Henrik Christoffersen

Markets and Municipalities: A Study of the Behavior of the Danish Municipalities

The complex pattern ofMarket Orientation of the 275 Danishmunicipalities is analyzed. An MO-variableis constructed from a poll covering 12tasks, where municipalities are free toproduce the service or purchase it on themarket. Six potential explanations of theMO-pattern are operationalized. Four ofthose work: (1) MO is a modernization, (2)spreading by diffusion. (3) MO increases ifthe municipality is under economicpressure. (4) MO stays low if the fractionof the population that depends upon thepublic sector is large. Whilestakeholder/pressure group politics thusworks, explanations based onideology/partisanship fail. In theintegrated Copenhagen metropolitan areamost explanations fail.

The Good Society. A Comparative Study of Denmark and Switzerland

Denmark and Switzerland are small and successful countries with exceptionally content populations. However, they have very different political institutions and economic models. They have followed the general tendency in the West toward economic convergence, but both countries have managed to stay on top. They both have a strong liberal tradition, but otherwise their economic strategies are a welfare state model for Denmark and a safe haven model for Switzerland. The Danish welfare state is tax-based, while the expenditures for social welfare are insurance-based in Switzerland. The political institutions are a multiparty unicameral system in Denmark, and a permanent coalition system with many referenda and strong local government in Switzerland. Both approaches have managed to ensure smoothly working political power-sharing and economic systems that allocate resources in a fairly efficient way. To date, they have also managed to adapt the economies to changes in the external environment with a combination of stability and flexibility.

Two Wealthy Economies and Their Development

As mentioned in the introduction both Denmark and Switzerland have managed to stay wealthier than most countries in Western Europe, but the process of convergence in the West has reduced the gap. The West has experienced a strong economic integration in the twentieth century – notably in the second half. This process has led to convergence within the West – and as more countries have joined the process, it has become a true globalization.

Two Good Societies: Switzerland and Denmark

What makes a good society? This question is one of the oldest in political economy. While widely different answers have been suggested over time, the answer given by Aristotle still seems to us to have a strong intuitive appeal: A good society is a society that enables its members to lead a good life. This definition begets the next question: What makes a good life? The next section gives a first look at two answers:

Two Variants of the Welfare State

The two countries we analyze in this study differ markedly with regard to the size of the public sector. Taxes collected in Switzerland amount to less than a third of GDP while Denmark, which approaches the 50 % mark, displays the highest tax revenue of all OECD countries (OECD 2011a). One would thus expect considerably less social welfare spending and more inequality in Switzerland than in Denmark. But, as this chapter will show, income inequality in Switzerland is not much higher than in Denmark and social expenditures in Switzerland are almost as high as in Denmark.

The Future of Switzerland

The preceding chapters show that Switzerland has been economically and politically highly successful, at least if compared with other real economies but not with an absolute ideal. Perhaps most importantly, it has provided its citizens with the conditions necessary in order to become highly satisfied with life. But will this also apply in the future? Is the ‘model Switzerland’ fit for the years to come? What has to be, and what can be, improved?

Two Stylized Models

The message from Chap. 2 is that the two countries are ahead of their neighbors in GDP per capita by 10–20 %, and has been so for a long time. Hence, the two countries must do something differently and better than their neighbors. This chapter looks for differences in the economic system giving an advantage. To this end two economic models are discussed:

Civil Society: Associational Involvement, Norms and Values

The concept “civil society” is a fuzzy one. Many different definitions have been suggested, and many different terms are in use. Despite this, Anheier (2004: 20) is most likely right in assessing that “(n)evertheless, most analysts would probably agree with the statement that civil society is the sum of institutions, organizations and individuals located between the family, the state and the market in which people associate voluntarily to advance common interests.”

Political Institutions and Politics

Switzerland and Denmark are both old democracies. Switzerland obtains the maximum score (10) on the Polity IV democracy-index from 1848 onwards – notwithstanding that Swiss women were not fully enfranchised at the federal level prior to 1971 and that the last canton to enfranchise them at the cantonal level (Appenzell-Innerrhoden) did so only in 1990. Denmark, which got its first democratic constitution in 1849, obtains its first “10” on the Polity IV democracy-index for the year of 1915, the year Danish women became enfranchised.

Happiness in Denmark and Switzerland

Everybody wants to be happy and certainly nobody wants to be unhappy. Danes and Swiss are very satisfied with their lives. International studies on happiness systematically show both countries at the top (see Frey and Stutzer 2000; Stutzer and Frey 2008 or Veenhoven 2011 etc.) and both are often labeled as success models for economic development and societal achievements in comparative analyses. However, this book also sketches and uncovers differences between the two countries with respect to institutions, socio-demographic and economic conditions. Thus, we investigate in this chapter whether Danes and Swiss are so happy for the same or different reasons and which factors matter for their respective happiness.