The Nation-State in Transformation

Edited by Michael Böss
The Nation-State
in Transformation
Economic Globalisation,
Institutional Mediation and
Political Values
The Nation-State in Transformation
The Nation-State
in Transformation
Economic Globalisation, Institutional Mediation
and Political Values
Edited by
Michael Böss
AARHUS UNIVERSITY PRESS
The Nation-State in Transformation
MatchPoints 1
© the authors and Aarhus University Press
Typeset by Narayana Press
Cover design by Jørgen Sparre
ISBN 978 87 7934 207 1
ISSN 1904‑3384
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Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes on contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
List of Tables and Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1. Towards a New Consensus
Michael Böss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PART I HISTORIES AND INSTITUTIONS
2. The Political Economy of Scale and Nation, with Special Reference to Denmark
John L. Campbell and John A. Hall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3. The Historical Dimension of Ireland’s Road to Modernisation and Europeanisation
Brian Girvin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
PART II POLITICAL AND ECONOMIC IMAGINARIES
4. It’s Not the Economy, Stupid – Or is It?
David Marsh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5. The Knowledge Economy as a State Project
Bob Jessop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
6. Globalisation, the Nation-State and the Public Sector
Francis Fukuyama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
PART III STATE, MARKET AND GOVERNANCE
7. Negotiated Governance and Hybridity in Small European Countries:
Ireland and Denmark
Rory O’Donnell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
8. Addicted to Growth:
State, Market and the Difficult Politics of Development in Ireland
Seán Ó Riain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
9. The Competition State: Irish Lessons
Peadar Kirby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
10. Ireland’s Multiple Interface-Periphery Development Model:
Achievements and Limits
Joseph Ruane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
11. Globalisation and Development: Ireland and Denmark
in Comparative Perspective
Georg Sørensen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
PART IV DEMOCRATIC VALUES, SOCIAL COHESION AND BELONGING
12. Responding to Globalisation: Changing the State Strategy from
Infrastructural Power to Authoritarian Liberal Power
Lars Bo Kaspersen og Linda Thorsager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
13. Pragmatic Nationals:
The Character and Roots of Danish Europragmatism
Michael Böss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
14. The Nordic Welfare Model and the Challenge of Globalisation
Bjørn Hvinden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292
15. Social Capital and the Welfare State
Gert Tinggaard Svendsen
Gunnar Lind Haase Svendsen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
16. Between Democracy and Good Governance:
A National-Global Quest
Henrik P. Bang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
17. Social Partnership in Ireland: Diluting or Deepening Democracy?
Chris McInerney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362
18. General Conclusions and Perspectives
Michael Böss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391
Preface
This book is about the significance of the nation-state in an internationalised
economy. Although each contribution has its own purpose and focus, many of the
chapters draw on Denmark and Ireland as empirical cases. Prior to the outbreak
of the international financial and economic crisis in 2008, Denmark and Ireland
were generally seen as two small European states which had adapted successfully
to economic globalisation. As experts point out in this book, they did so on the
basis of each their own strategies and institutions: Denmark as an example of a
‘coordinated market economy’ and Ireland as a ‘liberal market economy’ (cf. Hall
and Soskice 2001).
There is a history behind the book’s comparative approach. After having been
involved in Irish and political studies for many years, I came to the conclusion in
2006 that a comparative study of the economic development of Denmark and Ireland
would offer general insights into the ‘differentiated globalisation’ of nation-states,
i.e. how national institutions mediate external economic pressures (cf. Campbell
2004). Hence, I decided to organise a conference with the purpose of exploring this
theme. The conference was held at Aarhus University in November 2007 under
the title ‘The Knowledge-Based Economy, Identities and the Transforming State’.
Invitations were sent to international academics, but also to policy makers and
civil servants in Denmark and Ireland in order to open up for an unconventional
exchange of ideas and analyses. The conference was to be the first of a series of
international ‘MatchPoints Conferences’ at Aarhus University, and has now resulted
in the publication of the present book.
The book consists of a selection of papers from the conference combined with
a number of solicited manuscripts. During the process of writing and editing, both
Denmark and Ireland were hit by the worldwide financial and economic crisis,
Ireland more so than Denmark. This meant that manuscripts have had to be adjusted, revised or, in a few cases, even completely re-written. However, as editor,
I am thankful that the book did not come out prior to the crisis, of course, since
the crisis has allowed us the opportunity to make a form of status assessment of
what economic globalisation meant prior to the break-down of the ideology and
the largely deregulated financial system which had fuelled it.
In more personal terms, I want to express my thanks to the strong moral and
economic support I have received all along from the Rector of Aarhus University,
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Dr. Lauritz B. Holm-Nielsen, the Dean of the Faculty of Humanities, Dr. Bodil Due,
and the then Chair of the Department of Languages, Literature and Culture, Dr.
Hans Lauge Hansen. I owe further debts to colleagues at Aarhus University who
advised me in planning the conference in 2007, especially Dr. Kurt Petersen of the
Aarhus School of Business and Knud Warming of the Rector’s Office. I also want
to thank the team of bright and service-minded Ph.D. students who assisted in
facilitating the conference: Susan Yi Sencindiver, Marie Lauritzen, Rebecca Parbo,
Sophia Frovin and Nikolaj Gandrup Buckhorst.
Special thanks also to the sponsors and partners of the conference, first of all,
of course, to Ambassador Joe Hayes and his staff in Copenhagen, but also to the
Irish Departments of Foreign Affairs and Enterprise, Trade and Employment; to
Enterprise Ireland, Forfás, IBEC, Trinity College Dublin, the Political Studies Association of Ireland, Erhvervs- og Byggestyrelsen, Udenrigsministeriet, Ministeriet
for Videnskab, Teknologi og Udvikling, Aarhus Kommune, Region Midtjylland,
VisitDenmark, Væksthus Midtjylland, Danske Bank, Dansk Erhverv, Dansk Industri,
Arbejderbevægelsens Erhvervsråd, Dansk Tekstil og Beklædning and Morgenavisen
Jyllands-Posten. For the financial support of this book I want to thank the Research
Foundation of Aarhus University. For managing the conference and for invaluable
assistance in the editing of the book, I am deeply indebted to my excellent assistant, Eva Mejnertz, and for helpful comments and suggestions regarding my own
contribution I am grateful to Dr. Mette Kjær.
Michael Böss
Aarhus
February 2010
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Notes on contributors
Henrik Bang is Associate Professor in Comparative Politics and Coordinator of the
Comparative Politics Group in the Department of Political Science at University of
Copenhagen. His primary research interests are governance and political participation. Among his recent works are: with Anders Esmark (eds.) New Publics with/out
Democracy (2007, Frederiksberg: Samfundslitteratur Press/Nordicom), ‘Political
community: The blind spot of modern democratic decision-making’ (2009 British
Politics 4: 100‑116) and ‘“Yes we can”: identity politics and project politics for a
late modern world’. (2009 Urban Research & Practice, vol. 2, nr. 2: 117‑138).
Michael Böss is Associate Professor of History and Director of the Centre for Irish
Studies and Canadian Studies Centre at Aarhus University. His primary current
research interests are political theory, migration history and Irish history. He takes
a special interest in the theory and history of the nation-state, nationalism and
nationality. He has published widely on Irish history and culture. His most recent
book is Forsvar for nationen: Nationalstaten under globaliseringen (In Defence of the
Nation: The Nation-State under Globalisation) (2006). He is a media commentator
on Irish and Canadian politics, culture and social issues and writes regularly for
the Berlingske Tidende on current affairs.
John L. Campbell holds the Class of 1925 Professorship in the Department of Sociology at Dartmouth College. He is also Professor of Political Economy at the International Center for Business and Politics, Copenhagen Business School. His recent
books include Institutional Change and Globalization (Princeton University Press,
2004), and National Identity and the Varieties of Capitalism: The Danish Experience
(McGill-Queen’s University Press, 2006).
Francis Fukuyama is Bernard Schwartz Professor of International Political Economy
at the Paul H. Nitze School of Advanced International Studies, Johns Hopkins
University, and Director of its International Development Program. He has been
a Visiting Professor at Aarhus University since 2009. He is a cofounder of the
magazine and website, The American Interest, a new and independent voice devoted
to the broad theme of “America in the world.” He is chair of its editorial board.
Among his recent publications are America at the Crossroads: Democracy, Power,
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and the Neoconservative Legacy (2006), Nation-Building: Beyond Afghanistan and Iraq
(2006) and State-Building: Governance and World Order in the 21st Century (2004).
Brian Girvin is Professor of Comparative Politics at University of Glasgow. His main
intellectual interests are concerned with nationalism, religion and conservatism
and on how these might be studied in a comparative context in the contemporary
world. He has a special interest in Irish politics, both north and south, and he
has written extensively on them. His most recent book is The Emergency: Neutral
Ireland 1939‑45 (2004) deals with Ireland’s relations with the democratic powers
during the Second world War. He is completing De Valera’s Legacy and the Birth of
the Celtic Tiger (2010).
John A. Hall is the James McGill Professor of Comparative Historical Sociology at
McGill University in Montreal. His most recent book is an intellectual biography
of Ernest Gellner (Verso, 2010).
Bjørn Hvinden is Professor and Head of Research at the Norwegian Social Research
Institute (NOVA), Oslo, and Leader, Nordic Centre of Excellence in Welfare Research
‘Reassessing the Nordic Welfare Model’ (funded by NordForsk 2007‑11). He was
Professor of sociology at the Norwegian University of Science and Technology
(NTNU) 1995‑2007. His research interests include comparative welfare studies,
Europeanization, international human rights as instruments of social regulation,
food safety and risk regulation, disability and accessibility to information and communication technologies, ethnicity and international migration, movements and
organizations of poor and marginalized citizens, and participatory governance. He
has directed several transnational projects and networks, and has recently published
Citizenship in Nordic Welfare States (together with Håkan Johansson, Routledge
2007).
Bob Jessop is Founding Director of the Institute for Advanced Studies, Distinguished
Professor of Sociology, and Co-Director of the Cultural Political Economy Research
Centre at Lancaster University. His interests include state theory, Marxist and institutional political economy, governance, the political economy of post-war Britain,
changes in the state and welfare regimes, entrepreneurial cities, the knowledgebased economy, and the (il)logic of globalisation. His most recent book is State
Power: A Strategic-Relational Approach (2008).
Lars Bo Kaspersen is Professor of Political Sociology and Comparative Politics at
Copenhagen Business School and director of the International Center for Business
and Politics. He has published several books and articles on social theory, state
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formation processes and globalization issues. His most recent publications include
articles in Journal of Power (2009), Sociological Review, (2008) and in Archives Européennes de Sociologie/European Journal of Sociology (2008) and the book Danmark
i verden (Denmark in the World) (2008).
Peadar Kirby is Professor of International Politics and Public Policy and director
of the Institute for the Study of Knowledge in Society (ISKS) at the University of
Limerick. His latest books are Power, Dissent and Democracy: Civil Society and the
State in Ireland, co-edited with Deiric Ó Broin (A&A Farmer, 2009) and Contesting
the State: Lessons from the Irish Case, co-edited with Maura Adshead and Michelle
Millar (Manchester University Press, 2008). Forthcoming in 2009 is Transforming
Ireland: Challenges, Critiques and Resources, co-edited with Debbie Ging and Michael
Cronin (Manchester University Press). He has published extensively on international
development and globalisation, especially in Ireland and Latin America. He holds
a Ph.D. from the London School of Economics.
David Marsh is Director of the Research School of Social Sciences at the Australian National University. Previously he was Professor of Political Sociology at the
University of Birmingham, UK. He is the author or editor of 11 books and over
70 articles and chapters, broadly in the areas of Political Sociology, International
Political Economy, Comparative Politics and British Politics.
Chris McInerney has a Ph.D. from the Department of Politics and Public Administration at the University of Limerick, on the themes of democracy, governance and
social inclusion. Prior to this he worked for almost 18 years in a variety of governance contexts, both within civil society in Ireland and internationally. His principal
research interests focus on exploring the nexus of governance and social inclusion
concepts and on the development of institutionalist analysis and approaches to
policy making and implementation in the field of social inclusion. He is currently
working as a programme specialist on rural and community development at the
Tipperary Institute.
Rory O’Donnell is Director of the National Economic and Social Council of Ireland
(NESC) and Chief Officer of the National Economic and Social Development Office
(NESDO). In his work as Economist and later Director at NESC he has prepared the
analysis that underpins Ireland’s social partnership approach to economic and social
policy and has written extensively on partnership. He was Jean Monet Professor
of Business at the Smurfit Business School, University College Dublin; where he
edited a review of Ireland’s first 25 years in the EU, Europe – The Irish Experience
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(Institute of European Affairs, 2000) and co-authored Europe’s Experimental Union:
Rethinking Integration (Routledge, 2000).
Seán Ó Riain is Professor of Sociology at the National University of Ireland, Maynooth and Visiting Scholar at the Buffett Centre for International and Comparative
Studies at Northwestern University. His research examines the politics of the information economy through studies of developmental network states, of ‘time space
intensification’ in high tech regions, of the growth of technology driven commodity
chains, and of the politics of changing class relations in high tech workplaces. He
is the author of The Politics of High Tech Growth: Developmental Network States in
the Global Economy (Cambridge, 2004). Current projects include studies of the dynamics and politics of the Silicon Valley-Ireland production system (with C.Benner)
and a life history study of social change in twentieth century Ireland (with J. Gray
and A.O’Carroll).
Joseph Ruane is Associate Professor of Sociology at University College Cork. He is
interested in the intersection between long-term historical processes and current
conjunctures and their implications for economic development and ethno-religious
conflict. Publications include The Dynamics of Conflict in Northern Ireland (co-author,
1996), Europe’s Old States in the New World Order: Managing the Transition in Britain, France and Spain (co-editor, 2004) and ‘Majority-minority conflicts and their
resolution: Protestant minorities in France and in Ireland’, Nationalism and Ethnic
Politics, http://www.informaworld.com/smpp/title~content=t713636289~db=al
l~tab=issueslist~branches=12#v1212, 2006, 509‑532.
Gert Tinggaard Svendsen is a Professor of Public Policy, Department of Political
Science, University of Aarhus, Denmark, since 2004. PhD (Econ.) in 1996 and
MSc (Pol.Sci.) in 1991. Since 2002, director of the Danish Social Capital Project
(SoCap). Visiting scholar at the University of Maryland, Department of Economics
(1994‑95). Supervisors: Professor Mancur Olson and Professor Wallace E. Oates.
Member of the steering committee on Social Capital in the World Bank (1997‑99).
Author of eight books and more than 50 refereed articles in international journals.
Among his current research interests are environmental regulation, lobbyism in the
European Union/United States and social capital. Svendsen is a former member
of the Editorial Board of Public Choice (2004‑09) and former Chair of the Danish
Public Choice Association (2004‑06). He is a regular contributor in the public debate
about politics and the welfare state.
Gunnar Lind Haase Svendsen is a Professor at the Danish Institute of Rural Research,
University of Southern Denmark. His research interests include rural sociology,
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social capital theory, discourse theory, historical institutionalism, socio-spatial
planning and civic movements, especially cooperative movements. He has published
papers in international journals within sociology, history and economics, as well
as the book The Creation and Destruction of Social Capital: Entrepreneurship, Cooperative Movements and Institutions, Edward Elgar, 2004 (with Gert T. Svendsen).
Georg Sørensen is Professor of International Politics and Economics at the Department of Political Science, Aarhus University. His major current interest is liberal
world order and international relations theory. Recent books include Introduction
to International Relations: Theories and Approaches (w/Robert Jackson), 4th ed., OUP
2010, and Democracy and Democratization. Processes and Prospects in a Changing
World, 3rd. ed., Westview 2008.
Linda Thorsager, sociologist (BA & MA University of Copenhagen), former Research
assistant at the Danish National Institute of Social Research (2005‑2009) now
Director of Roskilde Voluntary Centre. Her recent publications include, with Eva
Børjesson, Ivan Christensen and Vibeke Pihl, Metoder i socialt arbejde. Begreber og
problematikker (Methods in Social Work, Concepts and Problenatics) (2007) and
“Afpolitisering og autoritære tendenser i Venstres politik” (Depoliticisation and
Authoritarian Tendencies in the Politics of the Danish Liberal Party) in Kritisk
Debat (2006).
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List of Tables and Figures
The Political Economy of Scale and Nation, with Special Reference to Denmark
Figure 1. Country Type and Human Development Index Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
The Historical Dimension of Ireland’s Road to Modernisation and Europeanisation
Table 1. Per capital income in some European states, 1938, 1947 and 1948. . . . . . . . . . . . . . . . . . . . . . . . Table 2. Real GDP Per Capita Calculated Using Purchasing Power Parities . . . . . . . . . . . . . . . . . . . . . . . . . . 70
76
It’s Not the Economy, Stupid – Or is It?
Table 1. Globalisation Rankings 20O7 (Kearney. Foreign Policy, Globalisation Indexj . . . . . . . . . . . . . . . . . Table 2. Geographical Distribution of Ireland’s Services Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 3. Geography of Ireland’s FDI Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 4. Foreign Direct Investment Denmark, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
95
95
95
The Knowledge Economy as a State Project
Figure 1. The Knowledge- and Production-Based Canon of Economic Theory . . . . . . . . . . . . . . . . . . . . . . . . 114
Table 1. What Follows Fordism? Some Alternative Visions following the Crisis in/of Fordism . . . . . . . . . . 117
Figure 2. Danish Strategy for the Knowledge Economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Globalisation, the Nation-State and the Public Sector
Figure 1. The Scope of State Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2. Stateness and Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 3. Reform Paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 4. Public Sector Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 5. The Flat Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 6. Networks: Informal Alliances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
132
134
138
142
143
Addicted to Growth: State, Market and the Difficult Politics of Development in Ireland
Table 1. Public Finances in Ireland, 1987‑2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 2. Venture Capital Investment in Ireland, 2000‑05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 3. General R&D: Sources of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 4. Enterprise Ireland, Support to Industry, selected major categories, 1999‑2007 . . . . . . . . . . . . . . Table 5. Financial Institution Lending (Resident non-Government) 1998‑2007: Selected Sectors . . . . . Table 6. Gross Fixed Capital Formation as a % of GDP, 1980‑2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 7. The Changing Structure of Taxation, 2001‑2006 (Net Receipts) . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 8. Growth and employment in small open European Economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 9. Poverty Rates and Reduction in Small Open European Economies . . . . . . . . . . . . . . . . . . . . . . . . . . Table 10. Innovation Inputs in Small Open European Economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
172
173
174
181
182
183
187
187
188
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Pragmatic Nationals: The Character and Roots of Danish Europragmatism
Figure 1. Typology of party positions on Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
The Nordic Welfare Model and the Challenge of Globalisation
Table 1. Expenditure for social protection, by type of spending, country and group of country.
Percent of Gross Domestic Product (GDP) 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 1. The proportion of the population living in relative poverty, by level of public and publicly
mandated expenditure on social protection. Fifteen OECD countries 2005. . . . . . . . . . . . . . . . . . Figure 2. Inequality in the distribution of disposable incomes, by level of public and publicly
mandated expenditure on social protection. Fifteen OECD countries around 2005. . . . . . . . . . . Figure 3. Inequality in the distribution of disposable incomes, by the dispersion of earnings. Thirteen
OECD countries around 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 4. Inequality in the distribution of disposable incomes 2004, by the inequality in the
distribution of disposable incomes 1985. Twelve OECD countries. . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 5. The ratio between the employment rates of men born in Africa, Asia and Latin America
and of all men aged 15-64 years, by earnings dispersion of host countries. Fifteen OECD
countries around 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 6. The ratio between the employment rates of women bom in Africa, Asia and Latin America
and of all women aged 15-64, by the earnings dispersion of host countries. Fifteen OECD
countries around 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 7. The proportion of the working-age population in receipt of incapacity benefits, by earnings
dispersion. Eleven OECD countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social Capital and the Welfare State
Figure 1. How is social capital created? Four models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 1. Social Trust in 86 Countries (rounded figures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 2. Institutional transformations in Denmark, 1800‑1900 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Figure 3. Cooperative dairies, Denmark, 1882‑90 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
300
301
302
303
304
305
306
318
322
326
333
Between Democracy and Good Governance: A National-Global Quest
Table 1. The double structure of late modern society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354
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1
Towards a
New Consensus
Michael Böss
A surprise winner
When the World Economic Forum (WEF) issued its annual ranking of the world’s
most competitive economies in November 2007, Time Magazine published an article
with a photo of a Lego employee in blue work clothes standing at his work bench.
The reason was that in 2007, Denmark was placed as number three on the list, only
surpassed by the United States and Switzerland, two low-tax countries. Following
closely at Denmark’s heels were Sweden and Finland, two other Nordic countries
known for their high income tax rates and generous welfare systems. The article
told the story of how Danes had learned to ‘love’ globalisation:
In most of the developed world, globalization is a deeply fraught topic. Not in Denmark.
There, 76% of respondents in a recent poll said globalization was a good thing. And why
shouldn’t they? Living standards in Denmark are among the highest in the world. Per capita
income trails that of the U.S. but is distributed far more equally. Unemployment is just
3.1%. The country exports more goods and services than it imports. And while only two
Danish corporations (shipper A.P. Moller-Maersk and the Danske Bank) are big enough to
make the FORTUNE Global 500 list, Denmark has more than its share of smallish, nimble,
outward-looking firms well positioned in growth areas ranging from alternative energy to
health care to high-end furniture (Time 2007).
The article reported how key politicians like the Prime Minister, Anders Fogh
Rasmussen, and his Minister for Employment, Economy and Trade, Claus Hjort
Frederiksen, who as late as 1993 both advocated neo liberal policies, had later
revised their opinion of what it took to adapt to the challenges of globalisation. As
the latter said, ‘I have to admit now, 15 to 20 years later, that the model we have
found here – free education, free health care, a good financial situation if you lose
your job, together with a flexible labor market and the size of Danish companies –
somehow has struck something that is the answer to the challenges of globalization.’
To this, Hans Skov Christensen, Director General of the Confederation of Danish
Industries, added the argument that the size and homogeneity of Danish society
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were also crucial to economic success: ‘We’ve been one small nation for 1,000 years.
[…] We’re basically a clan,’ he said. Furthermore, ‘Danishness’ – i.e. national identity and the values associated with it – played a key role: Informality, disputation,
disrespect for authority and a high degree of individual freedom were described as
core Danish values. The article concluded that the fact that Denmark had combined
‘a dynamic economy with a tax burden almost double that of the U.S.’ gave the lie
to the neo liberal agenda: There was more than one way to be competitive, it had
turned out. Columbia University’s Xavier Sala-i-Martin, the economist responsible
for defining the 113 different criteria on which the WEF index is based, was quoted
in Time as saying that the ongoing debate about the significance of more or less
government and about higher or lower taxes is actually beside the point. It is what a
government does to meet the challenges of globalisation which should be discussed,
not the size of the public sector.
In November 2009, two years after Time published its article, the financial
crisis had hit the world economy and sent a number of European economies
into seemingly free fall after years of spectacular growth rates. Although Danish
unemployment figures were far below (4.1%) those of Spain, the Baltic states
and Ireland, the report of the Danish Economic Council issued in the autumn of
2009 made no bones about a number of structural weaknesses in the economy,
which had been neglected during the boom years: In comparative terms the Danish
economy suffered from low productivity and growth and was in need of reforms
of the labour market and the welfare system if long-term fiscal sustainability was
to be ensured. Hence the council recommended a new ‘sustainability plan’, which
should include
concrete measures with regard to labour market reforms and measures to postpone retirement age. A new plan should also include an annulment of the tax freeze on property and
other nominal fixed non-inflation-adjusted taxes, which has been in place since 2001.
Such measures will improve fiscal sustainability. Measures to fulfil the governments objectives regarding education and GHG emissions should also be included in the new plan. The
necessary economic reforms should be carried through the parliament as soon as possible,
but the reforms can be implemented later and over several years when economic growth
has recovered (Economic Council 2009).
The council also recommended a public investment plan. Public investments were
regarded as an important part of both a short-term stabilisation policy and a longterm structural policy, since investments in infrastructure, for example, would
contribute to higher productivity. Finally, the chairmanship of the council called
for a reduction in the four-year unemployment benefit period, as already suggested
by the government’s Labour Market Commission, and for active labour-market
policy measures in the form of educational programmes targeted at low-skilled
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workers, who would have increasing difficulties in getting and maintaining jobs
on the labour market.
Prior to the publication of the report of the Economic Council, the government,
arguing that it intended to follow up on ‘the course reforms of recent years and
take an active approach to the challenges facing Denmark’, had set up a special
commission – a Growth Forum – consisting, among others, of social scientists,
representatives of employers organisations and the trade unions. The brief of the
commission was to offer the government advice on issues such as: how to increase
competitiveness through increased productivity; how to achieve a stable macroeconomy and healthy public finances in order to protect the welfare for a future
characterised by a new age profile in the Danish population; how to secure a highly
skilled and educated work force and high employment; and how to achieve economic
growth without dependency on fossil fuels (Statsministeriet 2009).
The strategy adopted by the Danish government in response to the crisis reflected a historical pattern: How Denmark has developed its own special variety of
capitalism; a model which is neither traditionally social democratic nor liberal in
the Anglo-Saxon sense, but characterised by processes of coordination and negotiation involving the state, its social partners and other actors and institutions of
civil society in the common project of securing the continuous adjustment of the
economy to the international market. To the centre-right Danish government of
Liberals and Conservatives, which took office in 2001, successful adaptation to
globalisation through the enhancement of economic competitiveness was not meant
to jeopardise social cohesion and the social security of citizens. In a contribution
to the public debate on the challenges of globalisation, the government concluded
in 2005:
It is the aim of the government that Denmark will continue to be found among the richest
countries in the world. And that Denmark remains a cohesive and secure society without
great inequalities. […] Denmark is known for its combination of a flexible labour market
and welfare programmes which provide a secure social safety net. This is a crucial source of
strength for our society in the global economy (Regeringen 2005: 40‑41).
The government thus reaffirmed the 20th-century Danish tradition of accommoda­
ting market policies within corporatist institutions. In doing so, it was also in line
with a growing perception internationally that neoliberal economic policies had had
their day, and that the financial and economic crisis had created a new consensus
on the crucial role of the state in the global economy.
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