Does Price Stability Exacerbate Labour Market Rigidities in the EMU?

How will the commitment to price stability affect labour market rigidities in the European Monetary Union? I explore a model where firms choose between fixed wage contracts (where the employer cannot lay off the worker, and the wage can only be changed by mutual consent), or contracts where employment is at will, so that either party may terminate employment (with strong similarities to temporary jobs). A fixed wage contract provides better incentives for investment and training, while employment at will facilitates efficient mobility. Inflation erodes the real value of a fixed contract wage over time, and badly matched workers are more likely to quit for other jobs. Disinflation has opposing effects on labour market rigidity: fixed wage contracts become more rigid in real terms, but fewer firms will choose fixed wage contracts.     

Comparative Capitalisms,Ideational Political Economy and French Post-Dirigiste Responses to the Global Financial Crisis

This article advances the case for the more systematic incorporation of ideational factors into comparative capitalisms analysis as a corrective to the rational choice proclivities of the Varieties of Capitalism approach. It demonstrates the pay-off of such an ideationally attuned approach through analysis of French capitalist restructuring over the last 25 years, placing it in comparative context. A modus operandi for such ideational explanation is elaborated through delineating different national conceptions of the market, and setting out their impacts on practices of market-making. The claim made in this article is that understanding the evolution of French capitalism requires recognition of the ongoing market-making role of the French State, in combination with the French conception of the market and its embedding within a social context characterised by the inter-penetration of public and private elitist networks of France's ‘financial network economy’ which remains substantially intact. The ideational dimension is crucial because French understandings of the market and competition, the ideational building blocks of market-making, inform French state interventions and leave footprints on French institutions and market structures, and the evolutionary trajectory of French capitalism. In charting this trajectory, this article deploys the concept of post-dirigisme. We map out the parameters and causes of the post-dirigiste condition in France through examination of French bond market development, privatisation, the shift from a government- to a market- dominated financial system, and French capitalism's internationalisation. It then uses post-dirigisme to explain French state responses to the financial crisis and the banking bailout, noting how state actors, in concert with the banking elites, actively facilitated dominant market positions of French international champions.     

Social Justice in Comparative Political Economy: Lessons from Habermas and the Contemporary German Case

This article critiques recent operationalisations of social justice theories in empirical research in comparative political economy from an epistemological entry point. It offers an alternative epistemic framework based on Habermas’s system and lifeworld distinction to reconcile normative theory with empirical research before developing a critical theory of social justice based on two principles: Nancy Fraser’s parity of participation and Hauke Brunkhorst’s notion that functional differentiation in systems cannot generate asymmetric moral standards. These principles are then operationalised for regimes of welfare capitalism before exploring the contemporary German labour market in these terms, drawing on original qualitative research. It demonstrates that parity of participation cannot be achieved when the moral duty to participate is asymmetrically applied. It concludes capitalism is inherently unjust in any variety due to the inequality of wealth and free movement of capital reinforcing the inequality of moral expectations characterising the lived experience of welfare-mediated labour markets. Therefore, accepting this inherent injustice and whether institutions of the welfare state exacerbate or mitigate it should be the central focus of future research on social justice in comparative political economy.     

市场经济条件下社会虚假性形成原因及对策探析

社会虚假性是市场经济在发展过程中出现的一种不良后果,其产生的原因为政治建设中对伦理道德的忽视、诚信缺失和文化的大众化倾向;其表现出来的特征为人的异化、信仰危机及理想和现实的矛盾。故唯有发展经济文化、完善社会制度、促进人的自由全面的发展才能化解这种虚假性。     

The Political Economy of Social Security

We consider a two-period overlapping generations model in which individual voters differ by age and by productivity. In such a setting, a redistributive pay-as-you-go system is politically sustainable, even when the interest rate is higher than the rate of population growth. The workers with medium wages (not those with the lowest wages) and the retirees form a majority which votes for a positive level of social security. This level depends on the difference between the rates of population growth and interest as well as on the redistributiveness of the benefit rule.     

The Impact of EMU Enlargement on Structural Reforms: A Political Economy Approach

This paper analyzes the setting of labor market reforms in the European Monetary Union (EMU), as a political compromise pressured by the lobbying of business interests and trade unions. Using a common agency model of lobbying, we model the impact of distorted and non-distorted Central Bank monetary policy on EMU member state incentives to reform its labor market. Paradoxically, a majority of citizens who do not support the reform can lead to an optimal level of reform. We also show that, in a context of EMU enlargement, inflationary policy generates a status quo if there is a majority of non-supporters. Surprisingly, inflationary policy enhances the reform if the share of non-supporters over supporters increases, and weakens it if this share decreases.     

Challenges for International Economic Policy Coordination in EMU: Institutional Setting, Financial Market Reactions and the Importance of Systemic Risk

The launch of the euro and, with it, the institutional framework that has been established are raising a number of important issues for the co-ordination of policies, not only within EMU, but also with countries outside the euro area. This paper looks at some of the challenges that the institutions and processes put in place for conducting policy in the euro area pose for international co-ordination. More precisely, it assesses whether there are risks that the new institutional arrangements may generate more imbalanced policies than earlier, thereby creating negative international spillovers. This paper also discusses whether these arrangements may create new systemic risks in international financial markets.Counsellor for Macroeconomic Policies     

The Political Economy of Brexit and the Future of British Capitalism First Symposium

The political economy of Brexit generates new challenges for the UK’s national business model and for European capitalism more broadly. Two symposia examine the implications of the UK’s withdrawal from the EU in key economic policy areas. These symposia contribute to two main bodies of academic literature: the political economy literature on varieties of capitalism, with a specific focus on the UK, and the political economy literature on key economic policy areas of the EU. This short introduction to the first symposium first outlines the key features of the British variety of capitalism and highlight the main questions raised by Brexit in that respect. It then summarises the main findings of the papers of the first symposium and tease out some common themes.     

The Attractiveness of the EMU Exchange Rate Stabilization Program

One of the arguments for a monetary union is that it reduces the variability of exchange rates. This paper demonstrates that the welfare gain that EU countries can expect to gain from the move to a single currency is moderate. The gains from exchange rate stabilization are limited by imports of foreign consumption goods and borrowing by governments. Furthermore, exchange rate stabilization may imply a welfare loss as the removal of non-zero exchange rate expectations deprives investors of the opportunity to speculate on expected-rate-of-return differentials. Numerical simulations suggest that the welfare gain from exchange rate stabilization for the average EU country is equivalent to a 0.9 percent rate of return on portfolio wealth.     

The (International) Political Economy of Falling Wage Shares: Situating Working-Class Agency

This paper relates the financial and monetary dimensions of the contemporary economic crisis to working-class agency via a central concern of classical political economy: the distribution of surplus between the chief factors of production. The fall in the wage share of value added is now accepted as a stylised fact in the empirical economic literature. This paper argues that the punctuated pattern of the development validates the regulation theoretical narrative of an epochal shift from Fordism to finance-led accumulation. Furthermore, synthesising econometric studies supports a class-centred explanation. In the last instance, the falling wage share is due to successful transnational class rule in the form of a neoliberal hegemonic paradigm. Crucially, such class rule restructured the environment of trade unions, rendering increasingly ineffective its relational power resources. The paper concludes by considering the contradictory implications for organised labour of the current financial crisis. On the one hand, the financial crisis offers an opportunity to link its particular interests to the general interest of macroeconomic management since low wage share inhibits growth rates. But how might trade unions assert a higher wage share in the face of the structural power of (financial) capital?     

Global Crisis,National Responses: The Political Economy of Turkish Exceptionalism

With its dilatory and piecemeal fiscal activism and uncharacteristic aversion to IMF assistance, the Turkish government's response to the global economic crisis of 2008–9 diverged considerably from prevalent trends in other major emerging market countries. Underlying this intriguing pattern were Turkey's pre-existing policy and macroeconomic constraints, cognitive lapses on the part of policymakers, and the conjunctural dynamics of domestic politics. The interplay of these factors progressively narrowed the policy space for vigorous action, leading to a motley combination of reactive initiatives that neither offered sufficient protection to vulnerable social groups nor promised sustainable growth in the long run despite rapid short-term recovery.     

The Political Economy of Addressing the Climate Crisis in the Earth System: Undermining Perverse Resilience

The Earth system is a complex adaptive system, characterised by non-linear change and with significant capacity for surprise. In times of systemic crisis, such as dangerous anthropogenic climate change, perverse resilience (for example the structural power of fossil fuel interests in the global economy) can threaten overall Earth system stability. Critical political economic analysis recognises climate change as a threat with significant political economic characteristics and implications. However, key dimensions of climate change as a globally coherent phenomenon, including the important implications of Earth system dynamism and non-linear change, can remain unrecognised, mischaracterised or underestimated. In contrast, resilience approaches describe social-ecological systems but neglect the significance of norms and power relations in human societies. This article builds theory by linking key concepts – hegemony and resilience – from neo-Gramscian political economic analysis and resilience approaches to social-ecological systems. Our objective is to generate a new conceptual framework to improve understanding of the role of politics in social-ecological systems. We use climate change and its mitigation to demonstrate the new framework's potential.     

The Political Economy of Social Security in a Borrowing‐Constrained Economy

This paper introduces a three‐income class, overlapping‐generations model with borrowing constraints. The labor income tax for financing pay‐as‐you‐go social security is determined in a majoritarian voting game played by successive generations. When the interest‐rate elasticity of consumption is low, the political equilibrium might be characterized by an equilibrium where the old and the middle‐income young individuals form a coalition in favor of a higher tax rate and greater social security, while the low‐ and the high‐income young individuals favor a lower tax rate and less social security. In this equilibrium, the size of social security is decreased by the mean‐preserving reduction of a decisive voter's wage if he/she is borrowing‐constrained.     

Towards a Political Economy of Zero Budgeting in Austria

The EMU sets new standards for public finance. In particular, the Stability and Growth Pact aims at a budget ``close-to-balance or in surplus'. Austria is lagging behind in this respect. First, this paper discusses the reasons for that. Then, two scenarios of budget consolidation are analyzed with the Wifo macroeconomic model. In the case of the crash-scenario, which balances the budget already in 2002, the pure Keynesian solution would result in a decline of real GDP of 1% after six years. The precautionary consolidation scenario (balanced budget in ten years) would result in a real GDP loss of only 1/2%. With supply-side effects (incentives for investment due to privatization and UMTS licences sales or credibility effects), real GDP declines only by 1/3% in both scenario. Taking a consolidated view of the tax reform 2000 and the budget consolidation, on balance, the overall effects are rather positive than negative.     

社会市场经济:德国模式的解读与借鉴

德国的社会市场经济模式被认为是成功的市场经济模式。本文通过对德国社会市场经济的理论基础、基本理念和运行机制的分析,探讨了德国社会市场经济模式对我国建立和完善有中国特色社会主义市场经济体制的借鉴意义。     

基于市场经济条件下企业危机管理的再认识

企业危机管理是现代企业管理的重要内容,中国企业实施危机管理是社会主义市场经济发展的必然要求。面对经济全球化和日趋激烈的竞争形势,中国企业必须努力建立和完善与市场经济发展要求相适应的企业危机管理机制,以应对和化解各种可能出现的企业危机,以促进企业的健康、持续发展。     

我国烟草产业行政垄断的社会成本估算

烟草产业行政垄断造成巨大的社会成本,其中行业管理部门对烟草制品的限产限价不仅导致生产过剩,而且所导致的无谓损失远大于垄断条件下单纯限制产量的无谓损失;不通过市场交换的投入要素是导致我国烟草产业X-低效率最重要的原因之一;行政垄断下烟草产业的高额垄断利润导致非生产性寻租。通过估算,1998-2008年中国烟草产业行政垄断所造成的社会总成本在15126.39亿元至26818.6亿元之间,占GDP的0.867%~1.54%。