The political economy of inequality--reformism or socialism?(Inequality and Prosperity: Social Europe vs. Liberal America by Jon

Jonas Pontusson, Inequality and Prosperity: Social Europe vs. Liberal America (Ithaca, NY: Cornell University Press 2005)

JONAS PONTUSSON IS A POLITICAL science professor at Princeton University who in the recent past has been known to critique social democracy, particularly in Sweden, from a socialist perspective. (1) However, the thrust of the book under review here is to provide an empirical and analytical rationale that social democratic regimes (especially those of the Nordic nations) have performed well in economic and social terms in the post-World War II era in comparison with other capitalist nations but especially in comparison with the neo-liberal United States. Indeed, some other forms of social welfare regimes in Western Europe have also done better than has the United States, thus setting up Pontusson's sub-title of "social Europe versus liberal America." It is an examination of what Pontusson refers to as "comparative political economy" with a focus on finding similarities, and particularly differences, among Western industrialized capitalist economies. Pontusson believes that while capitalism inevitably generates inequalities in the distributions of wealth and income, nonetheless, there can be a wide range among them in terms of how adversely the majority of their citizenries are affected. Neo-conservative, neo-liberal, moderate or centrist, welfare-state liberal, and social democratic governments can, and do, make some differences in how unequal economic inequality is.

In his comparative analysis, Pontusson has chosen to focus on economic indicators rather than on political (and social) indicators and analysis. In order to further such a presentation he has developed a typology which is as follows: SMES (social market economies which encompass Germany, Austria, Switzerland, Belgium, the Netherlands, Denmark, Sweden, Norway, and Finland); LMES (liberal market economies which include the United States, Canada, Australia, Ireland, and the United Kingdom); and then certain "outliers" including France, Italy, and Japan. Many of his empirical comparisons utilize these categories but complexities arise when some of the outliers share characteristics with the SMES--and when some of the SMES or the LMES are outliers themselves. Time and space could be spent dealing with these issues but that is not really my main focus here. What is important to note, at this juncture, is how Pontusson's typology is distinct from, but refers to, what has come to be the more conventional classification of Western welfare state regimes. In his 1990 book, Esping-Andersen discussed three "types" of welfare states (really three "clusters" of welfare states) which could be differentiated from one another: the social democratic, the liberal, and the conservative-corporate (2) The first is occupied by the Nordic countries, the second by English-speaking nations with roots in the British Empire, and the third basically all of the rest. (The latter have been further broken down into "Catholic/Rudimentary" and "Achievement-Performance.') Pontusson recognizes his separate path and does attempt to provide an (overly brief) justification. What happens, in my estimation, is that the focus on differences among industrial capitalist nations and their respective social-economic performances (strengths and weaknesses) leads to a drift towards limited economic analysis and away from political and social analyses. Perhaps more importantly, by such a narrowing of focus the similarities among all these nations, which are rooted in the dynamics of the capitalist mode of production, largely get ignored.

Turning to some of these political and social issues for a moment, let me briefly identify the distinctions made among the three types of welfare states. This can best be accomplished with a quote by Julia O'Connor:

The social democratic regime is characterized by universalism in social rights, a strong role for the state, and the integration of social and economic policy, which is reflected in a commitment to full employment. In contrast, in the liberal regime state intervention is clearly subordinate to the market, and there is a strong emphasis on income-and/or means-testing for access to benefits. Where universalism is applied it is universalism with a focus on equal opportunity. The conservative welfare state regime is characterized by the linkage of rights to class and status through a variety of social insurance schemes and the emphasis on the maintenance of the traditional family. The latter is reflected in the public provision of social services only when the family's ability to cope is exhausted. (3)

Social democratic regimes emphasize universal rights of citizenship, the decommodification of social services, the comprehensiveness of social services, and the emphasis on full employment. Citizens accessing such services are seen as having a (human) right to them and not because they are victims to be bailed out of their plight through the kindness of the state or private welfare agencies. What is lost in Pontusson's economistic approach is any reference to the nature of the state in Western democracies, i.e. to theories of the state. In short, does a ruling class rule? What does it do when it rules and how does it go about the process? In that regard, for Pontusson, even the classic Poulantzas-Miliband debate of decades ago is not worthy of addressing. Its relevance is captured in Miliband's following statement:

The question does not ... depend on the personnel of the state, or on the pressure which the capitalist class is able to bring upon it; the nature of the state is here determined by the nature and requirements of the mode of production. There are 'structural constraints' which no government, whatever its complexion, wishes, and promises, can ignore or evade. A capitalist economy has its own 'rationality' to which any government and state must sooner or later submit, and usually sooner. (4)

Pontusson does successfully show that governmental and social promotion of income redistribution and employment protection is quite compatible with economic efficiency, economic growth, and employment. Indeed, where government interference (intervention in an economy's activities) is (allegedly) less, such as in the United States, there is not a better economic performance and certainly not a more advantaged citizenry. In most instances, the more advanced Keynesian welfare states of the SMEs 'perform as well or better than the United States and the LMES. LMES do not "naturally" outperform SMES and there is not an automatic tradeoff between growth and equality. What's more, social democratic regimes often have performed the best and they certainly, at the same time, have demonstrated greater equality in their income distributions and social-economic performances for their citizenry. They have demonstrated the lowest levels of poverty, including child poverty, the greatest parity in female to male income levels, and the highest levels of female politicians in their elected national legislatures. (I might add that recently, Norway has passed legislation that at least 40 percent of the boards of directors of large corporations must be female.)

Pontusson's findings regarding growth and equality, employment and equality, national systems of wage bargaining, and so on are all presented in a very detailed empirical and analytical manner. Pontusson uses correlational data (with control variables) and regression analysis to substantiate his claims considering as many possible alternative explanations as would reasonably be warranted. He never over-reaches his available data. For the less statistically well-versed he also offers graphs which illustrate his findings and what he is analyzing. Such a presentation is to be welcomed and most academics could take a real lesson from him here.

As part of his examination Pontusson addresses what has come to be known as "convergence" which, in the political science sense, refers to declines in social programs in welfare states (particularly in Western Europe) due to the evolution of European Union integration and the increase in globalization. Given these political-economic forces it was hypothesized that the more advanced welfare states would need to cut social programs and undermine other policies to be able to compete globally and/or get more-in-line with other European nations, particularly those in Southern Europe. The process was often described as a "race to the bottom." However, Pontusson has shown that such convergence has not occurred and that social democratic regimes in particular have been able to maintain their status as advanced welfare states. (I would also note that Norway, in particular, has also had the advantage of offshore oil revenues.) That said, Pontusson does note that SMES and LMES have experienced rising wage inequality. (5)

"Convergence" has historically meant something different in the discipline of sociology but that notion has direct relevance here as well. Many sociologists saw their discipline as deeply divided right from its beginnings in the 19th century and have argued that it polarized into the "industrial society" camp and the "capitalist society" camp. The former has argued that regardless of what type of a system a country industrialized under all industrialized economies will come to resemble one another in their main economic, political, and social institutions and operations. In short, industrialization leads to convergence, post-capitalism, mixed economies, and the Keynesian welfare state. The fundamental goals and values of socialism could be achieved within a market economy if the citizenry elected social democrats into government. (6)

The notion of the term "convergence" gets even a bit more messy when we introduce the perspective of socialists into the mix. Socialists, of course, do not accept the view that Western industrialized nations are no longer capitalist, that the modern corporation is no longer under the ownership and control of the capitalist class, and that the state in capitalist society can come under the control of egalitarian social democrats. However different 20th and 21st century capitalism is from its roots in earlier eras it still generates economic, political, and social inequalities as a result of its DNA SO to speak. It follows that Western industrial capitalist economies should exhibit quite similar class structures and inequalities in the distributions of wealth and income. So the notion of "convergence" generates various interpretations. First there are those who bemoan the race-to-the-bottom phenomenon and place the blame on free-trade agreements and globalization. Next there are those who see industrial societies increasingly resembling one another and mostly for the good (mixed economies, the welfare state, relatively moderate politics, an end to ideology, etc.). Finally, there are those who see capitalism as inevitably generating substantial and malignant inequalities reflected in all capitalist nations.

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