Creating Jobs, Fighting Inequality: Who's Best

Abstract

achieving relatively high levels of material equality? Do the liberal market economies excel in economic efficiency while producing substantial income inequalities? Or, alternatively, is the classic equity-efficiency tradeoff muted by institutions and policies of one or both varieties of capitalism, and, if so, does this suggest important crossnational lessons for the policymakers and citizens of democratic market economies? These are the general questions that motivate Jonas Pontusson's Inequality and Prosperity-an impressive and useful new survey of comparative political economy. Indeed, it is important to mention at the outset that even though Inequality and Prosperity contains some original analyses of recently available data, the book is selfconsciously a survey and synthesis of what we know about the answers to these questions. New empirical analysis is limited to tabular presentations of data, bivariate scatterplots, and simple linear regression models. More precisely, Inequality and Prosperity primarily provides an insightful integration of theories of varieties of capitalism (Hall and Soskice 2001), democratic corporatism (Katzenstein 1985), and welfare state regimes (Esping-Andersen 1990) as well as surveys of some of the best recent research on the focal questions and hypotheses from these theoretical streams. Pontusson's central analytic framework is built around the notion that, for the most part, contemporary capitalist democracies bifurcate into social market and liberal market economies. Social market economies are characterized by high levels of cooperation among private firms in order to achieve collective goods (for example, skills formation, stable labor-management and finance-producer relations, research and development, and technology transfer). They are also characterized by high levels of centralization or coordination of collective wage bargaining among densely organized and centralized labor and employers' associations. In addition, social market economies have welfare states that combine generous social provisions with extensive employment protections. As a group, Pontusson further divides social market economies into Nordic and continental variants (Denmark, Finland, Norway, and Sweden, on the one hand, Austria, Belgium, France, Germany, and the Netherlands, on the other). The principal distinction here is that Nordic social market economies have relatively strong trade union movements and universalistic welfare states that combine generous transfers with publically provided social services for families, the elderly, and the unemployed. Although large in terms of shares of gross domestic product, continental social market economy welfare states are corporatist conservative, or dominated by generous occupationally based income transfer programs. Liberal market economies are, by contrast, characterized by low levels of