The Corporatist Political Economies: From Industrial Corporatism to the Social Investment State in the Knowledge Intensive Service Economy
In this paper, we discuss the role of the state in corporatist economies and its ongoing transformation in a globalizing economy. In these small open economies, the postwar state developed a distinctive supply-side Keynesianism model for growth and employment creation. Based on this model, the state lowered labor cost by coordinating centralized wage bargaining, lowered investment cost through favorable lending policies, and reduced workers’ risk-aversion towards skill training through generous social compensation. Since the 1980s, growing fiscal burden and capital liberalization led to a new supply-side model, focused instead on fiscal encouragements for investment in human capital and R&D. This strategy continues to prove successful for growth (in high tech market niches) and employment (in knowledge-intensive discretionary learning industries). Although the state reconfigured much of its supply-side function during the transition from the postwar to the early 21 century model, the exercise of wage restraint through tripartite bargaining remains a central pillar throughout.