The global financial crisis and ensuing weak growth have increased interest in macroeconomic issues within comparative political economy. CPE, particularly the dominant Varieties of Capitalism approach, has based its analyses on mainstream economics, which limits analysis of the relation between distribution and growth and neglects the role finance plays in modern economies. It overstates the stability of the capitalist growth process and understates the potential effectiveness of government interventions. Baccaro and Pontusson have suggested a post-Keynesian theory of distribution and growth (...) as an alternative. This article generalizes their point. PK theory highlights the instability of the growth process and lends itself to an analysis of income distribution and power relations. The article identifies the analysis of financialization and financial cycles, the understanding of neoliberal growth models, and the political economy of central banks as areas where PK economics provides specific insights for CPE. It also highlights that these arguments have important implications for government policy in an era of secular stagnation with ongoing social, distributional, and economic crises. (shrink)

This introduction summarizes the main contributions of this special issue titled “Quiet Politics and the Power of Business: New Perspectives in an Era of Noisy Politics.” The four articles in the issue use and extend Culpepper’s influential concept of “quiet politics” according to which business is able to shape policies and regulations when issues are of low salience to the public and politicians. The issue takes Culpepper’s analysis further in ways that respond to the rise of noisy politics over the (...) last few years, often associated with new strident forms of left- and right-wing populism. Three contributions are made. First, the articles show that salience is not an inherent property of a policy area but is socially constructed. Second, a variety of strategies are described that business uses when trying to keep politics quiet. Third, strategies are affected by the structure of business, which varies across types of capitalism. Future research can use these insights to extend our understanding of the limits, strategies, and dynamics of quiet politics across political economies. (shrink)

International political economy identifies declining nominal interest rates, securitization, and financial liberalization as drivers of rising housing prices. Despite witnessing these common credit shocks, however, developed economies experienced divergent trends in housing inflation since the 1980s. We offer a comparative political economy explanation of variation in house prices, arguing that by restraining household incomes, wage-setting institutions can blunt financial liberalization’s inflationary impact on housing markets. Employing quantitative analysis and a comparative study of Ireland and the Netherlands, we uncover two findings. (...) First, countries where political coalitions in the export sector held veto powers over those in the nontraded sector in national wage setting realized lower housing inflation. Second, the impact of sectoral coalitions on housing prices in OECD countries is similar to that of financial variables. Our results suggest that the organization of labor politics continues to play an important role in mitigating the destabilizing effects of global finance on developed economies. (shrink)

How and why did comparative political economy lose sight of the sources of growing macroeconomic and political instability, a problem that encompassed a growing financial bubble and then a crash in the housing market, a period of sluggish growth that plausibly constitutes secular stagnation, and a crisis of political legitimacy manifesting itself in the rise of antisystem “populist” parties? A gradual shift in CPE’s research agenda from macroeconomic to microeconomic concerns, and from demand-side to supply-side explanations, diminished its ability to (...) analyze adequately the central economic and political problems of the past twenty years. This article traces CPE’s evolution through successive “supermodels” that constituted its core research foci. To understand the current crisis, CPE needs to revisit and update its original roots in Keynes, macroeconomics, and the demand side. This shift is already happening at the margins, as CPE scholars struggle to understand the current crisis. (shrink)

How do we theorize and analyze the structural power of finance when global capitalism itself undergoes constant and profound structural transformation? The literature continues to assume that the source of financial structural power is its unique ability to provide credit to the real economy, playing a crucial role in meeting the investment imperative. But recent research documents that most financial market activities no longer facilitate productive investment and can even be a drag on economic development. If the financial sector's primary (...) role is not to support productive investments, then on what basis does it continue to hold structural power? The contributions to this special issue engage with how decades of financialization have transformed the basis of structural power toward alternative functions that have gone unnoticed in the existing literature. These include household and real estate lending that fuels consumption-led growth, concentration and expansion of financial institutions as tools of geo-economic strategy, financing current account deficits that facilitate global imbalances, and wealth preservation that bolsters inequality. (shrink)

Germany is widely seen as a “dualized” economy driven by a powerful and stable “insider” coalition in the manufacturing sectors. In this article, that picture is challenged. An examination of the political economy of the outsider-friendly 2014 Minimum Wage Act, using public opinion data, document analysis, and qualitative interviews, shows how earlier dualizing reforms led to unintended negative feedback effects: First, public opinion reacted negatively to increasing inequality in the years preceding the introduction of the minimum wage. Second, a remarkable (...) shift is found among trade unions toward support of a minimum wage, even in manufacturing. Although the threat of low-wage competition and flexibilization did play a role, trade union solidarity was at least as important. Those endogenous dynamics came together in a self-undermining process unfolding over a relatively short period of time. Potential alternative explanations are explored, including classical partisan politics, party competition, and employer preferences. (shrink)

Pepper Culpepper’s seminal Quiet Politics and Business Power has revitalized the study of when business elites can shape policies away from public scrutiny. This article takes the concept of quiet politics to a new, and surprising, set of actors: trade union leaders. Focusing on the case of Denmark, it argues that quiet politics functions through political elite networks and that this way of doing politics favors a particular kind of corporatist coordination between the state, capital, and labor. Rather than showing (...) macrocorporatist coordination between the two classes and governments, it identifies representatives of business and labor that hold privileged positions in political elite networks. Representatives of segments are found in industries important for the Danish economy, specifically, the exporting manufacturing sector. Being at the core of the network requires not only a key position in the Danish economy but also an understanding that politics is often done best without politicians and voters. The analysis shows that trade union and business association representatives work closely on a wide number of issues through quiet politics, using their extensive network to broker and foster agreement between different stakeholders. (shrink)