Main concepts
Socio-political groups
Social blocs
- Dominant social bloc
Political equilibrium
Political crisis
Systemic crisis
Workshop
The Political Economy of Institutional Change and Social Blocs: a Neorealist Approach
Celâl Güney
Introduction
Objective: present the neorealist approach to institutions, institutional change and social conflict developed by Bruno Amable and Stefano Palombarini
Focus on the theoretical framework (first part), empirics (second part), with example taken from my own applied research on Switzerland
A new political economy framework
Several issues with existing economic, comparative capitalism and political economy frameworks
- Tainted by functionalism
- Static
- Normative
Foundation of a neorealist approach
- Offer a positive approach (avoid normativity)
- Link political, economic and social dynamics
- Explore the causes of institutional change
- Fundamental question: in a system tainted by contradictions and crises, why do we observe periods of relative stability ? How is social conflict regulated ?
Foundations of the neorealist approach: social conflict
- The social structure being heterogeneous, individuals’ interests are varied
- This diversity of social expectations leads to contradiction and opposition of interests between actors
- There is no “general interest” or “general welfare” as in normative approaches (Marxism, mainstream econ…)
Regulation of social conflict: Ideology (1)
Shapes actors’ representation of the world, their position in society and thus their interests
Reduces heterogeneity from the structure by making agents converge to same political demands
Social expectations are not only shaped by class, stratification and the position in the structure
Reduces the space of acceptable political demands and homogenize the diversity of interests to a certain extent, by disregarding some demands deemed as socially unacceptable
Regulation of social conflict: institutions
Defined as rules of the social game
- Formal (written, as constitutions and laws in general) or informal (conventions, norms)
Are the result of past social compromises
Shape the representation of interests and the formation of political supply and strategies, as well as macro dynamics
What institutions are not
They are not practice, strategies, rules of thumb and must not be confounded with organizations (the state, political parties, interest groups etc.). Organizations are the players and institution the rules of the game.
Five institutional areas
Product market competition
- Degree of competition, cartels…
Wage-labour nexus and labour market institutions
- Labour flexibility, employment protection, minimum wage policy…
Financial sector and corporate governance
- Bank-based or market-based finance, power of shareholders…
Social protection and the welfare state
- Pension, insurance, invalidity systems, unemployment benefits…
Education system
- Vocational or general training, specific or general skills…
Political mediation
Institutional change is the result of political strategies devised by political actors
Political actors mediate a social compromise between the heterogeneous demands
They devise a specific strategy of economic policy and institutional design
They select which interests to protect and to disregard to aggregate support
Idea that the ruling actors cannot govern only by brute force, but need a certain degree of support
Political economy analysis
Elements to consider:
- Socio-economic model (institutions, complementarity, hierarchy)
- Macroeconomic policy
- Identification of social blocs
Political actors and strategies
Ideology
The Swiss model
A model particularly difficult to grasp, even in the existing literature
Liberal corporatism (Katzenstein 1985)
Liberal capitalism (Blaas 1992)
Coordinated market economies (Hall and Soskice 2001)
Continental model (Amable 2003)
Organised capitalism (Charles and Vallet 2024)
Hybrid model (Trampusch and Mach 2011)
Switzerland’s institutional paradox
Presence of institutions very close to the market-based model:
- Flexible labour market, low employment protection, weak labour unions
- Absence of Keynesian-style macroeconomic policies
- Weak welfare state, with prominence of private, market-based insurance schemes (health insurance, second and third pillars of pension funds)
- Highly competitive and de-regulated exporting sector
But co-existing with non-market, coordinated institutions:
- Protectionist, insider-oriented and bank-based financial system
- Predominance of vocational training
- Highly cartelized and protected domestic sector with low degree of competition
=> What kind of dominant social bloc made this model possible ?
The Swiss dominant social bloc
- Bourgeois bloc
-
Coalition between the governing right wing parties (SVP, FDP, CVP) and business interests associations (EconomieSuisse, USAM…)
Several issues with this definition:
- A social bloc should not be reduced to a political alliance/coalition
- No information about socio-political groups, and how the latter are aggregated through political strategy
Reconstructing the blocs
| Social bloc | Social groups | Political actors | Main policy demands |
|---|---|---|---|
| Liberal-conservative bloc (dominant) | Large internationalized export-oriented industries Domestic-oriented SMEs, farmers, craftsmen, storekeepers, self-employed |
Liberal-Radical party, Christian-democrats, EconomieSuisse, Avenir Suisse SVP, USAM, USP |
Labour flexibility, free-trade, weak welfare state, low taxation Public transfers, protection from international competition, labour flexibility, low taxation |
| Left bloc (dominated) | Production & service workers Socio-cultural professionals |
Swiss Socialist Party, Union Syndicale Suisse | Employment protection, social benefits, real wage increase, protection from international competition |
In search of social blocs: a general model
- Socio-political groups
-
Groups of individuals with the same political/social demands
- Social blocs
-
Socio-political groups aggregated by a political strategy
In search of social blocs: latent class analysis (LCA)
Clustering method to identify latent categorical patterns with categorical data
3-steps approach 1. compute the clusters, 2. assign posterior probabilities to sample individuals, 3. relate posterior probabilities to other variables (party support, socio-economic characteristics…)
Results for 1999 post-election data
Results for 1999 post-election data
Results for 1999 post-election data
References
Amable, Bruno. 2003. The Diversity of Modern Capitalism. Oxford ; New York: Oxford University Press.
Blaas, Wolfgang. 1992. “The Swiss Model: Corporatism or Liberal Capitalism?” In. New-York: Oxford University Press.
Charles, Léo, and Guillaume Vallet. 2024. “Fast and Curious: ‘The Swiss Development Puzzle.’ The Institutional Roots of the Success of Industrialization.” Review of Political Economy 0 (0): 1–27. https://doi.org/10.1080/09538259.2023.2298747.
Hall, Peter A., and David Soskice. 2001. Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford University Press.
Katzenstein, Peter J. 1985. Small States in World Markets: Industrial Policy in Europe. Ithaca; London: Cornell University Press.
Trampusch, Christine, and André Mach. 2011. Switzerland in Europe: Continuity and Change in the Swiss Political Economy. Taylor & Francis.
Workshop The Political Economy of Institutional Change and Social Blocs: a Neorealist Approach Celâl Güney