Perspectives on Globalization
Causes, consequences and strategies
(Economics and Politics)
Lars Niklasson, Political Science, Linköping University
Course requirements
 (MIER 7,5 hp, Swedish master 15 hp)
 Active participation in the seminars
 Three mixed groups
 MIER: Seminar on challenges
 MIER: Take-home exam
 Swedish master: More seminars & short paper
The idea of the course
 1. How politics impacts on the economy/firms
 Regulation, Institutions, Governance etc.
 2. How economics (firms) impacts on politics
 Structural change, globalization, lobbying etc.
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General theories (IR)
Political Economy (often motives, explanations)
Comparisons
It is all about Globalization!
What is globalization?
 Economic integration of the globe:
 We can buy cheap things
 Jobs get outsourced
 The third world wins or looses?
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Pollution or greener technologies?
Power shifts to global firms?
Power shifts from the US to China?
Europe needs to change a lot?
Topics of the debate:
Is everything you hear true?
 Inevitable (?) change through technology and the
integration of markets (What more?)
 Leads to increased competition but also new markets
 Financial imbalance: Western governments have
deficits and loans from China. Firms have money.
 Countries need lower taxes? and investments in skills
 Firms need to understand new customers, brands,
good location and flexibility/networking
 (Energy shortage?)
The critique, I
 The International Forum on Globalization: Alternatives
to Economic Globalization, 2002:
 Against corporate globalization: ”big firms get too much
power and ruin the resources of the planet”
 Local economies better than exports and integration
 Cultural and economic diversity is needed
 Local and national political power, democracy
 = similar to the progressive movement in the 1890s?
 = other values? Other economic theories?
The critique, II
 ”It’s too neoliberal”:
 Too much deregulation, too much belief in the market
 But some strategies are the opposite of liberalism:
 State support to make firms competitive
 Neo-mercantilism (i.e. too little liberalism? A bad mix?)
 = What is the manifest strategy/-ies?
 What works in theory? In practice?
 What are our core values? How can they be promoted?
Aims and ambitions
 Understanding key issues in the global economy & politics
 Production, finance, trade, development, environment
 Government and business
 Politics shapes the economy (firms): institutions
 The economy (firms) has an impact on politics
 A variety of perspectives
 Economics, Politics, IR/CP, Sociology
 Combine and contrast, to bring out assumptions
 Ravenhill, Schmidt, K&L, MLD&KSA
Questions
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What is globalization? (production, trade, finance)
What is global regulation? (WTO, Kyoto etc)
How is national politics relevant?
How is policy/regulation/institutions relevant?
 State support for businesss
 (Will globalization change the models?)
 Why are the Nordic countries doing well?
 What is private and transnational regulation? How does it
have an impact? (ideas)
Perspectives on globalization
 Globalization is (in brief) an ongoing transformation and
integration of the economy, with implications for politics
 Inevitable? Uniform? What are the drivers/causes?
 Can it be ”controlled” by politics? Can we make it “good”?
 A threat or an opportunity? More good than bad?
 ”Intended” effects: More wealth in more countries; win-win,
short-term problems (flexibility)
 Unintended effects: Poverty, environmental, big profits,
degradation of industry
 We need to understand it better: the drivers
Criteria for evaluating globalization
 Growth
 More opportunities or more restrictions?
 Less government support for business?
 Quality of life
 Welfare, living standards (developing countries?)
 Democracy
 Accountability? Leadership?
 Unintended consequences?
What is globalization?
(Ravenhill 2011: intro)
 Economic integration: FDI and TNCs
 International/Global
 From mercantilism to integration
 Bretton Woods 1944
 American hegemony
 From embedded liberalism to neoliberalism?
 The crisis 2008-09: what does it show?
 Why crisis? Why rescue packages?
 (IPE as a new subfield)
 See also McGrew (2011) table 9.3
How can we study globalization?
 Several research paradigms (Watson 2011)
 Different kinds of causality (McGrew 2011)
 My solution:
 A list of factors, from structural to cultural
 Additive, successive factors: all are relevant, but in
different ways
 Untangle the mess of causal factors! Set them in relation
to each other.
 (Lichbach & Zuckerman 1998: Comparative Politics)
A list of successive factors
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Structures: Economy, technology
Institutions: International regulation
International politics and Paths
Domestic politics
National patterns: variety of regulation
Ideas: scientific and normative
Fashions: follow the trends
Factors and literature
Factors
Literature
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Structures
Institutions
Politics and Paths
Domestic politics
National patterns
Ideas
Fashions
Ravenhill
Ravenhill
Ravenhill
Ravenhill
Schmidt, K&L
Schmidt, MLD&KSA
MLD&KSA
Research paradigms (Watson 2011)
 International Relations
 Realism (states as short-term rational actors)
 Liberalism (states as long-term rational actors with a motive
to cooperate)
 Marxism (normative critique of capitalism)
 International/Global Political Economy
 Liberalism (Smith) vs Mercantilism/Nationalism (List)
 See also: ”Comparative advantage” (Hiscox box 4.8)
 (Comparative Politics)
 Rationalism/interests, structures, ideas: combinations
 (American vs British School in IR)
Four ways to study globalization
International
Relations:
Focus on states
Source: Watson table 2.2
International/Global
Political Economy:
focus on economic
actors (or politics)
American School , ”IO”
Realism, statism,
Abstract and driven by
Rational choice
methods = similar to
(Liberalism)
Economics. (Assumptions
for convenience and
math, not accuracy; Hay)
Neoliberalism,
Nationalism/mercantilis
m
British School:
Wider perspectives and
normative =similar to
Sociology
Marxism/critical
Structuralism
Poststructuralism
(Constructivism)
Causes and effects (Hay 2011)
 Hyperglobalization too strong: Economists’ assumptions
 Perfect integration of markets, esp.capital? Exit costless?
 Cheap labor best? Welfare always a cost?
 (Financial capital vs. industrialists/investors)
 The state a source of competitiveness? (Neomercantilism)
 Convergence? LME/CME respond differently
 Globalized problems difficult to handle: free riders
 Effect: Retrenchment? Other drivers of policy change
 Cause: Globalization? Difficult to measure (Regionalization?)
 Why no convergence of interest rates? (Should they converge?)
Logics of globalization
(McGrew 2011)
 Economy or multidimensional processes?
 De-territorialization, difficult to separate domestic from
international, global division of labor
 Rescaling, regions
 Increasing trade, within TNCs
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Specialization and competition
Finance, investments, production
Deindustrialization of the north
Labor migration from south to north
 But: ”Beijing consensus” = state capitalism
The causes of globalization
Source: McGrew,
table 9.2
Causal
mechanism
Focus
”Forces”
Structural
Too strong:
Shaped by other
factors
Determinism
Pathdependence?
Why and How
Technology
Economy
Hegemony
Conjunctural
(Conditional)
”Could have
been different”
Circumstances,
timing
Tendencies
How, When and
What form
Institutions
(regulation)
Paths
Constructivist
(A subset of
conjunctural?)
Ideas shape
interests
When and What
form
(Schmidt 2002!)
Ideas
(Politics)
We need to study policy, politics and
practice (Schmidt 2002)
 Policy without politics: assumes interests and paths,
overlooks alternatives and culture
 Practices without policy/politics: economic
determinism and paths
 Politics without policy/practice: ideas without
economic factors, institutions and interests
 = economic background factors + politics (ideas)
 Push and pull
 (IR too abstract and theoretical, not empirical, p 60f)
1. Structures
 Is globalization driven by background forces such as
technology and economy?
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IT
China, India, BRICs etc.
Outsourcing of production (Thun)
New markets
(Because of deregulation?)
 Are all countries affected in the same way?
 Firms (and governments) do different things
The globalising firm (Thun 2011)
 Production: outsourcing, value chains
 Why now? Trade liberalization, developmental states in
Asia/relocation of American firms
 Hierarchies or markets and networks. Captive?
 Upgrading of the subcontractors? Competition?
 Nation states too small and too big?
 China: local diversity, slow development of cars
 Also sales: new markets, new values
 Variety? Are all firms similar?
 Good or bad?
China, India etc.
 ”We” see cheap labor, competitors
 They get higher living standards, education etc.
 Large increase in living standards in China and India
 Energy consumption goes up
 They buy more European goods
 How do they organize their economies and societies?
 From suppliers to new firms?
 Foxcon at the Pearl River Delta = Iphone
 Compare Wales, Ireland, Mexico etc.
Implications for globalization
 Inevitable causes, uniform effects?
 Resistance is meaningless?
2. Institutions (global regulation)
 Regulatory frameworks (rules, organisations) shape some
of the effects of globalization. What rules? Enough rules?
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Trade (Winham 2011, Ravenhill 2011)
Money and finance (Helleiner 2011, Pauly 2011)
Environment (Dauvergne 2011)
Development (Wade 2011, Phillips 2011)
Transnational regulation (MLD&KSA 2006)
Soft regulation (Mörth 2006)
 How did the rules develop? (part 3)
 International politics, paths, ideas etc.
The global trade regime
(Winham 2011)
 Repeal of the Corn Laws 1848: new majority
 Protectionism in the 1870s.
 USA 1930 (Smoot-Hawley) vs 1934 (RTAA)
 GATT 1947 (No ITO 1948)
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Non-discrimination, ”Most favored nation”
”Safeguards” as limits
Environmental concerns are barriers
Fair to developing countries?
 Several rounds, increased scope (table 5.1)
 WTO 1994, ministerial conferences, DSU
Regional Trade Agreements, RTAs
(Ravenhill 2011)
 EU, Nafta, Asean etc. (table 6.1)
 Logic: FTA, Customs union, Common market, EMU
 Political motives: confidence, security, joint power,
lock-in reforms, satisfy voters, easier implementation
 Economic motives: protecting sectors, deeper
integration, better than unilaterism (scale)
 But: third parties may be cheaper (”trade diversion”)
 Conflicts with WTO, ACP-countries /Lomé
RTAs, continued
 Nested with security, neoliberal ideas, contagion
 Winners and losers, Strategic trade theory
 Deeper integration because of its own momentum
(neofunctionalism) or intergovernmental bargaining?
 Increased trade because of RTAs?
 Stepping stone (easier) och stumbling block
(complexity) for global negotiations?
Money and finance (Helleiner 2011)
 The gold standard=fixed exchange rate, breakdown 1930
 International causes: change of hegemon
 Domestic causes: interventionist policies, speculation
 Bretton Woods and the dollar: IMF, IBRD, (GATT)
 Motives: reduced risks, national autonomy
 Why globalization: diversification, efficiency
 Risks: unstable, ”impossible trinity” (autonomy, openness,
stable exchange rates)
 Distrbutive consequences
Money and finance, continued
 The strong dollar allowed the US to finance deficits
 Loss of benefits for the US, loss of stability?
 Managed exchange rates 1982Plaza, 1987 Louvre
 Manipulating competitiveness?
 China buying dollars to keep their currency low?
 EMU and the Euro
 (Why has it failed? Is it still needed? What can be done?)
Global financial crises (Pauly 2011)
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Allocates resources where needed? Unstable?
Lender of last resort vs Moral hazard -> regulation
More difficult to interpret information: uncertainty
Coordinated policies or discipline by the market?
Loss of political sovereignty
Bank regulation: systemic risk, public and private
BIS, Basel Committee etc. (box 8.3)
Illiquidity or insolvency? (Firms and countries)
The crisis 2008: solved, but more systemic risk, high costs
Environment (Dauvergne 2011)
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Stockholm, Rio, Kyoto, Johannesburg, Copenhagen
Growth to reduce poverty? Kuznets curve
Trade for efficiency, standards, technologies
Unequal consumption etc.
Distance from effects, pollution havens
GEF: Assistance to the south benefits the north
Regimes are Common: Weak implementation?
Ozon (CFC substitutes) vs Climate change and Forests
Development (Wade 2011)
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China and India grow fast. 38% of world population
Better with more globalization? Trade?
Inequality
Government failure worse than market failure?
 Industrial/military policies for growth (mercantilism)
even in the US
Development (Phillips 2011)
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Modernization and catching up vs dependency
East Asia: due to the market or the state? Export
Import-substituting industrialization, ISI
The Washington Consensus: one size fits all
 Governance, state capacity, ownership etc.
 ”The poor are excluded from globalization” or
”globalized markets impose obstacles to
development”
Transnational regulation
(MLD & KSA 2006)
 A process of re-ordering regulation beyond the state
 ”Transnational” is more humble than ”global”
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More actors, soft modes of regulation and sanction
What: Governance without/with government, networks
Regulatory states, regulation as distrust
By whom? Epistemic communities (Politics below)
Institutional frames, fields, homogenization, ideas, forces
Ideas travel: translation, hybridization, institutionalization
Multi-level interaction
Transnational regulation:
”private regulation”
 Law firms in competiton regulation (Morgan 2006)
 Transnational social space, actors, institutions
 EU and US competition regulation, need for advice from
transnational law firms
 Standard-setting in accounting (Botzem & Quack 06)
 Globalization of financial reporting and auditing
 OECD, EU, UK alternative models. IASC
 Shift to financial market regulation
Soft law: a new kind of regulation
 Soft regulation: ”suggestions”? (Mörth 2006)
 Governance: soft law, public/private, networks
 Collaboration = Deliberative democracy beyond the state?
 Dahl, Held, Dryzek, Hirst
 Compare EU: Open Method of Coordination (=no mandate)
 Dynamics of soft law (Jacobsson & Sahlin-Andersson 2006)
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Diversification and convergence
Non-state organizations interrelate with states
Rule-setting, monitoring, agenda-settings (interrelated)
Authority by organizing, expertise, association. Webs.
Implications for globalisation?
 International regulation has an impact on the
structural forces of globalization (technology and
economy) by setting limits to public and private
action.
 International organizations are an important arena
for work on globalization?
 Private organisations are less visible.
 Not enough? Not the right policies? Etc.
3. International politics and paths
 International organizations: operations (and design)
 IMF, World Bank, WTO (frozen ideas?)
 A motive for states to collaborate
 From Realism/Nationalism to Liberalism. Marxism (Watson)
 Theoretical or Normative positions?
 Cooperation (Aggarwal & Dupont)
 International negotiations
 Rational, Rules of the game, Ideas.
 Who is in power?
 Path dependence, difficult to change
 Unintended consequences
 (Transnational ideas)
International organizations
as arena for international politics
 What are they?
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RTAs: EU, ASEAN, NAFTA etc.
Bretton Woods: IMF, IBRD, WTO
Environmental agreements: Rio, Kyoto etc.
Financial regulation: BIS, Basle Committee etc.
Transnational organizations
International organizations,
continued
 How do they operate?
 Membership, stringency, scope, delegation,
centralization: Because of type of problem? (Aggarwal &
Dupont, table 3.1 Below)
 States as members? Delegated powers?
 Suprantional? Intergovernmental? Private?
 Politics? Civil servants? Accountability? Democracy?
 What role for civil society, NGOs etc?
Motives for states to cooperate
(Aggarwal & Dupont 2011)
 Interdependence: economic gains in the long run but
political motives in the short run to ”free ride”
 Prisoners’ Dilemma (dominant strategy to cheat)
 ”Inhibiting fear” (mistakes): Assurance Game
 Where to meet”: Battle of the Sexes
 Mixed games, repeated games
 Solutions: Insulation, corporatism, international regimes and
organizations (enforcement, information, fairness)
 Why? Hegemonic power (realism), demand, paths, nesting,
linkages (liberalism), ideas (constr.)
Institutional solutions
Source: Aggarwal
& Dupont table 3.1
Free riding
temptation
Inhibiting fear
Where to meet
Strategic game
Prisoners’ Dilemma
Stag Hunt
Battle of the sexes
Illustrations
Trade liberalization
Debt rescheduling
Financial
integration
Trade
specialization
Managing
adjustments
Multilateral
negotiations
Role(s) of
institutions
Enforce contracts
Enhancers of
cooperation
Providers of
solutions
Examples of
international
solutions
Monitoring
Sanctions
Quota systems
Knowledge
Capacity
Negotiation forum
Agenda setting
International negotiations
 Intergovernmentalism = focus on negotiations by
states (especially in the EU)
 Why these positions? Look inside the state:
 Interests = domestic politics (below)
 = governmens help their exporting industry (the winners)
 Ideas = a convincing framing, discourse (below)
 = a new economic theory, such as monetarism
 Bargaining strategies: interdependence, within rules
 Game theory (above), nested games
Path-dependence
 Politics continues along a path
 Some actions are easier than other becasue of previous
choices
 International and national politics
 Schmidt on UK, Germany, France below
 It is a logic of the situation (time and place: history)
 Also unintended consequences: new paths
 Example: Rulings by the European Court of Justice on ”mutual
recognition” (implicit in the Rome Treaty?)
 Neofunctionalism: crises lead to action, a self-moving process
A kind of path: regulatory fields
(Jacobsson 2006)
 International organizations make rules, evaluations
 Embedded states (and agencies): Europeanization
 States need to respond = recreates the state
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Rule-followers more than rule-makers?
(=the logic of the field? A kind of path?)
Scripts, translation, such as the Employment Strategy
Fragmentation (epistemic communties)
De-coupling
Transnational regulation
driven by networks of agencies
 International competition network (Djelic & Kleiner)
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From positive to negative views on trust
1890 Sherman Antitrust Act led to more mergers
Europe: Cartels better than the chaos of competition
American influence after WWII: Germany, EEC
1990: EU, end of communism, globalization
Inconsistent and conflicting regulation->coordination
Experts (OECD), statism (WTO) or community (ICN)
Three possible scenarios for
transnational governance (table 14.2)
Source: Djelic &
Kleiner 2006
Experts
(OECD)
Statist
(WTO)
Community
(ICN)
Rule makers vs
rule followers
Separate
Separate
Combined
Product of
governance
process
Standards
Binding rules
Beliefs
Mode, logic of
rule making
Expert driven
Political
negotiations
Negotiations,
Expert input
Mode, logic of
rule monitoring
”Expert awe”
Coercion,
constraints
Socialization
+/-
Presupposes
legitimacy
Efficient
Easy to start
Transnational regulation
by epistemic communities
 Networks of central bankers (Marcussen 2006)
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Central banks and their governors
An epistemic community, a network
Where do they meet? BIS, IMF etc.
Networks produce standards, knowledge and identity
Institutional dynamics
(MLD & KSA 2006)
 A self-reinforcing governance spiral: distrust, control
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 Competition, a market for regulation
 Distrust by scientization, marketization, deliberative
democracy (Institutional forces, meta-rules, undetected)
 Responsibility becomes unclear
 Control achieved through rival regulation
Incremental change, complex but similar processes
Anti-globalists reinforce these patterns, a stabilizing order
Spaces, actors, relations. Efficiency based on power
First-mover advantage for the US (=entrepreneur)
Why CO₂-emissions trading?
(Engels 2006)
 ”Markets for pollution” to create property rights
 Pollution = negative externality
 Quasi-market: Commensuration is difficult
 Sociologists: states organize markets
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Supranational and national regulatory process
An international process after Kyoto
Three spaces: BP, UN and EU
Transnational actors
Why certification of forestry?
(McNichol 2006)
 Independent certification: A green premium. Market or
state? Complement or threat to existing regulation?
 At the intersection of producers and consumers
 Can change over time, by entrepreneurs
 FSC, Forest Stewardship Council 1993
 Consensus and cooperation, universal criteria/local variation,
several dimensions of sustainability
 Success and uncertainties, conflicts
 An articulated para-regulatory advocacy coalition: FSC
initiated by retailers, moderate NGOs, eco-entrepreneurs
 Four strategic action fields, competitors, states as allies
4. Domestic politics
 Winners and losers
 Institutions again (the regulation of politics
determines/shapes the outcome of politics)
 Ideas? Discourses (Schmidt below)
 Epistemic communities?
 Impact of globalization
 Developed countries (Hay 2011, above)
 Developing countries (Wade 2011, Dauvergne 2011,
above)
Winners and losers? (Hiscox 2011)
 Interests are based on material position: holders of
abundant vs scarce resources (?)
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Unions and their firms on the same side
The repeal of the Corn Laws 1848: new majority
Heckscher-Ohlin, Stolper-Samuelson
But: Why import cars from other countries?
Also immigration, investment and exchange rates
Institutions/constitutions lead to
different politics
 Institutions: elections, legislatures, agencies etc.
 Proportional voting, strong parties=more trade
 Delegating power to the president. Reality more
complex: ”bootleggers & baptists”, nested games,
framing/ideas
 Rational choice institutionalism: rational action within
the rules (institutions/constitutions)
 ”Economic analysis of political rules”
 Example: bargaining outcomes in bicameral legislatures
Lectures 3-4
5. National patterns:
countries are different
 A variety of patterns, no convergence?
 Institutions: LME and CME (Schmidt, K&L, L&R)
 Institutions are equilibria?
 Self-enforcing, but how?
 Institutions shape the economy?
 Patterns of specialization
 Or: the economy shapes the institutions?
 Firms, entrepreneurs
 Nordic model or models (K&L)
 Political institutions determine economies? (L&R)
European Capitalism
(Schmidt 2002)
 What is the impact of globalization on France,
Germany, UK? (Sweden?) Different reactions
 Challenges, policies, adjustment, discourses
 Britain (liberalism) changed early, anticipated EU
policies, a transformative discourse
 Germany (corporatism) changed lately, late change of
post-war discourse
 France (statism) tremendous policy adjustments
without a legitimating discourse
Policy, Politcs, Practice
(Schmidt 2002)
 Historical institutionalism (+interests, norms) + ideas,
discourses
 Policy without politics: assumes interests and paths,
overlooks alternatives and culture
 Practices without policy/politics: economic determinism and
paths
 Politics without policy/practice: ideas without economic
factors, institutions and interests
 = economic background factors + politics (ideas)
 Push and pull
 IR too abstract and theoretical, not empirical (p 60f)
Autonomy and control: losses and
gains (Schmidt 2002)
 Loss of national autonomy: monetary policy, tariffs,
subsidies, nationalization, benefits. Still variety
 Loss of national control: MNCs more independent but
still ties to home countries (identity, legal), exit costs
 Gains in supranational autonomy and control (EU,
WTO, IMF) but also networks and private regulation
 Europeanization (and different views of the EU)
 EU as a shield, creating new risks: EMU (national
wage bargaining without national monetary policy)
National policy adjustments
(Schmidt 2002)
 Mediating factors, mechanics of adjustment explain
responses to pressures (table 2.1):
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Economic vulnerability: Competitiveness
Political institutional capacity: veto-points
Policy legacies: fit/misfit with paths
Policy preferenes: openness to the new
Discourse: new perceptions change preferences
 Sequence of change: monetary, industrial, social
 EU pressures vary: specified (highly/less), suggested, no
specification (competition, mututal recognition) table 2.2
 Outcomes: inertia, absorption, transformation (figure 2.2)
Three ideal-types of Capitalism
(Schmidt 2002)
Source: Schmidt
2002, table 3.1
Market cap
(US, UK)
Managed cap.
(D, NL, S)
State cap.
(F, I)
Business rel.
Market-driven
Non-market
State organized
- interfirm
Competitive
Networks
State-mediated
- firm/finance
Distant
Close
State-mediated
-
Short-term
Long-term
Medium-term
Government rel
Arm’s length
Negotiated
State-directed
-
Liberal, arbiter
Enabling, facilitator Interventionist,
leader
Labor rel.
Adversarial
Cooperative
Adversarial
- Wage barg.
Market-reliant
Coordinated
State-controlled
- State reg.
Bystander
Co-equal or
bystander
State imposes
Investment
State
Convergence?
(Schmidt 2002)
 Evolution rather than convergence
 Differing impacts of financial markets, differing roles
of the state, differences in production profile
 Comparative advantages and disadvantages of the
three models
 Still three models
 Table 3.6, Figure 3.1
 Ch 4 on the dynamics of adjustment in UK, D, F
The Nordic models
(Kristensen & Lilja 2011)
 Varieties of Capitalism and how they react to globalization
 Nordic capitalism unexpectedly successful
 Firms’ (subsidiaries) strategies in local context
 Social inventions leading to experimenting firms
 Liberalization + new forms of corporatism
 Nordic welfare: bad shape 80s, reform 90s
 Enabling welfare state and individualized services
 Strong in Chandlerian innovation (Germany crafts-based)
 Networking firms: need for skills, more than R&D
Supportive welfare?
(Kristensen & Lilja 2011)
 The Nordic countries
 Different in types of industry, R&D
 Similar in learning work organization
 Welfare systems support learning organizations
 Flexicurity
 Public sector experiments (private providers)
Four countries
(Kristensen & Lilja 2011)




Finland: Flagship-driven + subsidiaries
Denmark: More SMEs, 20% change job every year
Norway: Natural resources, international, learning
Sweden: MNCs, knowledge-driven?
 BUT: Is Sweden similar to Denmark? Flexicurity?
 Lessons: Beyond Keynesianism and Neoliberalism
 Different kinds of risk-sharing/risk-taking
 Enabling welfare states
Implications: What can be done
to stimulate firms?




”Medicine for Sweden” (Arvidsson et al 2006)
Leading firms in pharmaceuticals and medtech
Big investments in medical research
Public health care was an important intermediary
 User, developer of products
 Now companies work with US hospitals
 What can be done?
 Smarter regulation (”neomercantilism”)
 Are there risks with the government?
 What else is important? Entrepreneurship? Deregulation?
What drives firms? (and politics?)
Economists vs. Sociologists
 Rational utility-maximizers
 Rational risk-minimizers
 Entrepreneurs see opportunities
 Schumpeter: Creative destruction, structural change
 Muddling through: wait and see
 Complex regulation leads to de-coupling
 Copy what others do, follow the trends
 Trends and ideas can come ”from the side”
How are firms regulated?
(Engwall 2006)






Complex corporate governance
Owners and managers: reciprocal relationship
Owners, governments, media, civil society
Handle uncertainty through boundary-spanning units
Internal gate-keepers to handle relations
External intermediaries: consultants, NGOs (CIO)
Regulation of universities
(Hedmo, Sahlin-Andersson, Wedlin)
 New ”products”/ideas from the US:
 Management education, MBA, on the margin







Accreditation, ranking: soft regulation, competing
By media and professional organizations
Demand from business schools
Field = interlinked system
Regulation unintended/uncoordinated consequences?
Isomorphism: coercive, mimetic and normative
Effects: Americanization? Homogenization?
6. The importance of ideas
 Are all actors ”rational”?
 Why does politics change?
 Dominant idea: ”Comparative advantage” (Hiscox
box 4.8)
 New discourses (Schmidt)
 (Merkel et al on what governments can do)
Discourses
(Schmidt 2002)
 How governments manage to gain agreement
 Explains change
 Ideational dimension (contents):
 Cognitive (necessary) and normative (appropriate) content
 Change in policy discourse and programme (table 5.3)
 Crisis, contradictions, lack of coherence
 Interactive dimension (process):
 Coordinative and communicative stages (fig 5.2-5.5)
 Epistemic communities, ”norm cascade” etc.
 Context (single-/multi-actor systems), causal influence
The role of discourses
(Schmidt 2002)




Britain: constructing a transformative discourse
France: in search of a legitimizing discourse
Germany: recasting the traditional discourse
Synthesis: fig 7.1







When practices no longer work
And policies no longer facilitate
And ideas no longer explain:
(Depending on mediating factors)
New ideas generate/legitimize…
New policies which facilitate…
New practices, which work
The room for manouvre
(Merkel et al)
Lecture 5
7. Fashions
 Beyond rational self-interest
 It is ”rational” to do what others do (Hayek!)
 Governments and firms
 ”Muddling through”
 Do the appropriate vs calculate what is best
 New ideas spread quickly, Follow the fashion
 Deep ideas: scientization, rationalization
Deep ideas:
structures of the mind?
 Scientific rationalization (Drori & Meyer 2006)
 Handle risks, organizing/rationalizing
 Why science? It works? Power? Modern religion?
 Marketization (Djelic 2006)





Why? Modernization? Diffusion of ideas?
Smith and Menger vs mercantilism and historicism
Keynes vs Monetarism (Chicago, Austria, Freiburg)
Better ideas or spread by politicians and IMF etc.?
Routines, networks, symbols, imitation, structuration
Deep ideas, continued
 Organizing (Ahrne & Brunsson 2006)
 Culture and organization. Standardization
 Meta-organizations
 Rationalization of virtue (Boli 2006)
 Awards, certification etc.
 Rationalization of universities (Ramirez 2006)
 Expansion, socially useful, flexible, exports
 European regulation of universities (Hedmo, KSA,
Wedlin 2006, above)
Conclusions
 1. The impact of politics on firms
 Regulatory frameworks, ideas
 2. The impact of firms on politics
 Lobbying, ideas
 All factors are relevant, but when and how?
 Simplification needed?
Additional readings




Lindvall & Rothstein
Arvidsson et al
Lichbach & Zuckerman
Merkel et al on governments