysis of 18 Advanced Capitalist Democracies, 1960-1971

This article elaborates the thesis that economic growth and various types of collective action by class-linked actors determine the expansion and decline of welfare spending in rich capitalist democracies. Our multivariate model of this thesis, specified to 1960-1971 growth rates in direct cash transfer payments as proportions of gross domestic product, is supported strongly by regression analyses. These indicate that economic growth notably facilitates transfer payment growth. They also suggest that rightist party participation in government notably dampens welfare expansion, while leftist, centrist and Christian democratic party participation in government are conducive to welfare expansion; and they suggest that the political influences of both unions and large industrial corporations are conducive to growth in transfers payments as well. In addition, state authorities appear to augment welfare spending in response to working class protests, strike activity, and capital investment/disinvestment — activities outside the boundaries of political arenas typically conceived. In short, institutional and extrainstitutional class-linked politics along with economic growth seem largely to determine welfare payment changes. In contrast with other comparative research on the welfare state, the fit of model to data is strong and findings are robust in the face of statistical controls, small changes in measurement, and small changes in sample.

Does the Organization of Capital Matter? Employers and Active Labor Market Policy at the National and Firm Levels

Does the organization of business matter for social policy development in the advanced capitalist democracies? Conventional welfare state analysis has given this significant question scant attention. We argue, however, that the representational power of business, coordination across business interest units, and integration of associations in corporatist policy-making forums, or what we call the social corporatist organization of business, should result in greater support and participation by employers in social policy formation and implementation. We test our arguments with models both of 1980–98 pooled time-series data on within- and across-country variation in spending on active labor market programs and of extensive firm-level survey data from Denmark and the United Kingdom. We find that the centralization and coordination of employers as well as the integration of employer organizations in corporatist policy-making forums are strongly associated with shares of national income devoted to active labor market policy. We find, moreover, that the degree of employer organization conditions active labor market policy responses to “de-industrialization” and increases in general unemployment. At the firm level, membership in an employer association has a significant positive effect on employer participation in active labor market programs in corporatist Denmark but not in the pluralist United Kingdom.

Globalisation, Domestic Politics, and Welfare State Retrenchment in Capitalist Democracies

Neoliberal reforms in social welfare policy have been common across the developed capitalist democracies in the latter decades of the twentieth century. A central question for political economists has been whether or not economic globalisation has played a significant role in fostering these reforms in public social welfare provision. In the present paper, I review the best recent work on globalisation and the democratic capitalist welfare state. I also provide a synopsis of recent arguments about the domestic political sources of contemporary trajectories of the welfare state. After brief surveys of welfare state retrenchment and recent scholarship, I utilise newly available data to offer an analysis of the impacts of globalisation and key features of domestic politics on 1981–2000 variations in social welfare entitlements and decommodification.

Culture, Institutions, and Economic Growth: Theory, Recent Evidence, and the Role of Communitarian Polities

Theory: Recent work suggests achievement motivation and values embodied in civic culture promote economic growth while postmaterialist values inhibit growth. I provisionally propose that a distinct cluster of values and attitudes, particularly those that emphasize collective organization and societal consensus and concertation, combines with the institutions and practices of communitarian polities to foster economic growth. Hypotheses: After considering the theoretical and methodological sources of diverse findings on culture presented by Granato, Inglehart, and Leblang (GIL), and Jackman and Miller (JM), I hypothesize that communitarian polities, both confucian statist and social corporatist, should have higher economic growth rates than noncommunitarian polities. Method: To reflect on the often divergent conclusions on the growth effects of culture presented by GIL and JM, I consider the different theoretical and empirical models utilized by these authors and related methodological disparities. I then utilize Ordinary Least Squares and robust regression techniques to offer a preliminary analysis of the growth effects of communitarian polities in the context of the basic endogenous growth model. Results: Diverse and divergent findings offered by GIL and JM stem from different theoretical emphases, distinct empirical modeling strategies, and different sample composition and time frames. Statistical analyses suggest that a parsimonious model highlighting the significance of convergence in growth rates, human capital investment, and communitarian polities is empirically more powerful than alternatives. It explains a full 84% of the cross-national variation in 1960-89 growth rates in 25 countries.

The Political Economy of Government Domestic Expenditure in the Affluent Democracies, 1960-80

Despite the large number of studies of the determination of government expenditure in the affluent democracies, most students of the subject admit that we know relatively little about the complex dynamics of spending change. Using multiple regression analyses of changes in nonmilitary outlays over the years 1960 to 1973 and 1973 to 1980, this study attempts to remedy some of the problems in the literature by providing new tests of several old hypotheses, by introducing and testing several relatively new hypotheses, and by evaluating such propositions in the context of an integrated theoretical framework and of analyses that span two distinct political-economic eras. Results suggest that the dynamics of domestic expenditure change are partially conditioned by macroeconomic and political environments of particular eras. Overall, the self-interests and ideological preferences of policymakers, the institutional and extrainstitutional political action of policy-relevant groups, and needs for state assistance emerge as principal sources of changes in domestic expenditure.

Mobile capital, democratic institutions, and the public economy in advanced industrial societies

Abstract This article addresses the following questions. Is international capital mobility systematically related to reductions in the size of the public economy, as globalization theory suggests? Alternatively, do democratic institutions and processes shape the ways in which internationalization affects national policies? Specifically, I argue that the effects of capital mobility on the scope of the public economy should be conditioned by the institutional forms of societal interest representation and the formal organization of decision‐making authority within the polity. Utilizing econometric analysis of 1964–1993 data from 16 nations, I find that international capital mobility has few direct effects on the scope of the public economy. However, configurations of democratic institutions fundamentally shape the domestic policy impacts of capital mobility. Where social corporatism and inclusive electoral institutions are strong and where decision‐making authority within the polity is concentrated, international capital mobility is either unrelated to the scope of the public economy or positively associated with total public spending, social transfers, and public consumption. In institutional contexts of pluralist interest and exclusive electoral representation, and in polities where decision‐making is dispersed, rises in capital mobility are systematically associated with rollbacks of the public sector.