Towards a Swiss Army Knife State? The changing face of economic interventionism in advanced democracies, 1980–2015

Abstract

This article systematically reviews trends in numerous economic policy indicators in eighteen OECD countries since the early 1980s, synthesizing findings about the fate of states' economic interventionism from several customarily separate literatures. Rather than observing any paradigmatic policy shift, the review finds that policies with markedly different ideational foundations currently cohabitate. In line with non-interventionist prescriptions, policymakers have largely abandoned the intrusive heterodox 'power tools' of previous eras, while establishing new norms for monetary policy based on monetarist theory. However, this has not led to a full retreat of economic interventionism. Instead, policymakers are gradually developing a new, albeit more constrained, approach to promoting economic activity in line with selected distributional goalshere labelled the micro-interventionist state, or the 'Swiss Army Knife State', as it were. The cross-partisan appeal of the 'multi-tools' associated with this approachsuch as horizontal industrial policy, active social policy, and strategic tax expenditures and procurementpartly stems from their versatility, as policymakers can use them to very different distributional ends. To better understand the politics and distributional consequences of contemporary economic policies, scholars need to take their versatility more seriously, shifting focus theoretically and empirically from how much to how policymakers intervene in the economy.

Contagion, Confounding, and Causality: Confronting the Three C’s of Observational Political Networks Research

“…If one unit's covariate value affects the outcome value of another unit, this can look, to the Shalizi and Thomas test, like contagion through the outcome variables, but it is actually a more subtle form of cross-unit dependence. To give an example of this dynamic, major policy decisions (e.g., business or trade shut downs due to the COVID-19 pandemic) made in a country may affect the economy of the country making the decision as well as the economies of other countries (Cronert 2022). This dynamic would look like economic contagion to the Shalizi and Thomas test, but it is actually a form of cross-border economic dependence based on policymaking effects.…”

Introduction: labour market policy as a field of government action and an object of research

“…As societies have moved across major structural changes and macro-economic consensuses have evolved, states have for no extended period retreated from policy intervention in labour markets in any straightforward way. While governments have certainly changed the ways in which they address labour market risks, we witness more of a reconfiguration and complexification of policy tools and approaches than a demise of public policy interventionism (Cronert, 2022).…”

Effects and explanations of active labour market policy: theoretical and empirical challenges for cross-national research

“…Indeed, people who view themselves as net contributors to social security systems, including employers and better-off workers, may view ALMP programmes as win-win solutions to social problems, since they can improve the well-being of their target groups while reducing reliance on publicly funded transfer programmes (Bonoli, 2013). Although empirical evidence on public preferences towards ALMP is still scarce, a few studies indicate that such considerations may be part of the explanation of the overall resilience of ALMP and similar state interventions (Garritzmann et al, 2018;Cronert, 2022b).…”

“…Third, there are some often-overlooked overlaps and functional equivalencies between ALMP and certain other policy fields. For instance, labour market training and employment subsidies are often also considered part of industrial policy, while strategic tax exemptions and strategic public procurement policies can serve as functional equivalents to ALMP for governments that seek to boost employment of particular groups of workers (Cronert, 2022b). Also, there is a relationship between vocational training and ALMP, particularly so those targeting youth Geyer, 2020, 2021).…”