WHEN GEORGE BUSH ANNOUNCED the beginning of a new world order, he had in mind a world in which democratic governments would together keep peace in the world and make it possible for everyone to be free to prosper in a liberalizing international economy. Peace, as we quickly came to see, was a pipe dream, as has been global prosperity. The only part of the agenda that has been continuing on schedule is the liberalizing. Capital has become increasingly mobile and business increasingly international as borders that act as barriers to trade fall and as regulations that constrain commerce are lifted.
This has largely been the product of the concerted efforts of nation-states that, through international trade organizations such as the General Agreement on Tariffs and Trade (GATT), international financial entities such as the International Monetary Fund (IMF) and the World Bank, and regional bodies such as the European Union (EU) and the North American Free Trade Agreement (NAFTA), have sacrificed their own independence as they have increased that of business. It has also resulted from the political and economic reforms internal to nation-states, such as privatization, deregulation, and decentralization, which have diminished central governments' powers at the same time that they have freed business even more.
What are the consequences of this liberalized new world order for the nation-state? In this essay I argue that however beneficial it may be for global prosperity and business, the jury is still out regarding its effects on global democracy and government generally. Because the international and regional organizations in no way constitute supranational governments, and because they quite narrowly focus on trade, they are freeing business from the traditional constraints imposed by national governments and societal interests without substituting some equivalent at the supranational level. The result is a strengthening of business, with transnational corporations less tied to nations and national interests, and a weakening of the nation-state overall, in particular of the voice of the people through legislatures and nonbusiness, societal interests.
Some would counter that the rise of regional and international trade organizations will have strengthened the nation-state by reinforcing executive power and reinvigorating the rule of law;(1) and that business will always be subject to national regulation, whatever the origin of that regulation. This is, no doubt, true, but it suggests a partial view of what constitutes strength for the executive and implies a limited definition of the nation-state, since it ignores the role of legislatures and societal interests. Moreover, it entirely overlooks the potential impact of all of this on the state-society relationship, and it denies the effect on nations of multinational corporations that put global profits before community interests.
To begin with, while the power of the executive may be enhanced, autonomy will be diminished, as governments must negotiate with others on the formulation of policies that in the past had been their purview alone. Moreover, the strengthening of the executive and the judiciary refers primarily to powers over legislative and societal interests, not to state capacity, which will in many cases be weakened. By liberalizing their trade policies, by deregulating their economies, and by privatizing their enterprises, national governments have much less control over what goes on in their own territory or what their own multinationals do elsewhere, and they no longer have the resources they had in the past to solve social problems. At the same time, multinational corporations are less bound economically, politically, and morally to nation-states, while supranational bodies such as GATT, NAFTA, and the EU, by concentrating on trade, have given scant attention to the social spillovers.
Most importantly for issues of democracy in the nation-state is the fact that at the same time that the executive may very well have been strengthened, the legislature is likely to be weakened, to say nothing of the societal interests that will have increasing difficulty gaining a voice in decisions made at the supranational level that cannot be modified at the nation-state or local levels. In other words, deliberative democracy may also suffer as a result of this new economic world order. But it will suffer differently, depending upon the nation's particular characteristics as well as the extent to which it had to change in order to meet the competitive challenges created by the new international economic environment. Within Europe, the smaller European countries and France have suffered more disruption than Germany, Great Britain, and Italy. The two most powerful economies in the world, the United States and Japan, have so far felt very little of all this, although they are likely to feel the effects increasingly over the next few years, as regional trade bodies such as NAFTA or the Asia-Pacific Economic Cooperation gather momentum, and as the World Trade Organization (WTO) develops.
Thus, nation-states are experiencing the disruptive effects of the new economic world order at different rates, and although many will undergo a weakening of the nation-state and of the voice of the people, a few may find one or the other strengthened--Italy and Japan being cases in point. Overall, however, democracy is at risk.
None of this is to suggest that we should turn back the clock and abandon the international and regional attempts at coordinating economic policy. It is, rather, to point to the dangers inherent in these attempts and to recommend that governments begin thinking of ways to overcome the greatest threats to national democracy and, by extension, to global stability. The real challenge is not so much to establish supranational bodies capable of ruling on the whole panoply of social and economic problems involved in the internationalization of trade as to ensure that nation-states provide new vehicles for democratic expression at the national level that also provide national democratic access to supranational decisionmaking.
INTERNATIONAL PRESSURES ON THE NATION-STATE
In recent years, the editorial pages of newspapers have been covered with impassioned accounts of the problems confronting nation-states. Some have been concerned that the internationalization of the financial markets has left governments with minimal influence and little to do other than stabilize prices and government spending in order to avoid pressures on their currency and to attract investment. Others have expressed alarm over the growing power and concentration of multinational business (the top five hundred of which control two-thirds of world trade). Yet others have warned of the potential labor adjustment difficulties and the threat to national labor and environmental standards resulting from the efforts of international and regional trade organizations, in particular with regard to NAFTA. And some have even linked the internationalization of trade to the breakup of the nation-state, not only by reference to the relatively benign cases of separatist movements in places such as Quebec, Catalonia, and the Basque region, but also in terms of fundamentalist religious and communitarian movements.
In response to many of these problems have come increasing calls for the creation of supranational political institutions to deal with the social spillovers resulting from the decisions of supranational economic institutions. So far, such calls have fallen on deaf ears. No one wants to meddle with the markets.
The Pressures from the Rise of Business
There is little new in the argument that the increasing internationalization of business has freed it from the constraints of national governments. In the 1960s and 1970s, a vast literature developed on multinationals that saw the increasing economic interdependence and technological advances in communications and transportation as contributing to the escape of large corporations from nation-state control, and even to the rise of a new transnational corporation that would lose all national identification.(2) Very quickly, however, scholars found that the view of the overarching power of the multinational corporation and the concomitant decline of the nation-state, whether seen in a positive or negative light,(3) was overstated. Much of it overestimated the power of the multinational corporation and underestimated that of the nation-state.(4)
The predictions of the 1970s appear more relevant today, as home and host countries have been giving up their traditional controls over business in a wide range of areas in the context of international and regional trade agreements. As a result, multinationals have been coming closer to the "stateless" ideal that in recent years has come to symbolize the escape of business from nation-state control, where companies aspiring to status as global corporations seek to dissociate themselves from their countries of origin, with their operations scattered around the world and their subsidiaries lobbying as members of whatever country in which they are located.(5)
The statelessness of the multinational manifests itself in a variety of ways: the dispersion of operations; the loss of loyalty to home or host country when it comes to jobs and operations; and the ability to avoid burdensome taxes. As US Secretary of Labor Robert Reich has argued, the dispersion of operations through the growing numbers of joint ventures, the increasing importance of capital markets for financing, the multinational character of production, and so forth, make corporations part of a "global web" that increasingly defies categorization by national origin.(6) Moreover, along with this dispersion of operations, multinationals have increasingly lost any sense of obligation to stay in communities in which they have invested. Even multinationals from countries such as Germany, where corporations have traditionally felt a social obligation to the community in which they operate, have increasingly been relocating with an eye to lower taxes and lower wages. And whether they stay or move, multinationals successfully use their mobility to pressure workers and to gain wage concessions. Finally, multinationals have also been quite adept at minimizing their tax liabilities through transfer pricing, setting profits or losses in countries where tax laws are beneficial to the company, despite the best efforts by countries such as Japan and the United States to limit this practice.
Multinational business' independence from the nation-state is growing not only as a result of its increasing economic freedom but also because of its growing political clout. Business has access to supranational negotiations not only through national governments, but also directly. And it also has influence, as in the case of the NAFTA negotiations with regard to the automotive market,(7) or in the EU, where the influence of business lobbies varies from sector to sector.(8) Although agency capture of the kind found in the United States is infrequent, given the range of interests seeking influence in each policy area,(9) and while clientelism of the Italian variety is also rare, given the bureaucratic culture that places more value on technical arguments than on political influence,(10) Eurocrats nevertheless risk falling into quasi-clientelistic relationships, given their reliance on industry experts and their need to make quick decisions.(11) But even short of this, business' privileged access to supranational decision-making ensures that policy interactions have shifted from an almost exclusive reliance on national government bargaining to one that includes, if it is not dominated by, business actors in the transnational private sector.(12)
Few have questioned the newfound freedom and influence of the multinationals. Those who have been concerned with detailing the characteristics of the new stateless corporation have tended to be charitable, arguing that multinationals are no longer of serious concern because they are bound for reduction to their smaller parts as a conglomeration of companies(13) or as part of a "global web" that denies significance to their bigness as well as to their country origin.(14)
Operations are one thing, control another. There is no doubt that global corporations have operations scattered everywhere. But suggesting that the country origin of large corporations no longer matters, or that their size does not count because of their decentralized organization, is a big leap of faith. Even if the conventional wisdom is correct in assuming that national governments today can do little more than invest in infrastructure, training, and education in order to make their countries more attractive to investors, there continue to be other ways in which governments make a difference to large corporations. For example, incorporation laws and tax laws continue to affect how corporations operate (e.g., Japan's high tax on profits that leads Japanese firms to concentrate on gaining market share or America's tax laws that favor debt over equity). Furthermore, the corporation generally has a special relationship with the home country, being able to count on the government to come to its aid, to protect existing markets, and to help it penetrate new ones. In addition, the culture of the multinational company, as much as its control, tends to remain identified with nationals of the company's country of origin.
Control of the multinational, in short, remains in the hands of relatively few individuals, who, by virtue of their nationality and position, have special access to power in nation-states, and who, by virtue of the global nature of their responsibilities, have the ability to avoid national control. Concern with this aspect of the increasing power of the multinational has generated only sporadic articles in the popular press. However, the honeymoon of the 1980s, when CEOs were depicted as heroes in the press, is over. In the United States, top management greed is now the focus of attention, as news magazines detail the astronomical compensation packages that, in 1993, provided CEOs with salaries that topped $200 million. In other advanced industrialized nations, the press has focused more on the corruption of CEOs, the insider trading scandals and illegal political campaign contributions in France, banking improprieties in Spain, and bribes and illegal campaign contributions in exchange for favors and contracts in Italy and Japan, among others.
Although CEOs remain the focus of criticism because of their ability to exploit their positions for personal or professional gain, that focus may shift to their power over the enormous economic organizations that they head that increasingly seem to escape political and, therefore, popular control. This may generate a new set of radical critiques that revivify the older theories and that concentrate on the inherent political dangers of multinationals controlled by a small elite of professional, capitalist managers with seemingly unchecked economic power and national loyalties only when it suits them.
The concern with business power and those who wield it is likely only to grow as trade liberalization progresses. This constitutes a major challenge to the independent powers of the nation-state. But this is not the only challenge.
The Pressures from the Rise of Supranational Organizations
The pressures on the nation-state resulting from the rise of supranational organizations are many, but cluster around two interrelated issues: 1) the political problems resulting from the loss of national sovereignty and the diminution of governmental autonomy; and 2) the economic and social problems resulting from the impact of trade internationalization.
There is no doubt that the rise of supranational organizations is undermining national sovereignty and governmental autonomy. The potential threat to national sovereignty was a major concern of those opposed to NAFTA, although labor and environmental issues held center stage. The much more immediate threat to national sovereignty represented by the Maastricht Treaty, which proposed monetary union and greater political union, was the main focus of the debates in European Community (EC) member countries, with the referendum in France passing only by a slim margin, with the one in Denmark not passing at all, and with none even held in Great Britain, for fear of the results. That same threat was also a major issue during debates on GATT ratification in Congress, as the new WTO is seen to usurp US trade prerogatives, such as its ability to impose sanctions unilaterally with Super 301.
Underlying many of the concerns about giving up national sovereignty is fear of the loss of governmental autonomy, and the possibility that national standards and mores will be compromised. This fear has been less pronounced with regard to the EC/EU, which already has an elaborate institutional structure to allow nations a say on the common standards to be developed, than it has been with NAFTA, where opponents complained about the lack of linkage between the economic issues and the social, and in particular the lack of a social charter to guarantee workers' rights; about the labor adjustment problems and the dangers of a "race to the bottom" where poorer areas would loosen standards and cut social programs to attract capital and jobs; and about the environmental hazards that were likely to fester without adequate oversight.(15)
The experience of the EC/EU suggests that although many of the specific trade and environmental problems that have worried NAFTA opponents will find solution over time through mutually elaborated and agreed upon rules and standards, labor's demands for guaranteed rights and protections are unlikely to be met. The EC/EU has, in fact, been no more successful than NAFTA in linking trade to labor, generally because of tremendous resistance by certain member governments to any such coordination. The Community Charter of Fundamental Social Rights for Workers of 1989, which was adopted by all member states except Great Britain, was entirely voluntary in terms of its implementation by member states, and was not included in the Maastricht Treaty, primarily because of Great Britain. The best hope for labor with regard to the internationalization of standards, ironically enough, is in the multinational corporations themselves, many of which have already been in the process of standardizing working conditions across their many subsidiaries in Europe.
The GATT has generated another series of concerns. Some fear that higher standards enacted by national legislatures to protect consumers, workers, culture, and so forth will be deemed unfair restraints on the free movement of people, goods, services, and money. Such fears, although not entirely unfounded, are exaggerated. The experience of the EC suggests that higher standards will be ensured gradually in a process related to the development of the trade agreements themselves. In the EC, the social field was, for the most part, originally placed outside the supranational competence of Community institutions, and Commission activity in this area was modest (with the exception of environmental policy) until the Single European Act of the mid-1980s, which officially brought health, safety, and environmental and consumer protection into Community competence and insisted that the Commission start from a high level of protection in these areas.(16)
Higher standards also mean standardization, which in turn means that governmental autonomy is threatened. Although majority voting in the EC/EU remains largely an exception to the consensual rule, the possibility of a vote has encouraged compromises in areas of product regulation that had been blocked for years.(17) The EC/EU has sought to minimize the threat to governmental autonomy as much as possible through the principle of subsidiarity, which seeks to ensure that regulation occurs at the lowest administrative level possible.
It is in the economic regulation area, however, that governmental autonomy has been most undermined, as member states have altered their economic policies in response to EC/EU-recommended changes in the state's role in the economy and the regulatory environment for business. These consist, more specifically, of changes that began slowly with the removal of customs barriers in the 1960s, followed by membership in the European Monetary System (EMS), established in 1979, in which member states peg their national currency to the deutsche mark, and then speeded up in the 1980s with the relinquishing of control over exchange rates, the opening of the financial markets, the ending of price controls, and so forth. In addition, they encompass changes in competition policy, product standards, sectoral rules governing different businesses, and all that the opening of the borders entails in terms of the free movement of goods, services, capital, and people.
The loss of autonomy involves not simply the fact that each member state in the Council of Ministers is only one of twelve,(18) or now fifteen, but also that much power has been given over to the EU Commission and to the European Court of Justice (ECJ). Not only does the Commission draft the directives that governments must then put into practice, once passed by the Council of Ministers, but it also rules on, and overrules, actions that governments used to decide unilaterally, in such areas as industrial policy and regional policy. The Directorate-General on Competition, for example, has, in several instances, not allowed the French government to provide grants to nationalized enterprises on the grounds that they were disguised subsidies, and it rejected the proposed acquisition of de Havilland by Aerospatiale, much to French dismay.
The ECJ has been a less noticed but important force in the subversion of national autonomy. It has been acting as if it were the supreme court of a federal system, the guardian of an entrenched written constitution by which it was empowered, rather than the court of a loose economic federation, which, although its decisions are binding on national governments, has no formal power over national legal systems and no enforcement powers.(19) The most dramatic instance of this judicial activism is a 1991 case in which the ECJ ruled in favor of Spanish fishermen on the grounds that a proposed directive intended to liberalize the European fishing industry, which had been torpedoed in the Council of Ministers by Great Britain, should have been passed and therefore had become EC law.(20)
Thus, the EC/EU, whether through economic policy recommendations, standardization procedures, or court decisions, has in many different ways undermined the autonomy of national governments. No one is complaining much, however, because in exchange for the loss of autonomy has come a larger market, higher standards, better protections for all citizens of the EU, and greater economic stability. This is likely to be the pattern of the future for NAFTA and even GATT countries. In fact, there are already signs that even without any one world organization, not only official treaty organizations but also professional associations of governmental regulators (e.g., international banking and securities regulators in the derivatives market) are seeking to make order out of the chaos that has come from the freeing of the market.
NATIONAL RESPONSES TO INTERNATIONAL PRESSURES
The unwritten story behind the internationalization of trade lies not so much in how international and regional trade associations are diminishing the autonomy of the nation-state, or in how multinationals are escaping the control of the nation-state, but in how nation-states have been altering their policies and policy-making processes to function in the new international arena. These changes have, in most instances, undermined the nation-state's particular kind of democracy by strengthening executive power vis-a-vis societal interests and freeing business from its traditional constraints.
As the most advanced of the international and regional trade bodies, the EC/EU's impact on member states deserves special attention because it offers lessons on what may happen to other countries as the WTO, NAFTA, and other regional trade bodies grow in significance. It also shows that national responses to the pressures of internationalization differ widely, depending not only on the particular state-society relationship embodied in the policy-making process (corporatist, statist, or pluralist), but also on such factors as country size (small or large), culture, history, governmental structure (federal or unitary) and capacity (to reform or not), labor history (conflictual or consensual) and organization (cohesive or fragmented), and business size (large or small), organization (cohesive or fragmented), and orientation (domestic or international).
Among the threats to democracy in the nation-state, the most significant is that posed by the structure of decision-making in the EU. The EU suffers from a "democratic deficit," given a Council of Ministers that relies more on the European Commission and its bureaucracy for recommendations than on the European Parliament, which performs only a consultative role.(21) And this only compounds the problems at the nation-state level. The EU enhances the powers of the executive to the detriment of the legislature and societal interests through a "two-level strategy" to overcome domestic opposition: first, through its mantle of legitimacy and, second, through the creation of policies by way of an insulated process that offers national legislatures and societal interests few opportunities for comment or change.(22) The Maastricht reforms that gave the European Parliament a legislative function and strengthened its control over the executive reduced but did not eliminate this democratic deficit.(23) Nor did the various reforms in member states that followed upon treaty ratification.
Most seriously for democracy in European countries, the policy changes governments have instituted in response to outside economic pressures have combined to bring about major alterations in the balance of relations among major players in the policy-making process. Business generally has become stronger, more independent and mobile, and less in need of the close relationships with government or of the compromises with labor that it had developed throughout the postwar years. Labor, by contrast, has become weaker with respect to business at the same time that it has increasingly been shut out of policy-making processes by liberalizing governments. And, government has become more dependent, with Brussels having usurped much of its autonomy in policy formulation and much of its flexibility in policy implementation. The result is that societal interests, with the exception of business interests, have less access to decision-making at the national level, let alone at the supranational level.
This lack of access is not necessarily a problem in cases where societal interests remain convinced that governments are representing their interests at the national and supranational levels. But as national governments continue to deregulate and privatize, to reduce taxes, and to diminish their own control over economic policies generally, they have increasingly less capacity to meet societal needs in the face of economic downturn, especially in such areas as employment and social welfare. The result is that those societal interests whose needs have not been met have become disenchanted with both national governments and the supranational agreements into which they have entered, and have become a potentially disruptive force.
The Smaller European Countries: Unbalancing the Corporatist Relationship
During the postwar period and in some cases even before, a number of smaller European countries developed systems of social concertation that have often been characterized as corporatist. This means that business and labor (represented by peak associations) together with government (represented by state agencies) formulate and implement policy, often absent any independent role for parliament. This relationship has, in recent years, become unbalanced in most smaller European countries.(24)
The pressures of internationalization, including membership in the EC/EU, have been major contributing factors to the problems of corporatism, despite the fact that small European states with corporatist policy processes had been thought more capable of responding to outside challenges than larger states because of those relationships.(25) The problem is that the traditional "class compromise" that has helped explain the stability of corporatist polities(26) no longer works in a world of capital mobility and financial integration, where labor rightly sees business as less bound to it, morally or economically, and where business can obtain concessions from both labor and government without the traditional compromise. And governments, no longer able to use public spending programs to reconcile the conflicting demands of labor and business as they had in the past without running into macroeconomic trouble (any such action is seen as contributing to inflationary pressures, a signal for capital outflow and foreign currency speculation), have had less interest in maintaining the old corporatist arrangements and have instead promoted change by embracing market-oriented policies.(27)
This has been occurring at varying rates, primarily in relation to the states' degree of openness to international financial and business pressures. While such EC/EU members as the Netherlands (a typical corporatist state) and Belgium (much lower on the corporatist scale) found their particular brands of social concertation in jeopardy by the early 1980s, such non-EC members as Austria (another typical corporatist state) and Sweden were able to delay the impact of international economic constraints until the late 1980s.
Of course, EC/EU membership has been only one of a number of factors that help explain the vulnerability of the social concertation systems of small European countries. One of the major differences between Belgium and the Netherlands, on the one hand, and Austria and Sweden, on the other, has been that the former have had strong, internationally oriented financial institutions that acted as major advocates of financial integration and trade liberalization, while the latter have not. In addition, there are institutional differences involving the size, organization, and orientation of business concerns: Swedish and Austrian business associations have been large and cohesive, with Swedish business, although large and international, as domestically rooted as smaller, noninternational Austrian business (with the exception of state-owned enterprises); Belgian business and its associations have been divided culturally along linguistic lines as well as in terms of size, while Dutch business and its associations have been divided along domestic/international orientation lines. There have also been differences in labor history and organization: Swedish and Austrian unions, like their business associations, have been large and cohesive and have had a history of consensual relations with business, while Belgian and Dutch unions have been more fragmented and conflictual.
Finally, there have been political differences, in particular the social democratic governments in Austria and Sweden that continued their commitment to the social welfare state long after Belgium and the Netherlands had elected center-Right governments that sought to cut back social spending and government intervention in the market economy.(28) This meant that Austria and Sweden were able to delay the inevitable, although the signs of strain in the corporatist relationship were increasingly apparent.(29) By the 1990s, Austria and Sweden had begun embracing the changes, membership in the EU among them: Sweden, pushed by the collapse of its currency; Austria, concerned by fears of its increasing marginalization and lack of internationalization.
Germany: Corporatism under Siege
Germany, although also generally characterized as a corporatist nation, has not had the same problems as the smaller European nation-states.(30) Given its position as the lead economy in the EU and one of the most advanced industrialized nations, it has not been vulnerable to the same external pressures as the smaller European nation-states. With the deutsche mark the lead currency in the EMS, Germany, or more specifically its independent central bank, the Bundesbank, has set monetary policy for all the EMS members and has led all the other EC/EU countries in imposing restrictive monetary policies and austerity budgets to guard against inflation. But, whereas for Germany the past few years of austerity and relatively high interest rates have proven salutary, given the pressures resulting from unification, for many other European countries this has often entailed deeper recession.
The level of internationalization of German business, which has made it the second largest export nation in the world, together with its particular business structure (the close business-banking partnership in which banks provide long-term, low-cost financing at the same time that they protect businesses from takeovers), has made German business less vulnerable to outside pressures. Moreover, Germany's social concertation system made possible the innovations in production systems, in particular the move from Fordism to flexible specialization,(31) that spared it from the radical restructurings that businesses of other nations went through beginning in the late 1970s. Only recently have German firms begun the rationalizing of operations and the shedding of workers that have been endmic to most other advanced industrialized nations. As a result, Germany has managed to maintain its corporatist set of relationships much longer than the smaller, corporatist European countries.
Because Germany has been committed to the "three 'Cs': consensus, corporatism, and cooperative federalism," and because that consensus is institutionalized, both the "social partners" in the corporatist relationship and the "governmental partners" in the federal system have had access to supranational decision-making. Business and labor associations have been largely included in deliberations involving major moves forward on European integration, while the Lander, which play a major role in policy implementation in a great number of areas affected by EU regulation, have been largely brought into the policy formulation process by the federal government.(32)
Most importantly, perhaps, German institutions did not have to change much to respond to the requirements of European economic integration. To begin with, the German federal system, with its emphasis on the importance of law as a regulatory instrument and its respect for local government, parallels EU practice in the first instance and is supported by the EU principle of subsidiarity in the second.(33) Moreover, the German central bank was already independent, unlike in France and Italy (until recently). In addition, Germany had no need to alter its business-government relationship. Not only was the government already less present in the economy in terms of nationalized enterprise (at least compared to France subsequent to the 1981 nationalizations), but the government also played no formal interventionist role in the economy, although it provided subsidies and the like for key industries on an ad hoc basis.
This is not to suggest that Germany is the ideal market-oriented economy. In fact, despite the formal governmental commitment to market-orientation since the end of World War II, German business relations have generally been characterized more by cooperation than by competition, aided by the banks that sit on the boards of competing firms and, as both a source of credit for and an owner of equity in major German firms, often play the kind of leadership role for industry that the government plays in France.(34)
European integration has not jeopardized Germany's corporatist democracy because it has been protected by the power of its economy and the nature and organization of its institutions. Germany, nevertheless, today finds its corporatist relationship under siege, the result of unification. The signs of strain are at the margins of society, reflected in the rise of antiforeigner sentiment and in the rise of right-wing extremism and brought about by the high unemployment rates and adjustment problems experienced in the former East Germany, as well as by the malaise in the former West Germany, related, among other things, to growing ambivalence with regard to unification and resentment of its costs.
France: The Statist End to Old-Style Statism
While Germany has, so far, felt the least change, France has felt the most. France's statist pattern of policy-making, where governments have typically formulated policy unilaterally but allowed societal interests in at the implementation stage, has been disrupted by European integration.(35) This is not only because of the major deregulatory reforms that have transformed the economy from state-led to market-oriented,(36) thereby loosening the ties that have traditionally bound business and government, or because of the decentralizing reforms that have transferred national powers and resources to local authorities.(37) It is also because the government has lost autonomy at the formulation stage and flexibility at the implementation stage.
The French business-government relationship has changed dramatically as a result of European integration.(38) The tensions between two competing strands of economic management policy, that is, of dirigisme (state direction) of the economy and liberalism, with its greater emphasis on the market, came to a head in 1983, when the socialist government, faced with abandoning either major elements of its dirigiste policies or the EC (and in particular the EMS that it had joined in 1979), decided to remain in the EC.(39) French exceptionalism could not last long in an increasingly interdependent global economy and in an integrating Europe. The strict monetary policies and economic austerity program that diminished government resources almost guaranteed the further liberalization of the economy, since, no longer able to stimulate industry through demand, governments had to turn to more supply-side measures in order to improve the competitiveness of French industry, with deregulation a top priority.(40) By the 1990s, the traditional dirigisme, in which French governments set macroeconomic policy relatively independently of the international economic climate and engaged in "micromanagement" of the microeconomic sphere, had ended.
The result is that the ties that traditionally bound French business to government have been lossened. Business has become increasingly independent of the state, and not only as a consequence of the deregulatory policies that divested the state of its traditional dirigiste instruments. As business has been increasingly subject to the imperatives of world competition, the constraints of the market, and the demands of technological advancement, it has looked less to the government for guidance. And as alternative sources of financing have grown as a result of the opening of the markets along with the internationalization of capital, business has turned less to the government for support. Moreover, as French big business has gotten bigger, consolidating, concentrating, and expanding worldwide in response to the challenge of European competition, other supranational firms have become its ally and the EU its interlocutor. French business now has the kind of access to policy formulation at the EU level that it never had at the national level, where lobbying has traditionally been regarded as illegitimate, and it has been encouraged in this by the national government.(41)
While French business has become freer from the traditional constraints, French government has become less free. European integration has diminished governmental autonomy in policy formulation, as we have already seen, at the same time that it has done little to enhance the powers of national parliaments, which in the case of France are already exceedingly meager. Most dangerous for France's statist model of democracy, however, is the diminished governmental flexibility at the implementation stage. In the statist model, societal interests that traditionally have had little say in policy formulation have generally been accommodated at the implementation stage, when civil servants adjusted the rules to respond to interest group needs in order to avoid potential confrontation. This approach to implementation, summed up in de Tocqueville's famous phrase, "The rule is rigid but the application flexible," is in jeopardy. Because the EU regulatory model regards any exceptions to the rule as illegitimate, its increasing presence has called into question the administrative nature of the French state, where making exceptions is the rule. Societal interests that have little access to EU policy-making, by contrast with business, will therefore find themselves increasingly shut out of any direct access to the decision-making process at both the front and the back ends. And, finding less accommodation, they may engage in more confrontation, albeit with less success. This has been most apparent in the agricultural sector in the context of the GATT talks. "Vegetables on the highways and pigs in the street," however, have not been as effective forms of protest as they were in the past because the government is no longer as free to bend to the pressures of confrontation.
Although European integration has encouraged modernization of France's economic institutions, it has generated a crisis for France's political institutions, as citizens and their elected representatives find themselves increasingly frozen out of the policy-making process. The crisis manifests itself in the increasing disillusionment with government officials and the attacks on their probity; in the disaffection of the electorate and the rising extremism of the Right; and in the general malaise that comes from the increasing banality of political discourse and the lack of new ideas that have followed the disintegration of left-wing and right-wing ideological divisions. Until the French find a way to adapt their statist model to the new realities, the crisis is likely only to deepen.
Great Britain: Liberal Statism with a Difference
Great Britain has felt the impact of integration much less than France, despite the fact that it, too, has a statist pattern of policy-making, where government can formulate policy absent significant interest group input. This is because Great Britain in some ways anticipated the changes demanded by European integration, in particular with regard to the business-government relationship, and in other ways successfully resisted them, especially with regard to social regulation.
Great Britain has historically had a more laissez-faire ideology, more open financial markets, and a less close business-government relationship than either France or Germany. Throughout the postwar era, it has had a more "liberal" and international approach to economic policy than most of its European neighbors, often sacrificing the domestic economy on the altar of its ambition to remain a world power. Whether the policy involved deflating the economy in order to maintain a strong pound or restraining domestic investment in an effort to strengthen the balance of payments, the government put international economic considerations above domestic economic health.(42) And they seem to have continued this under Thatcher and Major, with laissez-faire ideology substituting for world ambitions.
Although Great Britain, like France, has traditionally had a powerful executive and a strong bureaucracy, it has also had "an abiding prejudice which sees it as the natural business of government to react--not to act," in particular with regard to business.(43) This cultural aversion to government intervention in the economy, combined with the size of its markets, has always ensured the government of a smaller role with regard to economic matters, and problems whenever it tried either statist experiments similar to those of France in the planning sphere or corporatist ones in the social concertation sphere.(44) Thus, although the executive is strong, as in the typical statist model, it is limited. It was this strength, however, that enabled Prime Minister Thatcher to begin her radical program of privatization and deregulation, even before the pressures of European integration seemed to demand it.(45)
Great Britain has been ahead of the EC/EU in the economic arena, in macroeconomic and microeconomic policies as well as in its openness to the international economy. Therefore, it was less vulnerable to the pressures which hit both France and the smaller European countries. Although it has in some sense been behind EC/EU member states in the social arena, it has managed to avoid some of the potentially most onerous (in its view) aspects, in particular with regard to the social charter.
Great Britain's particular form of liberal statist democracy has been little affected by integration, especially by comparison with France. Because of the traditional role of parliament as a forum for the vigorous debate of ideas, the British people, through their parliamentary representatives, appeared to have had more voice on the whole set of issues related to integration than did the French people. Because the rule of law is more respected in Great Britain than in France, the European model of regulation has not been as disruptive there as it has been in France at the implementation stage--on the contrary, Great Britain has one of the best records on implementation of EU directives. And because British common law is similar to the EU in its precedent-setting approach, the validity of ECJ decisions has not been questioned as much as in France.
In one area, however, Great Britain is likely to have increasing problems. Because Great Britain alone among EC/EU member states has recentralized, taking power back from local governments, it is likely to find the subsidiarity principle, as it applies to subnational authorities, increasingly difficult to reconcile, not only with its policies toward local governments, but also with its use of the subsidiarity principle to defend against the further shift of powers to EU institutions.(46)
Statism, Italian-Style: Paralysis followed by Crisis
Like Great Britain, Italy has changed less in response to the pressures of European integration than has France, but not from a lack of need. Italy has been unable to carry out the reforms required by integration, given a statist polity characterized by a weak executive and parliamentary paralysis. Its current on-going economic and political crises result from this, as well as from the internal collapse of its institutions stemming from the corruption scandals.
Unlike France or many of the smaller EU member states, Italy has yet to shift to strict monetary policies and to submit to the discipline of the market. During the 1980s, in fact, at a time when other EC members were deregulating, privatizing, and instituting austerity budgets to reduce inflation and deficits, Italy was not. Despite Italy's enthusiasm for going forward with European integration, seeing this as a way of reinforcing the executive from the outside, many of its actions remain in violation of Maastricht guiding principles. For example, although Maastricht recommends an open market economy with free competition favoring an efficient allocation of resources, Italy only recently recognized the market economy; it had no competition law until 1990; it continued direct interventions on prices and quantities, thus distorting resource allocation; and it persisted in providing state subsidies and other aid to public sector companies. It also fell short on the Maastricht recommendations for public finance, the monetary regime, and the financial regime, having failed to monitor sufficiently government deficits (now 1.7 times the EU average) and public debt (now at 1.7 times larger than that of the Group of Seven [G-7] nations). The principle of full independence of the central bank was ensured only in 1993; and price stability has yet to become the monetary regime's primary objective.(47)
Much of the problem for Italy has been its particular model of statist policy-making, which is weak by comparison with France's. Rather than the state appearing as an entity apart from governing parties, in their service but independent of them, administered and embodied by a bureaucratic elite that is impermeable to outside interests, Italy has been characterized by partitocrazia (party government). In Italy, parties predominate, controlling the state, with parties deciding what to send to parliament and dominating the interest articulation process, such that where groups exercise influence, they do so as clients and/or patrons of political parties. In the system of consociativismo (consociationalism), opponents are coopted by bringing them into the governmental machinery, ensuring compromise and coexistence such that even disagreements over substantive policy issues do not jeopardize governing coalitions (although they may lead to the creation of new governments and cabinet reshuffling).(48)
This system has recently collapsed under the weight of the pressures of European integration, the fall of the Berlin Wall and the end of the communist threat that had served to justify the consociative balance, and, most importantly, the corruption that by the early 1990s had careened out of control, as dramatized by the mani pulite (clean hands) and tangentopoli (bribe city) scandals. With this collapse, many changes are likely to occur, although it is hard to determine when, since the reform of the electoral system has not yet led to any other major institutional reforms.
The executive has yet to produce the promised deregulatory and privatization laws, largely because of parliamentary paralysis, a result of the fact that the parliament is a transformative rather than an arena legislature. And there has been no change so far in the structure or culture of the bureaucracy. Most importantly, however, even if the reforms are passed, there is some question as to whether they will hold, since Italy continues to be characterized by a process of policy-making that goes way beyond France in following the principle that ensures that rigid rules are bent in the implementation process. In other words, in Italy the future may very well mimic the past, when "the formal dirigisme of these state-sponsored reforms was belied in practice,"(49) and where confrontation was an accepted course of action when accommodation or co-optation were not available.(50)
This was "democracy, Italian style,"(51) a style that, as in France, will be increasingly at odds with the demands of the European regulatory model. Unlike France, however, where the bureaucracy has been leading the changeover to this model, in Italy the changeover is most likely to be led by the judiciary, which has proven itself in the recent scandals and which (with the exception of Portugal) is the only self-governing judiciary in the world without political oversight.
Japan: Statist Resistance to the Pressures of Internationalization
Compared to the European nations generally, Japan has changed little, despite the pressures of the GATT and its main trading partners, in particular the United States. In fact, while France, with a similarly close business-government relationship, has embraced change, deregulating, privatizing, and decentralizing, its strong bureaucracy leading the way, Japan has resisted most efforts at internal reform and has dragged its feet with regard to opening its markets. However, reforms resulting from the opening to the outside may also force an opening on the inside, with the loosening of the ties that bind business and government leading to a strengthening of the voice of nonbusiness societal interests.
Japan has, until very recently, remained largely immune to outside pressures, able to control its international economic policies and achieve its economic objectives because of a "confluence of domestic political structures," organized in a "conservative network of technologically advanced industry, finance, and the state bureaucracy."(52) This network is characterized by close business-government interaction, which, much like in France before the reforms of the 1980s, involves leadership by elite civil servants(53) in a relationship that, whether one wishes to place the emphasis on state control, characterizing the Japanese business-government relationship as one of "administrative guidance,"(54) or on business, characterizing it as one of "reciprocal consent,"(55) ensures orderly cooperation in a competitive market economy. Despite inroads into the bureaucracy's leadership role by the politicians since the mid-1970s,(56) and a diminution in its authority over business,(57) the bureaucracy continues to have tremendous power.
The very structure of business helps to explain the greater success of the Japanese business-government relationship by comparison with the French. Japanese business has been much more organized and cohesive, not only through trade and peak associations, but also through the keiretsus and the semipermanent linkages between large firms and their smaller subcontractors. This structure also helps explain the greater success of the Japanese economy: the Japanese keiretsu performs a function similar to that of the German banking-industry partnership, providing industry with long-term financing at low cost and stable relationships that have traditionally allowed it to focus on penetrating markets without worrying about short-term profits.
For Japan, much of the resistance to change has to do with the fact that it has had a winning combination in its business-government relationship and business structure. The current political crisis has had less to do with economic issues and the related pressures, intense as they are given the three-year economic slump, and much to do with the decay within. The Japanese statist model also has some similarities with the Italian, having also had a party government that encouraged corruption and bribe-taking, but without the need to share the spoils with opponents. Unlike in Italy, however, the bureaucracy remains, for the moment at least, relatively untouched by the scandals, and thus retains prestige and a leadership capacity that increases as that of politicians diminishes. This bureaucracy continues to constitute a major obstacle to change, largely unwilling to jettison a system that has served it and the country so well for so long.
Change is, nevertheless, occurring, albeit slowly. Pressures are coming from the outside as well as the inside. To begin with, the Japanese economy is already more open than it was, the result of bilateral talks with the United States as well as multilateral ones involving the GATT.(58) Outside pressures, however, have been most successful in the case of individual companies or sectors, as in the 1994 deregulation of cellular phones, or where such gaiatsu (outside pressure) is manipulated by internal groups for their own purposes.(59) Overall, deregulatory reforms of the kind seen in France or other European countries have not been forthcoming. Japan remains a highly regulated economy.
However, as Japan's economy moves from a manufacturing base toward service and information-based industries and from dependence on exports to domestic consumption, internal pressure for change is also likely to build. Manufacturers are already pressing for deregulation of the service industry, while consumers are increasingly looking for bargains. Such internal pressures, together with the greater opening to the outside, are likely to force a move from what is very much a producer oriented society to a more consumer oriented one, with a concomitant end to the archaic distribution system that raises consumer prices and shuts out foreign firms, but also employs many people. The increased competition resulting from foreign goods penetrating the market and from domestic producers scrambling to retain market share could also cause cracks in the keiretsu system. It could even jeopardize the system of lifetime employment (which has already been showing signs of strain).
Economic changes are only the beginning. Political changes, already apparent with citizen dissatisfaction with the Liberal Democratic Party and increased impatience with its successors, are also likely to generate demands for greater access to the political process, especially by groups traditionally left out, such as women, environmentalists, and workers not protected by lifetime employment. Ultimately, regionalism is also likely to grow, with concomitant demands for decentralizing reforms.
The United States: Recreating a Quasi-Statist Pattern in a Pluralist
Polity
The United States, with its pluralist pattern of policy-making, in which interest groups are involved in policy formulation, but not in implementation (where the regulatory model holds sway), has probably been the least subject to change as a result of international pressures. This is primarily because the United States, as the hegemonic power of the postwar period, has been doing the pressuring. But it is also because it has had less far to go than many other countries, having had larger, more open financial markets ensuring greater capital mobility, a large, already highly deregulated economy that was deregulated even more in the 1980s, and a traditional separation of business and government, with an even more pronounced cultural aversion to state intervention in the economy than Great Britain. Consequently, the foreign trade policy, which originated in the post-World War II conviction that the internationalization of trade was the best way to avert future wars and which has been used to open up other economies to American business, has not much affected the American economy, other than to represent a competitive challenge for American business. Moreover, the fact that the foreign trade policy-making process has for a long time taken a quasi-statist form, as Congress, through a variety of institutional mechanisms, allowed trade officials to make major decisions in its place, has not mattered so far. But as NAFTA widens and deepens and as the GATT becomes the WTO, America's pluralist pattern of policy-making is likely increasingly to be threatened.
In the foreign trade arena, the quasi-statist pattern of policy-making characterizes fifty years of the preference of the White House and the State Department for liberal trade policies overriding the protectionist impulses of Congress. This quasi-statist system began in 1934 with the Reciprocal Trade Agreement, which shifted the issue from domestic policy, under the jurisdiction of Congress, to foreign policy, under the jurisdiction of the executive.(60) Although the institutional mechanisms changed over time as the focus shifted from tariff to nontariff barriers, and as Congress itself democratized,(61) the "statist" elements remained, in particular bureaucratic responsibility for policy formulation and insulation from external pressures. Most recently, the "fast-track procedures," which began with the Trade Act of 1974, were reiterated in 1988, and were extended in 1991 to cover the Uruguay Round of the GATT and NAFTA, together with Super 301, which enables the United States to retaliate unilaterally against those practices it deems unfair, only ensured that the executive would continue to dominate in the trade process.(62) When it came time for the NAFTA vote in the autumn of 1993, the fast-track procedures ensured passage despite major opposition, as they also did with the GATT. Future trade negotiators are not likely to be so lucky, as fast-track procedures were not extended at the time of the GATT vote.
Even with the variety of institutional mechanisms to shield Congress from special interest pressure, there is always the danger that special interests can prevail, as in the 1982 "voluntary" EC steel export restraints and the 1983 toughening of restrictions on textile imports. But at the same time that it threatens to unravel international trade agreements, it also serves as an extremely effective bargaining tool for trade negotiators, who can use the threat of congressional action to gain further concessions. Throughout the 1980s, even as protectionist sentiment mounted in the face of growing deficits, Congress tended to propose statutory bills primarily as a means of pressuring the executive branch to stand tough and to negotiate more firmly with trade partners, rather than as a means of taking the initiative themselves.(63)
Whatever the advantages for the United States of the pluralist backdrop to the quasi-statist pattern of policy-making in the foreign trade area, the quasi-statist nature of the process of negotiation means that societal interests will have little say in the formulation of policies that are likely increasingly to affect the American economy. Moreover, given the regulatory model operative in the United States, there is no recourse after the fact--societal interests will find little accommodation at the implementation stage. The response to NAFTA is a good indication of how concerned about this American interest groups have already become. The challenge for the United States is to find some way of allowing these groups access without undermining the international negotiation process entirely. The United States, after all, has been ideologically committed to trade internationalization. And yet, the United States is likely in the future to be the greatest threat to internationalization, given its decentralized institutions and weak executive, and a Congress that is more and more vulnerable to the pressures of special interests.
THE DECLINE OF THE NATION-STATE?
The new world order is becoming incorporated, and business is rising. For the moment, the nation-state as we knew it is in decline. This is a serious problem, since the nation-state will continue to be the prime interlocutor in an increasingly complex world, and the only one that speaks with authority to both supranational and subnational authorities. The challenge for the nation-state is two-fold: First, it must ensure that as the world becomes increasingly interdependent economically as a result of the internationalization of trade the social spillovers are not neglected. This is not so difficult, as long as advanced industrialized nations exercise leadership. Second, it must find new ways of ensuring democratic access to the national decisions that are part of the supranational decision-making process. This is much more complicated. But unless nation-states make their citizens feel that they are participating in the supranational decisions that increasingly affect their lives, the legitimacy of both the supranational organizations and the nation-state will be increasingly open to question.
ENDNOTES
(1)Alan S. Milward, The European Rescue of the Nation-State (Berkeley, Calif.: University of California Press, 1992); Andrew Moravscik, "Preferences and Power in the European Community: A Liberal Intergovernmentalist Approach," Journal of Common Market Studies 31 (4) (December 1993); and Andrew Moravscik, "Why the European Community Strengthens the State: Domestic Politics and International Cooperation," paper presented at the Conference of Europeanists, Chicago, Ill., April 1994.
(2)Ernst B. Haas, Beyond the Nation-State (Stanford, Calif.: Stanford University Press, 1964); Charles Kindleberger, ed., The International Corporation (Cambridge, Mass.: MIT Press, 1970); Raymond Vernon, Sovereignty at Bay (New York: Basic Books, 1971); and Richard N. Cooper, The Economics of Interdependence (New York: McGraw-Hill, 1968).
(3)On the negatives, see Stephen Hymer, "The Multinational Corporation and the Law of Uneven Development," in Jagdish Bhagwati, ed., Economics and the World Order--From the Nineteen Seventies to the Nineteen Nineties (New York: Macmillan, 1972); Jean-Jacques Servan-Schreiber, Le Defi Americain (Paris: Editions de Noel, 1967); and Ernest Mandel, "International Capitalism and Supra Nationality," in Ralph Miliband and J. Saville, eds., The Socialist Register 1967 (London: Merlin Press, 1967).
(4)See Robert Gilpin, U.S. Power and the Multinational Corporation (New York: Basic Books, 1975), chap. 9; and Samuel P. Huntington, "Transnational Organizations in World Politics," World Politics 25 (April 1973): 333--68.
(5)William J. Holstein, "The Stateless Corporation," Business Week, 14 May 1990, 98--100.
(6)See Robert Reich, The Work of Nations (New York: Knopf, 1991).
(7)Lorraine Eden and Maureen Appel Molot, "Insiders and Outsiders: Auto Industry Policy Choices in the NAFTA Debate," in Robert G. Cushing et al., The Challenge of NAFTA: North America, Australia, New Zealand and the World Trade Regime (Austin, Tex.: Lyndon B. Johnson School of Public Affairs, 1993), 175--90.
(8)See Andrew McLaughlin, Grant Jordan, and William A. Maloney, "Corporate Lobbying in the European Community," Journal of Common Market Studies 31 (2) (June 1993): 191--212; and Justin Greenwood and Kersten Ronit, "Interest Groups in the European Community: Newly Emerging Dynamics and Forms," West European Politics 17 (1) (January 1994): 37--38.
(9)Sonia Mazey and Jeremy Richardson, "Introduction," in Sonia Mazey and Jeremy Richardson, eds., Lobbying in the European Community (Oxford: Oxford University Press, 1993), 10--11.
(10)Robert Hull, "Lobbying Brussels: A View from Within," in Mazey and Richardson, eds., Lobbying in the European Community.
(11)Mazey and Richardson, "Introduction," in Ibid., 21--22.
(12)See Michelle Egan, "The Politics of European Regulation: Bringing the Firm Back In," paper prepared for the International Conference of Europeanists, Council for European Studies, Chicago, Ill., 31 March-2 April 1994.
(13)John Naisbitt, Global Paradox (New York: William Morrow and Co., 1994), 14--15.
(14)Reich, The Work of Nations.
(15)For some of the criticisms, see: Jonathan Lemco and William B. P. Robson, eds., Ties Beyond Trade: Labor and Environmental Issues under the NAFTA (Toronto: Canadian-American Committee, 1993); The Cuomo Commission on Competitiveness, Amercia's Agenda: Building Economic Strength (New York: M. E. Sharpe, 1992); and Ricardo Grinspun and Maxwell A. Cameron, eds., The Political Economy of North American Free Trade (New York: St. Martin's Press, 1993). For a succinct defense, see Gary Clyde Hufbauer and Jeffrey J. Schott, NAFTA: An Assessment, rev. ed. (Washington, D.C.: Institute for International Economics, 1993).
(16)See Giandomenico Majone, "The European Community Between Social Policy and Social Regulation," Journal of Common Market Studies 31 (2) (June 1993): 154--55.
(17)C. D. Ehrlemann, "The '1992 Project': Stages, Structures, Results and Prospects," Michigan Journal of International Law 11 (1990): 1097--118; and Renaud Dehousse, "Integration v. Regulation? On the Dynamics of Regulation in the European Community," Journal of Common Market Studies 30 (4) (December 1992): 396--97.
(18)One could argue that nation-states give up a bit of national sovereignty to gain supranational sovereignty.
(19)Eric Stein, "Lawyers, Judges, and the Making of a Transnational Constitution," American Journal of International Law 75 (1981): 1--27; and Geoffrey Garret and Barry R. Weingast, "Ideas, Interests, and Institutions: Constructing the European Community's Internal Market," in Judith Goldstein and Robert O. Keohane, eds., Ideas and Foreign Policy: Beliefs, Institutions, and Political Change (Ithaca, N.Y.: Cornell University Press, 1993), 195--96.
(20)Garret and Weingast, "Ideas, Interests, and Institutions," 195.
(21)Shirley Williams, "Sovereignty and Accountability in the European Community," in Robert O. Keohane and Stanley Hoffmann, eds., The New European Community: Decision-Making and Institutional Change (Boulder, Colo.: Westview Press, 1991).
(22)Robert D. Putnam, "Diplomacy and Domestic Politics," International Organization 42 (1988): 427--61; and Moravscik, "Preferences and Power in the European Community," 515.
(23)Philip Raworth, "A Trivial Step Forwards: Maastricht and the Democratization of the European Community," European Law Review 19 (1) (February 1994).
(24)See the convincing case made by Paulette Kurzer, Business and Banking: Political Change and Economic Integration in Western Europe (Ithaca, N.Y.: Cornell University Press, 1993). The following discussion of the smaller European countries is based in large measure on this recent work.
(25)Peter Katzenstein, Small States in World Markets (Ithaca, N.Y.: Cornell University Press, 1985).
(26)Adam Przeworski and Michael Wallerstein, "The Structure of Class Conflict in Democratic Capitalist Societies," American Political Science Review 76 (1982): 215--38.
(27)Kurzer, Business and Banking, vii-viii, 9--12.
(28)Ibid.
(29)In Austria, the role of parliament and political parties had been strengthened as a result of the economic crisis. See Peter Gerlich, Edgar Grande, and Wolfgang Muller, "Corporatism in Crisis: Stability and Change of Social Partnership in Austria," Political Studies 36 (2) (1988).
(30)On German corporatism, see Kenneth Dyson, Party, State, and Bureaucracy in West Germany (Beverley Hills, Calif.: Sage Publications, 1977).
(31)See Michael Piore and Charles Sabel, The Second Industrial Divide: Possibilities for Prosperity (New York: Basic Books, 1984).
(32)Simon Bulmer, "Completing the European Community's Internal Market: The Regulatory Implications for the Federal Republic of Germany," in Kenneth Dyson, ed., The Politics of German Regulation (Aldershot, Hants: Dartmouth, 1992), 66--67.
(33)Ibid., 67--68.
(34)Heidrun Abromeit, "Government-Industry Relations in West Germany," in Martin Chick, ed., Governments, Industries, and Markets (Aldershot, Hants: Edward Elgar, 1990). See also John Zysman, Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change (Ithaca, N.Y.: Cornell University Press, 1983).
(35)See Vivien Schmidt, Modernizing France: Business and Government in the Mitterrand Years (Cambridge: Cambridge University Press, forthcoming, 1996), pt. 1.
(36)See Vivien A. Schmidt, "An End to French Economic Exceptionalism? The Transformation of Business under Mitterrand," California Management Review 36 (1) (Fall 1993): 75--98; and Schmidt, Modernizing France, pt. 2.
(37)See Vivien A. Schmidt, Democratizing France: The Political and Administrative History of Decentralization (New York: Cambridge University Press, 1990).
(38)The following discussion draws from Schmidt, Modernizing France.
(39)See Peter Hall, Governing the Economy (Oxford: Polity Press, 1986); and Michael Loriaux, France after Hegemony: International Change and Financial Reform (Ithaca, N.Y.: Cornell University Press, 1991).
(40)For Socialist industrial policies from 1981 to 1986, see Vivien A. Schmidt, "Industrial Management under the Socialists in France: 'Decentralized Dirigisme' at the National and Local Levels," Comparative Politics 21 (1) (October 1988): 53--72.
(41)Jean Francois-Poncet and Bernard Barbier, 1992: Les Consequences pour l'Economie Francaise du Marche Interieur Europeen (Paris: Economica, 1989).
(42)Andrew Shonfield, British Economic Policy since the War (London: Penguin, 1958); Susan Strange, Sterling and British Policy (London: Oxford University Press, 1971); and Stephen Blank, "Britain: The Politics of Foreign Economic Policy, the Domestic Economy, and the Problem of Pluralistic Stagnation," in Peter J. Katzenstein, ed., Between Power and Plenty (Madison, Wis.: University of Wisconsin Press, 1978), 107--108.
(43)Andrew Shonfield, Modern Capitalism: The Changing Balance of Public and Private Power (Oxford: Oxford University Press, 1965), 386.
(44)On statist experiments, see Ibid and Jack Hayward, "National Aptitudes for Planning in Britian, France and Italy," Government and Opposition 9 (4) (Autumn 1974): 397--410. On corporatist experiments, see Keith Middlemas, Politics in Industrial Society: The Experience of the British System since 1911 (London: Andre Deutsch, 1979); and J. T. Winkler, "Corporatism," European Journal of Sociology 17 (1) (1976).
(45)Candace Hetzner, "Business and the Conservatives: Ideology, Social Class, and Economic Change," Administration and Society 21 (2) (August 1989): 134--54.
(46)See Andrew Scott, John Peterson, and David Millar, "Subsidiarity: A 'Europe of the Regions' v. the British Constitution?," Journal of Common Market Studies 32 (1) (March 1994).
(47)Mario Monti's remarks and tables from the "Reconstituting Italy: Sources of Pathology and Forces for Reform" Conference, Harvard University, Cambridge, Mass., 4--6 February 1994.
(48)Giuseppe DiPalma, Surviving without Governing: Italian Parties in Parliament (Berkeley, Calif.: University of California Press, 1977); Gianfranco Pasquino, "Unregulated Regulators: Parties and Party Government," in Peter Lange and Marino Regini, eds., State, Market, and Social Regulation: New Perspectives on Italy (Cambridge: Cambridge University Press, 1989); and Bruno Dente and Gloria Regonini, "Politics and Policies in Italy," in Lange and Regini, eds., State, Market, and Social Regulation.
(49)Peter Lange and Marino Regini, "Conclusion," in Lange and Regini, eds., State, Market, and Social Regulation, 254--55.
(50)Sidney Tarrow, Democracy and Disorder: Protest and Politics in Italy, 1965--1975 (Oxford: Oxford Unversity Press, 1988).
(51)Joseph LaPalombara, Democracy, Italian Style (New Haven, Conn.: Yale University Press, 1987).
(52)T. J. Pempel, "Japanese Foreign Economic Policies: The Domestic Bases for International Behavior," in Katzenstein, ed., Between Power and Plenty, 141.
(53)Byung Chul Koh, Japan's Administrative Elite (Berkeley, Calif.: University of California Press, 1989).
(54)See Chalmers Johnson, MITI and the Japanese Miracle (Stanford, Calif.: Stanford University Press, 1982).
(55)Richard Samuels, The Business of the Japanese State: Energy Markets in Comparative and Historical Perspective (Ithaca, N.Y.: Cornell University Press, 1987), x.
(56)See Michio Muramatsu and Ellis Krauss, "The Conservative Policy Line and the Development of Patterned Pluralism," in Yamamura Kozo and Yasuba Yasukichi, eds., The Political Economy of Japan, vol. 1, The Domestic Transformation (Stanford, Calif.: Stanford University Press, 1987).
(57)See T. J. Pempel, "The Unbundling of 'Japan, Inc.': The Changing Dynamics of Japanese Policy Formation," in Kenneth Pyle, ed., The Trade Crisis: How Will Japan Respond? (Seattle, Wash.: University of Washington Press, 1987).
(58)See Paul Krugman, ed., Trade with Japan: Has the Door Opened Wider? (Chicago, Ill.: University of Chicago Press, 1991).
(59)Chalmers Johnson, "MITI, MPT and the Telecom Wars: How Japan Makes Policy for High Technology," in Chalmers Johnson, Laura Tyson, and John Zysman, eds., Politics and Productivity: How Japan's Development Strategy Works (New York: Ballinger, 1989); and I. M. Destler and Hideo Sato, eds., Coping with U.S.-Japanese Economic Conflicts (Lexington, Mass.: Lexington Books, 1982).
(60)Destler, American Trade Politics, 16. For the history, see David A. Lake, Power, Protection, and Free Trade: International Sources of U.S. Commercial Strategy, 1887--1939 (Ithaca, N.Y.: Cornell University Press, 1989). See also Theodore Lowi, "American Business, Public Policy, Case-Studies, and Political Theory," World Politics 16 (4) (July 1964); and Elmer E. Schattschneider, Politics, Pressures and the Tariff (New York: Prentice-Hall, 1935).
(61)For the classic work on foreign trade policy and business influence, see Raymond A. Bauer, Ithiel de Sola Pool, and Lewis Anthony Dexter, American Business and Public Policy: The Politics of Foreign Trade (Chicago, Ill.: Aldine/Atherton, Inc., 1963).
(62)See Destler, American Trade Politics.
(63)Ibid.
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