Peter Baldwin's The Politics of Social Solidarity: Class Bases of the European Welfare State 1875-1975 and Fritz Scharpf's Crisis and Choice in European Social Democracy

...The high interest rates mean, in turn, that the terms of trade throughout the world will continue to favor capital, undermining the possibilities for progressive social and economic policies...

...economy, there is little relief abroad...

...Investors will continue to avoid long-term investments in favor of the much higher returns available from speculative investments in asset markets...

...He argues persuasively that the first "universalist, egalitarian, tax-financed" social policies came about in Sweden primarily in response to the interests of farmers in a period when the social democrats had not yet become a major political force...

...he first provides a country-by-country narrative of the efforts to maintain price stability and full employment in the more hostile international economic environment of this period...

...Peter Baldwin's book, The Politics of Social Solidarity: Class Bases of the European Welfare State 1875-1975, represents both the best and the worst of contemporary scholarship...

...His project is to compare social democratic strategies in Austria, Sweden, Germany, and England in the period from the first OPEC oil price increase in 1973 through the mid-1980s...

...Although he is certainly correct to emphasize that the social interpretation of the rise of advanced European welfare states needs to pay more attention to class alliances, political strategies, and the legacies of previous reforms, the reality remains that in several countries, and particularly in Sweden, social democrats did succeed in linking universalist social welfare policies, full-employment policies, and centralized union bargaining to create an advanced welfare state...

...policy continues in its post-1980 direction, European social democrats will be limited to second- and third-best options...

...Moreover, even in periods of recession, when the Federal Reserve cuts short-term interest rates to stimulate the U.S...

...In fact, the argument that he originally published in German in 1987 anticipated the growing crisis of Swedish social democracy...

...The available funds could then be redirected into financial instruments that would be used to finance spending on public infrastructure,the production of affordable housing, improving the education and training of the population, and civilian-oriented research and development...

...Moreover, with these high interest rates, governments had to assure firms higher rates of return on their business activity or they would not bother to invest in productive activities...

...17.95 paper...

...Scharpf's core message is that policy does matter—that government initiatives can reconcile full employment, higher wages, and continued economic growth in a market economy...

...However, he is hardly sanguine about this...

...Here, he pushes well beyond the literature on "corporatism" to capture the specific elements of the Austrian case that helped that country to achieve enough wage restraint year after year so that high levels of private employment could be maintained...

...policy encourages the integration and growth of international financial markets, then long-term interest rates are likely to remain high...

...Cornell University Press, 1991...

...The end of the Cold War should mean the end of the illusion that "free market capitalism" and communism are the only choices for a developed 546 • DISSENT economy...

...His own preference is for policies that maintain full FALL • 1992 • 547 employment and high levels of state spending while allowing real wages to decline...

...both his title and his conclusion leap from the specific policy arena to the broader issue of the social welfare state...

...However, he recognizes that it is not easy, and he is appreciative of many of the ingenious Swedish initiatives that allowed them to balance these goals through much of the post–World War II period...

...For that reason any attempt to maintain or restore full employment in the private sector in the early 1980s had to be paid for by a massive redistribution in favor of capital incomes...

...The experiences of advanced European welfare states show that there are many more possibilities for producing an efficient economy than were ever dreamt of by Ronald Reagan and George Bush...

...Such policies could both restore the health of the U.S...

...In the end, Scharpf 's analysis suggests the irony that the future of European social democracy may be written in Washington...

...Scharpf relies on careful comparison...

...Yet at this historical turning point, European social democracy is in crisis...

...Hence, it is vital to understand more about the origins of the advanced welfare states, their successes and failures...

...But Baldwin claims too much for his fine-grained treatment of old-age provision...

...He emphasizes particularly the importance of the solidaristic wage policy with its centralized wage bargaining, the use of public-sector surpluses to fund private investment, and the active labor-market policy that emphasized retraining of employees...

...What is needed are policies that would shift resources out of speculative investments that promise big capital gains in the short term...

...he is not optimistic that European economic integration will make possible the pursuit of a continent-wide policy of full employment...

...If U.S...

...The nuances of Baldwin's arguments about old-age pensions do not call this achievement into question...

...This could be done by substantially increasing capital gains taxes on assets held less than three or five years...

...303 pp...

...Baldwin offers a meticulous analysis of the development of old-age pension policies in Sweden, Denmark, England, France, and Germany over an entire century...

...CRISIS AND CHOICE IN EUROPEAN SOCIAL DEMOCRACY, by Fritz W. Scharpf, translated by Ruth Crowley and Fred Thompson...

...The advanced European welfare states are the starting point for Fritz Scharpf's analysis in Crisis and Choice in European Social Democracy...

...Long-term rates are remaining stubbornly high, and the weakness of demand in the U.S...

...The turning point for him is the shift toward high interest rates in the United States at the beginning of the Reagan administration...

...49.95 cloth...

...He goes on to show that the political struggles in these countries over the nature of old-age pensions cannot be grasped in simple class terms, but that there are shifting alliances among different social groups...

...His mastery of the literature—including archival sources and parliamentary debates—for five different countries is extraordinary His book is also theoretically ambitious: his goal is to challenge the familiar story that advanced European welfare states with universalistic social programs were put in place by social democratic politicians and their trade union allies against strenuous bourgeois opposition...

...He then analyzes the institutional factors that contributed to success in some countries and failure in others...

...Countries that tried to resist this trend were likely to experience huge capital outflows and forced currency devaluations...

...As capital markets became internationalized and the international level of interest rates was raised, the terms of trade between capital, labor, and government shifted in favor of the capital side...

...On the other hand, a shift in policy in Washington could open the way for a new period of creative social democratic experimentation abroad...

...As his analysis comes up to the present, Scharpf becomes substantially more pessimistic about the practicability of social democratic policies...

...A small dose of social democracy in the United States seems now to be a precondition for large doses of social democracy abroad...

...In this new environment, he argues, the best that social democratic governments can hope to achieve are two out of the three goals of full employment, rising wages, and expanding social services...

...Here again, policies matter, since both Reagan and Thatcher met none of these three goals, and even well-intentioned governments can end up with similarly dismal results...

...As long as U.S...

...In combination with the growing integration of international financial markets, high interest rates forced European countries to pursue tighter monetary policies to keep their own interest rates high...

...economy and lower long-term interest rates internationally...

...further discourages expansionary monetary or fiscal policies abroad...

...he foresaw that the weakening of centralized wage bargaining would make it increasingly difficult for the Swedish Social Democrats to achieve any of their historic goals...

...Scharpf recognizes that the only way out of the current impasse is the elaboration of new international economic arrangements that would insulate Europe from the pressures of the international capital markets and from economic choices made in Washington...

...The only question was who would pay this price and how...