Winner-Take-All Politics in Europe? The Political Economy of Rising Inequality in Germany and Sweden

51 Pages Posted: 27 May 2015

See all articles by Karen M. Anderson

Karen M. Anderson

Radboud University Nijmegen - Department of Political Science

Anke Hassel

Hertie School of Governance

Date Written: May 26, 2015

Abstract

Is there a "winner-take-all" politics in the affluent democracies of Northern Europe? We explore this question through a comparison of two cases of "regulated capitalism," Sweden and Germany, asking whether these institutions continue to produce equitable outcomes in the face of globalization and financial crisis. Both countries have experienced significant increases in income inequality since 1990, and their labor markets have begun to display signs of dualism, demonstrating the weakened capacity of regulated capitalism to secure equality. Despite these broad similarities, inequality and labor market dualism have increased more in Germany than in Sweden. We argue that the shift to the right, even among social democratic parties, is an important cause of increased inequality in both countries. Our analysis also emphasizes the political effects of decades of welfare state building in both countries: the popularity of the welfare state and other institutions of regulated capitalism among the electorate constrain the ability of governments to pursue a radical liberalization agenda. We attribute Sweden’s superior performance relative to Germany in protecting low income groups to the interaction of industrial relations institutions and the electoral system. Swedish corporatism has retained much of its encompassingness compared to Germany, and proportional representation in Sweden creates incentives for the Center-Left to include the interests of low-income groups in their electoral and governing strategies. In contrast, German industrial relations are increasingly marked by segmentalism, and the electoral system generates few incentives for the Center-Left to include low income groups in their electoral coalition.

Keywords: inequality, electoral competition, organized interests

Suggested Citation

Anderson, Karen M. and Hassel, Anke, Winner-Take-All Politics in Europe? The Political Economy of Rising Inequality in Germany and Sweden (May 26, 2015). Available at SSRN: https://ssrn.com/abstract=2610653 or http://dx.doi.org/10.2139/ssrn.2610653

Karen M. Anderson

Radboud University Nijmegen - Department of Political Science ( email )

P.O. Box 9108
Nijmegen, 6500 HK
Netherlands

Anke Hassel (Contact Author)

Hertie School of Governance ( email )

Friedrichstr. 180
Berlin, 10117
Germany
+49.30.259 219 310 (Phone)

HOME PAGE: http://www.ankehassel.de

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