Flexible Adjustment in the Age of Financialisation: The Case of Norway

Abstract

Norway's “Government Pension Fund” – Global (GPF-G) is large (around $400b), portfolio oriented and transparent. It tries to be ethical and has been mooted as a role model for other SWFs. The way the GPF-G is set up undergirds the US vision of a financialised world economy and it even indirectly supports US warfare in Iraq by buying treasury bills. It is also a leader in ethical investments – more than 20 private funds piggyback any divestment decision the GPF-G makes. Understanding the international implications of the GPF-G does not, however, amount to an explanation of why this vehicle was created. This article puts forward the argument that if we want to understand why and how these diverse behaviours cohere into a larger strategic whole, the fund must be interpreted as the continuation and technocratisation of a long established corporatist tradition of foreign economic policy that Peter Katzenstein more than 25 years ago labelled a strategy of flexible adjustment and domestic compensation.