The Political Economy of De-liberalization: A Comparative Study on Austria, Germany and Switzerland, by Anna Fill

Jörg Michael Dostal considers the complex struggles between economic liberalisation and deliberalisation in three European countries

April 4, 2019
Source: iStock

For more than a generation, we have been told that neoliberal capitalism delivers deregulation, privatisation and the step-by-step disappearance of the welfare state.

However, capitalism (or “the market”) is inherently unstable: markets must be embedded in regulatory structures or will tend to self-destruct. This basic argument of Karl Polanyi’s classic work of political economy, The Great Transformation (1944), is updated in Anna Fill’s study of continental European countries. Her comparative analysis of Austria, Germany and Switzerland between 1980 and 2015 suggests that liberalisation policy does not lead to a stable political outcome. Instead, one can observe a mixture of liberalisation and de-liberalisation succeeding each other in a cyclical manner. Each round of liberalisation will produce countervailing pressures on political actors to engage in compensatory policies that allow for parallel or subsequent rounds of de-liberalisation.

The author starts off by discussing competing theories of political economy. Fill generally prefers agency-based accounts over those stressing structural factors. Since political parties and many interest groups must react to public opinion, salient policies concerning health, pensions and social insurance are always highly contested and difficult to retrench. In many cases, affected constituencies will block liberalisation or even succeed in pushing for higher degrees of de-liberalisation. This applies primarily to what the author terms “endogenous” policies: the welfare state, industrial relations and labour market regulation. On the other hand, she also acknowledges “quiet politics” (a term borrowed from Pepper D. Culpepper), by which liberalisation and deregulation have been able to proceed for a long time without much resistance (the financial sector before and after the Great Recession of 2008 comes to mind, as does corporate governance). The question is whether her argument does not overplay the relative continuity of policymaking between the early and later stages of neoliberal capitalism. Can we really assume that increasing Europeanisation in the form of a common currency, globalisation and financial deregulation has left the domestic side of policymaking untouched?

Turning to the three country case studies, Fill’s particular strength is the way in which she combines qualitative and quantitative research methods. Her account is informed by a “Liberalization database” that aims to quantify the relative significance of liberalising and deliberalising policies in a large variety of sectors since the 1980s. By using this source, she is able to provide quantification and graphic descriptions of the impact of (de-)liberalisation in each country and at different times.

She clearly demonstrates that political structures have a major influence on the results of policymaking. Thus, Austria is initially an example of strong neo-corporatism (labour and business are centralised and interact with the main political parties), while Switzerland is an example of liberal corporatism in which business is the dominant actor. The German case is less clear-cut: earlier efforts at concertation between business and labour declined in the 1990s and have so far not recovered. In a nutshell, Austria and Germany experienced more liberalisation and political conflict than Switzerland, in which a consensus-seeking political culture often stops controversial policies from being enacted.

To sum up, the study’s effort at multi-dimensional analysis deserves praise and convincingly argues that we need to keep an open mind about the political opportunities to re-regulate capitalism. It might be worth considering, however, whether the issue of growing labour migration requires a separate analytical category in the “Liberalization database”.

Jörg Michael Dostal is an associate professor in the Graduate School of Public Administration, Seoul National University, Korea.

The Political Economy of De-liberalization: A Comparative Study on Austria, Germany and Switzerland
By Anna Fill
Springer, 176pp, £74.99
ISBN 9783030010652
Published 25 January 2019

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