Small states, big success: party politics and governing the economy in Denmark and The Netherlands from 1973 to 2000

Abstract

In recent years, a wave of publications within comparative political economy has focused on patterns of adjustments of the political economies of advanced industrial countries to such recent conditions as globalization and the effects of these adjustments with regard to macroeconomic outcomes. This article argues that a way to enhance the understanding of adjustment patterns and consequently macroeconomic outcomes is to focus on party politics and its consequences for the emergence of broad political agreement around a coherent socioeconomic policy, including controversial reforms of the welfare state and the labor market. Party politics has two aspects: namely, the strategies of political parties 'owning' the welfare state issue, i.e. Social Democratic parties and in some countries Christian Democratic parties, and the polarization of the party system, especially the strategies of extreme wing parties. The relevance of the argument is shown by analyzing socioeconomic policy making and macroeconomic outcomes in Denmark and The Netherlands since 1973.