The State and Coordinated Capitalism: Contributions of the Public Sector to Social Solidarity in Postindustrial Societies

Abstract

This article investigates the politics of change in coordinated market econo\mies, and explores why some countries (well known for their highly cooperative arrangements) manage to sustain coordination when adjusting to economic transformation, while others fail. The authors argue that the broad category of “coordinated market economies” subsumes different types of cooperative engagement:macrocorporatutforms of coordination are characterized by national-level institutions for fostering cooperation and feature a strong role for the state, while forms of coordination associated withenterprise cooperationmore typically occur at the level of sector or regional institutions and are often privately controlled. Although these diverse forms of coordination once appeared quite similar and functioned as structural equivalents, they now have radically different capacities for self-adjustment.The role of the state is at the heart of the divergence among European coordinated countries. A large public sector affects the political dynamics behind collective outcomes, through its impact both on the state's construction of its own policy interests and on private actors' goals. Although a large public sector has typically been written off as an inevitable drag on the economy, it can provide state actors with a crucial political tool for shoring up coordination in a postindustrial economy. The authors use the cases of Denmark and Germany to illustrate how uncontroversially coordinated market economies have evolved along two sharply divergent paths in the past two decades and to reflect on broader questions of stability and change in coordinated market economies. The two countries diverge most acutely with respect to the balance of power between state and society; indeed, the Danish state—far from being a constraint on adjustment (a central truism in neoliberal thought)—plays the role of facilitator in economic adjustment, policy change, and continued coordination.