How have advanced capitalist economies and their welfare systems evolved since the early 1990s? To answer this question, Bruno Palier, CNRS Research Director at Sciences Po’s Centre for European Studies, and Anke Hassel, Professor of Public Policy at the Hertie School, co-wrote the book Growth and Welfare in Advanced Capitalist Economies: How Have Growth Regimes Evolved?, recently published by Oxford University Press. The volume was discussed by distinguished scholars from CIVICA universities in a webinar on 29 March 2021. We asked the authors a few questions.
What is the goal of your book?
Anke Hassel and Bruno Palier: We have an academic and a practical goal: Academically, we want to expand the analysis of the welfare state and social policy reform to pay attention to concerns by governments with economic growth. Social policy reforms respond not only to electoral pressure but also to strategies by governments to pursue growth. Practically, we want to show how governments in some countries have successfully pursued balanced growth strategies towards employment in dynamic services.
How have political economies transformed in the past decades?
A.H.,B.P.: All countries have faced the challenge to find new engines of economic growth in order to create new and good employment. These engines differ in different countries: some countries focused on exports either of manufactured products or dynamic services, some on the financial services industries. Some countries relied heavily on public spending and ran into problems. It is important to understand the different responses and their implications.
What have been the main drivers of these changes?
A.H., B.P.: In advanced industrialized countries, growth rates have been relatively low over the last decades and governments have been looking for new ways to boost growth. Globalization opened up new roles for financial markets and new export opportunities to emerging economies. Governments sought to exploit these opportunities and thereby enabled the business communities in their countries to engage in these markets. The digital transformation enhances these drivers by allowing for dynamic services and digitally enhanced manufacturing as well as by speeding up innovation in financial products.
What is the role of welfare state reforms in these transformative changes?
A.H., B.P.: The welfare state is an integral part of economic policy-making as it stabilizes demand in the business cycle and shapes skills and labour market participation. It is therefore not surprising that governments have started to use social policies to enhance their growth strategies. For instance, social investment is a policy that focuses on early childhood education but also universal access to broad education. Social investment pays into a growth strategy that embraces the digital transformation and dynamic services. On the other hand, private pension funds feed into financial markets and further know-how of financial services industries.
What has been the added value of collaborating within the CIVICA alliance?
A.H., B.P.: CIVICA has enabled us to cooperate in a different way than before. While cross-country collaboration in academia is the norm, CIVICA gives us new forms of cooperation by allowing us to run joint seminars and also teaching. Joint teaching enables peer-learning on a different level.
Watch the replay of the webinar:
This article was originally published on the website of CIVICA.