Varieties of Capitalism and Social Inequality, Fall 2012, p.

Varieties of Capitalism and Social Inequality Harvard University: Government 2176 MIT 17.154 Professors Kathleen Thelen (MIT) and Peter A. Hall (Harvard)
Meets Wednesdays 10 am to 12 pm (Harvard CGIS K-401; MIT E51-390) Kathleen Thelen kthelen@mit.edu Assistant: Kate Searle (ksearle@mit.edu), E53-456 (office hours by appointment)

Fall 2012

Peter A. Hall phall@fas.harvard.edu Center for European Studies 27 Kirkland Street, 495-4303 ex. 229

The course examines variation in the institutions of the political economy across the advanced capitalist economies. What institutional arrangements distinguish more liberal from more coordinated models of capitalism, and liberal from conservative or social democratic welfare regimes? We will examine the frameworks that scholars have devised to capture these differences and explore the historical origins of this diversity. We will explore efforts to explain cross-national variation and changes in income inequality over time. On the basis of insights from history and the analysis of contemporary politics, we will ask what globalization, the rise of the service sector and global recession imply for the survival of the institutions supporting egalitarian economic outcomes. Requirements and Grading: All participants will be expected to: 1) take an active part in class discussions; 2) prepare response papers on the required readings for three of the weeks (2-3 pages each); and 3) write a short literature review (15 pp) or research paper (35 pp) on a topic agreed in advance with the instructors. Weekly memos and class participation will count together for 50 percent of the final grade. The literature review or research paper will count for the remaining 50 percent of the final grade. Weekly response papers: These are intended to prepare the ground for discussions by asking participants to set out their initial responses to the readings in written form. Memos should not summarize the readings, but rather take up specific arguments, compare the positions of different authors, raise questions of evidence, or draw attention to particular strengths and weaknesses in the texts. We will share these memos through email, using the class list. In order for everyone to have time to read over the comments of others, these will be due on email by 5 p.m. on the day before the class meets. You will find all readings either on Stellar, on the Harvard course website, or on reserve in Dewey and Lamont library. Along with many articles, portions of the following books will be used: Esping-Anderson, Gosta. 1990. Three Worlds of Welfare Capitalism. Princeton: Princeton University Press. Gosta Esping-Andersen, 1999. Social Foundations of Post-Industrial Economies. Oxford University Press Peter A. Hall and David Soskice. 2001. Varieties of Capitalism. Oxford University Press

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Peter Katzenstein. 1985. Small States in World Markets. Ithaca: Cornell University Press Philip Manow and Kees van Kersbergen. 2009. Religion, Class Coalitions and Welfare States. Cambridge University Press. Paul Pierson. 2001. The New Politics of the Welfare State. Oxford University Press

Course Outline
1. (Sept 5) Introduction (KT, PH)

Part I. Theoretical Perspectives on the Political Economy of Advanced Capitalism

2. (Sept 12) Precursors to Varieties of Capitalism: Corporatism and the Organization of Economic Interests (KT) Schmitter, Philippe. 1979. Still the century of Corporatism? In Philippe Schmitter and Gerhard Lehmbruch, eds. Trends towards corporatist intermediation. Beverly Hills: Sage, 43-94. Katzenstein, Peter. 1985. Small States in World Markets. Ithaca: Cornell University Press, Chapter 1 and pp. 136-173 of ch. 4. Cameron, David. 1984. Social Democracy, Corporatism, Labour Quiescence and the Representation of Economic Interest in Advanced Capitalist Society, in John Goldthorpe, ed. Order and Conflict in Contemporary Capitalism (Oxford 1984), 143178 Streeck, Wolfgang. 1991. On the Institutional Conditions for Diversified Quality Production. In Egon Matzner and Wolfgang Streeck, eds. Beyond Keynesianism Elgar , 21-61.
Background Reading Soskice, David. 1990. Wage Determination: The Changing Role of Institutions in Advanced Industrialized Countries, Oxford Review of Economic Policy, 6:4, 36-61. Berger, Suzanne. 1981. Organized Interests in Western Europe New York: Cambridge University Press. Eichengreen, Barry. 1997. Institutions and Economic Growth: Europe after World War II. In Crafts, Nicholas and Toniolo, Gianni, eds. Economic Growth in Europe Since World War II. Cambridge: Cambridge University Press, pp. 38-72.

3. (Sept. 19) Varieties of Capitalism (PH) Hall, Peter A. and David Soskice. 2001. An Introduction to Varieties of Capitalism. In Hall and Soskice (eds), Varieties of Capitalism: Institutional Foundations of Comparative Advantage (Oxford: Oxford University Press), 1-68. Swenson, Peter. 1991. Bringing Capital Back In, or Social Democracy Reconsidered: Employer Power, Cross-Class Alliances, and Centralization of Industrial Relations in Denmark and Sweden. World Politics. 43:513-44. Estevez-Abe, Margarita, Torben Iversen and David Soskice. 2001. Social Protection and the Formation of Skills: A Reinterpretation of the Welfare State, in Peter A. Hall and David Soskice, eds. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press 2001: 145-83. Streeck, Wolfgang. 2010. E Pluribus Unum? MPIfG Discussion Paper 10/12 (October 2010)

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Background Reading: Hollingsworth, Roger and Robert Boyer. 1997. Contemporary Capitalism: The Embeddedness of Institutions, chapter 1 (pp. 1-49). Hall and Soskice, Varieties of Capitalism, chapter by Kathleen Thelen. Albert, Michel.. Capitalism against Capitalism Hall, Peter A. and Daniel Gingerich. 2009. Varieties of Capitalism and Institutional Complementarities in the Poltical Economy: An empirical Analysis, British Journal of Poltiical Science 39: 449-482. Hanck, Bob, Martin Rhodes and Mark Thatcher, eds. 2007. Beyond Varieties of Capitalism. Oxford: Oxford University Press. Hanck,Bob. ed. 2009. Debating Varieties of Capitalism. Oxford: Oxford University Press. Callaghanm Helen. 2011. Constrain-Thy-neighbor Effects as a Determinant of Transnational Interest Group Cohesion. Comparative Political Studies 44: 8 (August). Amable, Bruno. 2003. The Diversity of Modern Capitalism. Oxford: Oxford University Press.

4. (Sept 26) Varieties of National Welfare Regimes (KT) Esping Andersen, Gosta. 1990. Three Worlds of Welfare Capitalism. Princeton: Princeton University press, Chapters 1 and 2. Ferrera, Maurizio, 1997. The Four Social Europes: Between Universalism and Selectivity, in: Yves Mny and Martin Rhodes (eds.), The Future of Welfare in Europe: A New Social Contract? New York: St. Martins, pp. 81-96. Orloff, Ann S. 1993. "Gender and the Social Rights of Citizenship: The Comparative Analysis of Gender Relations and Welfare States," American Sociological Review 58:303-28 Esping Andersen, Gosta, 1999. Social Foundations of post-industrial economies, Oxford University Press. Chapter 5. Bradley, David et al. 2003. Distribution and Redistribution in Post-Industrial Democracies, World Politics 55: 193-228.
Background Reading: Manow, Philip and Kees van Kersbergen. 2009. Religion and the Western Welfare State: The Theoretical Context, Introduction to Manow and van Kersbergen, Religion, Class Coalitions and Welfare States. Cambridge University Press Stephens, John. and Evelyn Huber Stephens. 2001. Development and Crisis of the Welfare State. Chicago: University of Chicago Press.

Part II: Debates about the origins of capitalist diversity

5. (Oct 3) The Origins of Institutional Variation in Welfare States (KT) Swenson, Peter. 2004. Varieties of Capitalist Interests: Power, Institutions, and the Regulatory Welfare State in the United States and Sweden, Studies in American Political Development 18 (Spring): 1-29. Hacker, Jacob, and Paul Pierson. 2002, Business Power and Social Policy: Employers and the Formation of the American Welfare State Politics and Society, 30: 2. . Korpi, Walter. 2006. Power Resources and Employer Centered Approaches, World Politics 58: 2 (January). Manow, Philip. 2009. Electoral Rules, class coalitions and welfare state regimes or how to explain Esping-Andersen with Stein Rokkan,. Socio-Economic Review 7(1), 101-121.
Background Reading:

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Korpi, Walter. 1989. Power, Politics and State Autonomy. American Sociological Review 54 (June), 309-328. Korpi, Walter. 1985, Power resources approach versus action and conflict. On causal and intentional explanations in the study of power. Sociological Theory, 3 (2), pp.31-45. Swenson, Peter. 2004. Varieties of Capitalist Interests: Power, Institutions and the Regulatory Welfare State in the United States and Sweden. Studies in American Political Development 18 (Spring 2004), 1-29. Hacker, Jacob and Paul Pierson, Varieties of Capitalist Interests and Capitalist Power: A Response to Swenson, Studies in American Political Development 18 (Fall 2004), 186-195. Steinmo, Sven. 2010. The Evolution of Modern States. NY: Cambridge University Press. Mahoney, James and Kathleen Thelen. 2010. Explaining Institutional Change. NY: Cambridge University Press. Kahl, Sigrun. 2005. The Religious Roots of Modern Poverty Policy: Catholic, Lutheran, and Reformed Protestant Traditions Compared, European Journal of Sociology (Archives Europennes de Sociologie) 45, 1, pp. 91-126

6. (Oct 10) The Origins and Evolution of Institutions in the Political Economy (PH) Orren, Karen and Stephen Skowroneck. 1994. "Beyond the Iconography of Order: Notes for a 'New' Institutionalism," in The Dynamics of American Politics: Approaches and Interpretations, ed. Larry Dodd and Calvin Jillson . Boulder: Westview. Thelen, Kathleen and Wolfgang Streeck. 2005. eds. Beyond Continuity New York: Oxford University Press, Introduction. Thelen, Kathleen 2004. How Institutions Evolve: The Political Economy of Skills in Germany, Britain, the United States and Japan. NY: Cambridge University Press, chapters 1 and 6. Iversen, Torben and David Soskice Soskice. 2009. Distribution and Redistribution: The Shadow of the Nineteenth Century, World Politics 61: 3 (July). Martin, Cathie Jo and Duane Swank. 2008. The Political Origins of Coordinated Capitalism, APSR (May 2008).
Background Reading: Pierson, Paul. 2006. Politics in Time. Princeton: Princeton University Press. Streeck, Wolfgang and Kozo Yamamura, eds. 2002. The Origins of Non-Liberal Capitalism. Ithaca: Cornell University Press. Martin, Cathie Jo and Duane Swank 2011. Gonna Party Like its 1899: Party Systems and the Origins of Varieties of Capitalism, World Politics 63 (1) January 2011.]

Part III. Inequality and its Politics

7. (Oct 17) Explaining Variations in Redistribution across Countries and Time (PH) Iversen, Torben and David Soskice. 2006. Electoral Systems and the Politics of Coalitions: Why Some Democracies Redistribute More than Others, American Political Science Review 100: 165-81. Kenworthy, Lane and Jonas Pontusson. 2005. Rising Inequality and the Politics of Redistribution in Affluent Countries, Perspectives on Politics 3, 3 (September): 449471. Lupu, Noam and Jonas Pontusson. 2011. The Structure of Inequality and the Politics of Redistribution, American Political Science Review 105(2): 316-36.

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Iversen, Torben and David Soskice. 2012. Information, Interests and Distributive Politics. Paper presented at a Workshop on the Political Economy of Skills, Konstanz. Hacker, Jacob and Paul Pierson 2010. Winner-Take All Politics: Public Policy, Political Organization , and the Precipitous Rise of Top Incomes in the United States, Politics and Society 38(2): 152-204.
Background Reading: Moene, Karl Ove and Michael Wallerstein. 2001. Inequality, Social Insurance and Redistribution, American Political Science Review 95: 859-74. Birchfield, Vicki and Marcus Crepaz. 1998. The Impact of Constitutional Structure and Collective and Competitive Veto Points in Income Inequality in Industrialized Democracies, European Journal of Political Research 34: 175-200. Bartels, Larry M. 2008. Unequal Democracy: The Political Economy of the New Gilded Age. Princeton: Princeton University Press. Huber, Evelyn, Charles Ragin, John D. Stephens. 1993. Social Democracy, Christian Democracy, Constitutional Structure and the Welfare State, American Journal of Sociology 99 (November): 711-49. Swank, Dwane. 2001.Political Institutions and Welfare State Restructuring: The Impact of Institutions on Social Policy Change in Developed Democracies, In Pierson, ed., The New Politics of the Welfare State. NY: Oxford University Press.

8. (Oct 24) Inequality and Visions of Social Justice: Their Determinants and Effects (PH) Alesina, Alberto, Edward Glaeser and Bruce Sacerdote, "Why Doesn't the US Have a EuropeanStyle Welfare System" Brookings Papers on Economic Activity (Spring 2001): Steensland, Brian. 2006. Cultural Categories and the American Welfare State: The Case of Guaranteed Income Policy, American Journal of Sociology 111, 5 (March): 1273-1326. Benabou, Roland and Jean Tirole. 2006. Belief in a Just World and Redistributive Politics, Quarterly Journal of Economics (May): 699-746. Shayo, Moses. 2009. A Model of Social Identity with an Application to Political Economy: Nation, Class and Redistribution, American Political Science Review 103(2): 147-74. Sears, David O. 2001. The Role of Affect in Symbolic Politics, in J.H. Kuklinski (ed.), Citizens and Politics: Perspectives from Political Psychology. New York: Cambridge University Press.
Background Reading: Kumlin Staffan and Stefan Svallfors. 2008. Social Stratification and Political Articulation: Why Attitudinal Class Differences Vary Across Countries. Luxembourg Income Study Working Paper. 484. Alesina, Alberto and Edward Glaeser. 2004. Fighting Poverty in the US and Europe. New York: Oxford University Press. McCall, Leslie. 2007. The Undeserving Rich: Beliefs about Inequality in the Era of Rising Inequality. Manuscript, Northwestern University. Korpi, Walter and Joakim Palme. 2003. New Politics and Class Politics in the Context of Austerity and Globalization: Welfare State Regress in 18 Countries, 1975-1995, American Political Science Review, 97: Banting, Keith and Will Kymlicka, eds. Multiculturalism and the Welfare State. NY: Oxford University Press 2006. McCarty. Nolan, Keith Poole and Howard Rosenthal. 2006. Polarized America. Cambridge: MIT Press. Svallfors, Stefan. 1997. Worlds of Welfare and Attitudes to Redistribution: A Comparison of Eight Western Nations, European Sociological Review 13 (3): 283-304.

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9. (Oct 31) Other Forms of Inequality: Integrating Sociological Perspectives (PH) Erickson, R.and J. Goldthorpe. 1999. Intergenerational Inequality: A Sociological Perspective, Journal of Economic Perspectives, 16:31-44. Kerckhoff, Alan. 1995. Institutional Arrangements and Stratification Processes in Industrial Societies, Annual Review of Sociology, 15: 323-47. Di Prete, Thomas A. 2002. Life Course Risks, Mobility Regimes and Mobility Consequences: A Comparison of Sweden, Germany and the United States, American Journal of Sociology, 108: 267-309. Barnes, Lucy, Peter A. Hall and Rosemary CR Taylor. 2008. The Social Sources of the Health Gradient: A Cross-National Analysis. Paper presented to the Annual Meeting of APSA. Chauvel, Louis. 2008 Comparing Welfare Regime Changes: Living Standards and the Unequal Life Chances of Different Birth Cohorts. Luxembourg Income Study Working Paper No. 500.
Background Reading Lamont, Michle. The Dignity of Working Men: Morality and the Boundaries of Race, Class and Immigration. Cambridge, Ma.: Harvard University Press. Solon,G. 2002. Cross-country Differences in Intergenerational Earnings Mobility, Journal of Economic Perspectives, 16: 59-66. Esping-Andersen, Gosta. 1993. Changing Classes. London: Sage. Lamont, Michle and Virag Molnar. 2002. The Study of Boundaries in the Social Sciences, Annual Review of Sociology 28: 167-95. Massey, Douglas S 2007. Categorically Unequal: The American Stratification System. NY: Russell Sage. Wilkinson, Richard. 2005.The Impact of Inequality NY: Free Press. Link, Bruce G. and Jo Phelan. 1995. Social Conditions as Fundamental Causes of Disease, Journal of Health and Social Behavior (extra issue): 80-94. Richard Carpiano, Bruce G. Link and Jo C. Phelan. 2008. Social Inequality and Health: Future Directions for the Fundamental Cause Explanation, in Annette Lareau and Dalton Conley, eds. Social Class: How Does it Work? NY: Russell Sage Foundation.

Part IV. Contemporary Challenges and Questions of Institutional Change

10. (Nov 7) Welfare States under Pressure (KT) Pierson, Paul. 2001. The New Politics of the Welfare State. Oxford University Press, Introduction and Conclusion. Iversen, Torben and Anne Wren. 1998. Equality, Employment and Budgetary Restraint: the Trilemma of the Service Economy, World Politics 50: 4: 507-546. Rueda, David. 2005. Insider-Outsider Politics in Industrialized Democracies: The Challenge to Social Democratic Parties. APSR 99: 1 (February): 61-74. Hacker, Jacob, Philipp Rehm and Mark Schlesinger. 2012. Insecure Alliances: Risk, Inequality, and Support for the Welfare State" American Political Science Review, 106(2), pp. 386 406. Pontusson, Jonas. 2011. Once Again A Model: Nordic Social Democracy in a Globalized World, In James Cronin, George Ross and James Shoch, eds., Whats Left of the Left (Durham, N.C.: Duke University Press: 89-115.
Background Reading:

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Hacker, Jacob. 2005. Policy Drift: The Hidden Politics of US Welfare State Retrenchment in Streeck and Thelen, eds. Beyond Continuity. Esping-Andersen, Gsta, (ed.), 1996, Welfare States in Transition, National Adaptations in Global Economies, London: Sage, chapter 3 (Welfare States Without Work, the Impasses of Labour Shedding and Familialism in Continental European Social Policy). Clegg, Daniel. 2007.Continental Drift: On Unemployment Policy Change in Bismarckian Welfare States. Social Policy & Administration 41:6. Myles, John and Paul Pierson, 2001. The Comparative Political Economy of Pension Reform. In Paul Pierson (ed.), The New Politics of the Welfare State. Oxford: Oxford University Press, 305-333. Bonoli Guiliano and Toshimitsu Shinkawa, Ageing and Pension Reform around the World (Cheltenham, UK Edward Elgar), Introduction. Schludi, Martin, 2005. The Reform of Bismarckian Pension Systems. A comparison of Pension Politics in Austria, France, Germany, Italy and Sweden (Amsterdam University Press). Chapter one. Rueda, David. 2007.Social Democracy Inside Out. Cambridge: Cambridge University Press. Rehm, Philipp,. 2010. Risk Inequality and the Polarized American Electorate, British Journal of Political Science 41: 363-87. Jenson, Jane and Denis Saint-Martin. 2003. New Routes to Social Cohesion? Citizenship and the Social Investment State, The Canadian Journal of Sociology 28(1): 77-99

11. (Nov 14) The Transition to Services, Dualism, Gender and Education (KT) Wren, Anne.. 2011. The Politics of the Service Transition mss. Streeck, Wolfgang. 2009. Flexible Employment, Flexible Families, and the Socialization of Reproduction MPIfG Working Paper 09/13. Gingrich, Jane and Ben Ansell, The Dynamics of Social Investment: Human Capital, Activation and Care. Ms. Iversen, Torben and John Stephens. 2008. Partisan Politics, Welfare States and Three Worlds of Human Capital Formation, Comparative Political Studies 41 (4/5): 600-637 Zysman, John, et al. 2010.The Digital Transformation of Services: From Economic Sinkhole to Productivity Driver, BRIE Working Paper 187 (April 6, 2010)
Background Reading King, Desmond and David Rueda. 2008. Cheap Labor: The New Politics of Bread and Roses in Industrial Democracies, Perspectives on Politics: 279-97 Husermann, Silja and Hanna Schwander. 2010. Varieties of Dualism: Labour Market Segmentation and Insider-Outsider Divides. Paper presented at the University of Oxford, January. Palier , Bruno and KathleenThelen. 2010. Institutionalizing Dualism: Complementarities and Change in France and Germany, Politics & Society 38: 119-48. Huber, Evelyn, et al. 2009. The Politics of Womens Economic Independence, Social Politics 16:1, 139. Warren, Elizabeth. 2006. The Middle Class on the Precipice, Harvard Magazine (Jan-Feb).

12. (Nov 28) Political Economies under Pressure (KT) Streeck, Wolfgang. 2009. Bringing Capitalism Back In, chapter 17 of Streeck Re-Forming Capitalism. Oxford: Oxford University Press. Baccaro, Lucio and Chris Howell. 2011 A Common Neoliberal Trajectory: The Transformation of Industrial Relations in Advanced Capitalism Politics and Society 39(4) 521-63. Hall, Peter A. and Daniel Gingerich. 2009. Varieties of Capitalism and Institutional Complementarities in the Political Economy: An Empirical Analysis, British Journal of Political Science 39: 449-482.

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Schneider, Martin R. and Paunescu, Mihail. 2011.Changing Varieties of Capitalism and Revealed Comparative Advantages from 1990 to 2005: A Test of the Hall and Soskice Claims, Socio-Eocnomic Review. Thelen, Kathleen. 2012. Trajectories of Liberalization and the New Politics of Social Solidarity, chapter 1 of book manuscript
Background Reading Streeck, Wolfgang 2009. Re-Forming Capitalism. Oxford: Oxford University Press. Baccaro, Lucio and Jonas Pontusson. 2012. Moving Apart: Wage Bargaining and Sectoral Wage Disparities in Advanced Capitalist Economies. Presented at the SASE conference, MIT, Cambridge, June 29. Bartels, Larry, Nancy Bermeo and Jonas Pontusson, eds. Coping with Crisis NY: Russell Sage Foundation forthcoming. Hall, Peter A. and Michle Lamont, eds. Social Resilience in the Neo-Liberal Era. 2013. NY: Cambridge University Press. Streeck, Wolfgang. 2011. The Crisis of Democratic Capitalism, New Left Review 71 (Sept Oct): 5-29.

13, (Dec 5) Politics in an Age of Austerity: New Challenges and Cleavages? (PH) Kriesi, Hans-Peter et al. 2006. Globalization and the Transformation of the National Political Space: Six European Countries Compared, European Journal of Political Research 45: 921-56. Hall, Peter A. 2013. The Political Origins of our Economic Discontents. In Miles Kahler and David Lake, eds. The New Politics of Hard Times. Ithaca: Cornell University Press. Schfer, Armin and Wolfgang Streeck. 2013.Politics in the Age of Austerity (forthcoming Polity Press. Ch 1 by Schfer and Streeck, Ch. 2 by Streeck and Daniel Mertons] Hall, Peter A. 2012. Varieties of Capitalism and European Monetary Union. Paper prepared for a Workshop on Europes Dilemmas, Toronto
Background Reading Esping-Andersen, Gosta. 2009. Equal Opportunities in an Increasingly Hostile World. Trois Lectures II. van der Brug, Wouter and Joost van Spanje. 2009. Immigration, Europe and the New Cultural Dimension, European Journal of Political Research: 48: 309-34. Streeck, Wolfgang. 2009. Bringing Capitalism Back In.Re-Forming Capitalism. Oxford: Oxford University Press. Chapter 17. Kitschelt, Herbert and Philipp Rehm. 2010. Economic Redistribution and Socio-Political Realignments: When and Where Do Second Dimension Voter Alignments Matter. Paper presented to the Conference of Europeanists, Montreal. .