ABSTRACT

Traditional narratives of both the left and right contend that economic globalization has compelled advanced industrial welfare states to deregulate their economies and curtail social benefits and public expenditure. As the story goes, the liberalization of the movement of both goods and capital (particularly financial capital) limits the policy autonomy of welfare states and compels a “race-tothe-bottom” in regard to both social benefits and economic deregulation. In order to be globally competitive and to maintain fiscal balance, advanced welfare states can afford neither high levels of taxation nor generous social benefits. Continuing to do so serves only to engender both capital flight and high levels of long-term unemployment.1