chapter  1
New models of democratic capitalism and policy regime change
ByHIDEKO MAGARA
Pages 14

Introduction: policy regime change Democratic capitalism in developed countries has been facing an unprecedented crisis since 2008. Its political manageability is declining sharply. Both democracy and capitalism now involve crucial risks that are significantly more serious than those observed in earlier periods (Crouch 2013; Schmitter 2013; Streeck 2013). In this context, the notion of policy regimes has gained new significance in analysing the possibilities for a post-neoliberal paradigmatic alternative. Policy innovations directed towards an economic breakthrough require both political leadership and a new economic theory (Magara 2014; Przeworski 2001, 2014). This volume examines, from a policy regime perspective, how developed countries attempt to achieve such a breakthrough at critical junctures triggered by historic economic crises. Under the neoliberal policy regime, a serious challenge to democracy currently exists, in that the processes of political decision making have become quite distant from the public realm, and a limited number of economic and political elites exert influence on public policy (Crouch 2013). By and large, the more neoliberal an economy becomes, the less democratic its politics tends to be. In this project, we first observe main reasons why the socialdemocratic policy regime, the regime that preceded neoliberalism, came to an end. We then show the nature of the present crisis and identify the actors involved. Thereafter, we provide an analytical definition of a crisis, stressing that most crises contain within them the potential to be turned into an opportunity. We then develop a new analytical design in which we can incorporate today’s more globalized and fluid context. Presently, the legitimacy of the neoliberal policy regime is seriously questioned. Its economic performance has been incomparably abysmal. While some political elites attempt to move to a new policy regime, others prefer maintaining the status quo. In whose hand does the key to a new period of economic growth rest? The central problem of political management in advanced societies today is related to forms of economic transformation. The economy is in the midst of transition from an old order to a new order, and this transformation is often said

to be nonlinear. In this chapter, I first go back to the 1980s and 1990s to show why and how the old regime, which had been based on corporatist coalitions, collapsed. I will then provide an analytical framework by which we can explore possibility and difficulty of transitions to new policy regimes.