ABSTRACT

The strategic behavior of the Finns and the Danish ability to extract concessions, while heartening for those seeking examples of room for maneuver, point squarely at the coordination problem of transnational monetary regimes. The markets that result from globalization may circumscribe options, but small states can find themselves in a strategic position vis-à-vis governing supranational institutions, not unlike classic free riders. The lesson is that despite the deterioration of centralized collective bargaining, small states like Austria are flexibly employing their institutional legacies neither to dictate the character of change nor simply "to let the ice crystals form on the windshield," but to coordinate the responses of economic actors. In the postwar period the Economic and Social Partnership was used to dampen wages and prices and hence achieve competitiveness. Because of this arrangement, Austria could take pride in a stable hard currency that allowed it to mesh economic activity with Germany, its main trading partner.