Why, according to Iversen, have the United States and Continental Europe adopted such different approaches to labor markets and social protection?

Résumé du document

Published in 2005, Torben Iversen, tries in his book ?Capitalism, Democracy and Welfare', to build a general explanation on why within a group of countries labeled western type democracies there are such differences regarding economic equality and welfare protection. With an integrated framework and extensive research the author draws two groups of countries which decided to take a different economic and social path to manage their societies. Iversen argues that by the early 1970s, advanced economies had divided into two broad categories: "one with generous social protection, specific skills, and competitive advantages in established product markets, and one with low social protection, general skills, and comparative advantages in new product markets". The first group, labeled as "coordinated market economies" or "social market economies"3, represents Nordic and continental European countries. The second, called "liberal market economies", describes Anglo-Saxon states. The question that interests us today is why these two groups of similar types of democracy adopted different approaches to labor market and social protection.

Extraits

[...] And individuals, firms, and industries, in turn, will invest in developing skill profiles that are consistent with existing social protection regimes. Iversen shows that investments in human capital by both workers and firms permit the development of a systematic explanation of popular preferences for redistributive spending. He argues that after institutions and policies were in place, countries were locked in particular path through a set of interlocking complementarities5. For him, social insurance shapes the incentives workers and firms have for investing in particular types of skills, and skills are critical for competitive advantage. [...]

[...] As part of the New Institutionalist approach, Iversen uses the Varieties of Capitalism conceptualization, which focuses on the complementarity between firm strategies in product markets, systems of industrial relations, and the nature of social protection. Firms may choose to specialize in products that intensively use general skills (the liberal-market model, which is associated with Fordism), industry-specific skills (high-quality niche strategies associated with craftlike workshops), or firm-specific skills (which combine flexibility with craftlike skills). These different product- market strategies are buttressed by labor-market and welfare institutions. [...]

[...] There is a systematic explanation of the role political parties and electoral systems play in committing governments to protect investments in specific skills. Even facing an accelerated trend of deindustrialization of their economies, both groups seem to continue to diverge. One of the key argument of Iversen's analysis is that, instead of globalization leading to convergence, persistent variations in patterns of social protection are systematically driven by a high international division of labor, which allows firms to specialize in different set of production depending on an abundant supply of workers with specific (or general) skills and hence high (low) demand for protection. [...]

[...] We can argue that the choice between Europe and America, or the Atlantic reconciliation, can be best exemplified by Britain and its third way. Both models do have some room to converge. If we distinguish between social democratic policies (public investment in education, labor market policy, wage solidarity etc . ) and social market institutions (strong unions, employer centralization or concentrated ownership of firms) the liberal market economies can to a great degree emulate the former. Bibliography 1 Torben Iversen, Capitalism, Democracy and Welfare (Cambridge: Cambridge University Press, 2005) p Peter Hall and David Soskice, eds., Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford: Oxford University Press, 2001) 3 Jonas Pontusson, Inequality and prosperity: Social Europe Versus Liberal America (Ithaca; Cornell University Press, 2005) 4 Torben Iversen, Capitalism, Democracy and Welfare (Cambridge: Cambridge University Press, 2005) p Ibid p Ibid p Ibid p 164. [...]

[...] Why, according to Iversen, have the United States and Continental Europe adopted such different approaches to labor markets and social protection? Published in 2005, Torben Iversen tries in his book, Capitalism, Democracy and Welfare, to build a general explanation on why within a group of countries labeled western type of democracies there are such differences regarding economic equality and welfare protection. With an integrated framework and extensive research the author draws two groups of countries which decided to take a different economic and social path to manage its societies. [...]