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Perspectives on Globalization Causes, consequences and strategies (Economics and Politics) Lars Niklasson, Political Science, Linköping University.

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Presentation on theme: "Perspectives on Globalization Causes, consequences and strategies (Economics and Politics) Lars Niklasson, Political Science, Linköping University."— Presentation transcript:

1 Perspectives on Globalization Causes, consequences and strategies (Economics and Politics) Lars Niklasson, Political Science, Linköping University

2  (MIER 7,5 hp, Swedish master 15 hp)  Active participation in the seminars  Three mixed groups  MIER: Seminar on challenges  MIER: Take-home exam  Swedish master: More seminars & short paper Course requirements

3  1. How politics impacts on the economy/firms  Regulation, Institutions, Governance etc.  2. How economics (firms) impacts on politics  Structural change, globalization, lobbying etc.  General theories (IR)  Political Economy (often motives, explanations)  Comparisons  It is all about Globalization! The idea of the course

4  Economic integration of the globe:  We can buy cheap things  Jobs get outsourced  The third world wins or looses?  Pollution or greener technologies?  Power shifts to global firms?  Power shifts from the US to China?  Europe needs to change a lot? What is globalization?

5  Inevitable (?) change through technology and the integration of markets (What more?)  Leads to increased competition but also new markets  Financial imbalance: Western governments have deficits and loans from China. Firms have money.  Countries need lower taxes? and investments in skills  Firms need to understand new customers, brands, good location and flexibility/networking  (Energy shortage?) Topics of the debate: Is everything you hear true?

6  The International Forum on Globalization: Alternatives to Economic Globalization, 2002:  Against corporate globalization: ”big firms get too much power and ruin the resources of the planet”  Local economies better than exports and integration  Cultural and economic diversity is needed  Local and national political power, democracy  = similar to the progressive movement in the 1890s?  = other values? Other economic theories? The critique, I

7  ”It’s too neoliberal”:  Too much deregulation, too much belief in the market  But some strategies are the opposite of liberalism:  State support to make firms competitive  Neo-mercantilism (i.e. too little liberalism? A bad mix?)  = What is the manifest strategy/-ies?  What works in theory? In practice?  What are our core values? How can they be promoted? The critique, II

8  Understanding key issues in the global economy & politics  Production, finance, trade, development, environment  Government and business  Politics shapes the economy (firms): institutions  The economy (firms) has an impact on politics  A variety of perspectives  Economics, Politics, IR/CP, Sociology  Combine and contrast, to bring out assumptions  Ravenhill, Schmidt, K&L, MLD&KSA Aims and ambitions

9  What is globalization? (production, trade, finance)  What is global regulation? (WTO, Kyoto etc)  How is national politics relevant?  How is policy/regulation/institutions relevant?  State support for businesss  (Will globalization change the models?)  Why are the Nordic countries doing well?  What is private and transnational regulation? How does it have an impact? (ideas) Questions

10  Globalization is (in brief) an ongoing transformation and integration of the economy, with implications for politics  Inevitable? Uniform? What are the drivers/causes?  Can it be ”controlled” by politics? Can we make it “good”?  A threat or an opportunity? More good than bad?  ”Intended” effects: More wealth in more countries; win-win, short-term problems (flexibility)  Unintended effects: Poverty, environmental, big profits, degradation of industry  We need to understand it better: the drivers Perspectives on globalization

11  Growth  More opportunities or more restrictions?  Less government support for business?  Quality of life  Welfare, living standards (developing countries?)  Democracy  Accountability? Leadership?  Unintended consequences? Criteria for evaluating globalization

12  Economic integration: FDI and TNCs  International/Global  From mercantilism to integration  Bretton Woods 1944  American hegemony  From embedded liberalism to neoliberalism?  The crisis 2008-09: what does it show?  Why crisis? Why rescue packages?  (IPE as a new subfield)  See also McGrew (2011) table 9.3 What is globalization? (Ravenhill 2011: intro)

13  Several research paradigms (Watson 2011)  Different kinds of causality (McGrew 2011)  My solution:  A list of factors, from structural to cultural  Additive, successive factors: all are relevant, but in different ways  Untangle the mess of causal factors! Set them in relation to each other.  (Lichbach & Zuckerman 1998: Comparative Politics) How can we study globalization?

14  Structures: Economy, technology  Institutions: International regulation  International politics and Paths  Domestic politics  National patterns: variety of regulation  Ideas: scientific and normative  Fashions: follow the trends A list of successive factors

15 Factors and literature Factors  Structures  Institutions  Politics and Paths  Domestic politics  National patterns  Ideas  Fashions Literature  Ravenhill  Schmidt, K&L  Schmidt, MLD&KSA  MLD&KSA

16  International Relations  Realism (states as short-term rational actors)  Liberalism (states as long-term rational actors with a motive to cooperate)  Marxism (normative critique of capitalism)  International/Global Political Economy  Liberalism (Smith) vs Mercantilism/Nationalism (List)  See also: ”Comparative advantage” (Hiscox box 4.8)  (Comparative Politics)  Rationalism/interests, structures, ideas: combinations  (American vs British School in IR) Research paradigms (Watson 2011)

17 Source: Watson table 2.2 International Relations: Focus on states International/Global Political Economy: focus on economic actors (or politics) American School, ”IO” Abstract and driven by methods = similar to Economics. (Assumptions for convenience and math, not accuracy; Hay) Realism, statism, Rational choice (Liberalism) Neoliberalism, Nationalism/mercantilis m British School: Wider perspectives and normative =similar to Sociology Structuralism Poststructuralism (Constructivism) Marxism/critical Four ways to study globalization

18  Hyperglobalization too strong: Economists’ assumptions  Perfect integration of markets, Exit costless?  Cheap labor best? Welfare always a cost?  (Financial capital vs. industrialists/investors)  The state a source of competitiveness? (Neomercantilism)  Convergence? LME/CME respond differently  Globalized problems difficult to handle: free riders  Effect: Retrenchment? Other drivers of policy change  Cause: Globalization? Difficult to measure (Regionalization?)  Why no convergence of interest rates? (Should they converge?) Causes and effects (Hay 2011)

19  Economy or multidimensional processes?  De-territorialization, difficult to separate domestic from international, global division of labor  Rescaling, regions  Increasing trade, within TNCs  Specialization and competition  Finance, investments, production  Deindustrialization of the north  Labor migration from south to north  But: ”Beijing consensus” = state capitalism Logics of globalization (McGrew 2011)

20 Source: McGrew, table 9.2 Causal mechanism Focus”Forces” Structural Too strong: Shaped by other factors Determinism Path- dependence? Why and HowTechnology Economy Hegemony Conjunctural (Conditional) ”Could have been different” Circumstances, timing Tendencies How, When and What form Institutions (regulation) Paths Constructivist (A subset of conjunctural?) Ideas shape interests When and What form (Schmidt 2002!) Ideas (Politics) The causes of globalization

21  Policy without politics: assumes interests and paths, overlooks alternatives and culture  Practices without policy/politics: economic determinism and paths  Politics without policy/practice: ideas without economic factors, institutions and interests  = economic background factors + politics (ideas)  Push and pull  (IR too abstract and theoretical, not empirical, p 60f) We need to study policy, politics and practice (Schmidt 2002)

22  Is globalization driven by background forces such as technology and economy?  IT  China, India, BRICs etc.  Outsourcing of production (Thun)  New markets  (Because of deregulation?)  Are all countries affected in the same way?  Firms (and governments) do different things 1. Structures

23  Production: outsourcing, value chains  Why now? Trade liberalization, developmental states in Asia/relocation of American firms  Hierarchies or markets and networks. Captive?  Upgrading of the subcontractors? Competition?  Nation states too small and too big?  China: local diversity, slow development of cars  Also sales: new markets, new values  Variety? Are all firms similar?  Good or bad? The globalising firm (Thun 2011)

24  ”We” see cheap labor, competitors  They get higher living standards, education etc.  Large increase in living standards in China and India  Energy consumption goes up  They buy more European goods  How do they organize their economies and societies?  From suppliers to new firms?  Foxcon at the Pearl River Delta = Iphone  Compare Wales, Ireland, Mexico etc. China, India etc.

25  Inevitable causes, uniform effects?  Resistance is meaningless? Implications for globalization

26  Regulatory frameworks (rules, organisations) shape some of the effects of globalization. What rules? Enough rules?  Trade (Winham 2011, Ravenhill 2011)  Money and finance (Helleiner 2011, Pauly 2011)  Environment (Dauvergne 2011)  Development (Wade 2011, Phillips 2011)  Transnational regulation (MLD&KSA 2006)  Soft regulation (Mörth 2006)  How did the rules develop? (part 3)  International politics, paths, ideas etc. 2. Institutions (global regulation)

27  Repeal of the Corn Laws 1848: new majority  Protectionism in the 1870s.  USA 1930 (Smoot-Hawley) vs 1934 (RTAA)  GATT 1947 (No ITO 1948)  Non-discrimination, ”Most favored nation”  ”Safeguards” as limits  Environmental concerns are barriers  Fair to developing countries?  Several rounds, increased scope (table 5.1)  WTO 1994, ministerial conferences, DSU The global trade regime (Winham 2011)

28  EU, Nafta, Asean etc. (table 6.1)  Logic: FTA, Customs union, Common market, EMU  Political motives: confidence, security, joint power, lock-in reforms, satisfy voters, easier implementation  Economic motives: protecting sectors, deeper integration, better than unilaterism (scale)  But: third parties may be cheaper (”trade diversion”)  Conflicts with WTO, ACP-countries /Lomé Regional Trade Agreements, RTAs (Ravenhill 2011)

29  Nested with security, neoliberal ideas, contagion  Winners and losers, Strategic trade theory  Deeper integration because of its own momentum (neofunctionalism) or intergovernmental bargaining?  Increased trade because of RTAs?  Stepping stone (easier) och stumbling block (complexity) for global negotiations? RTAs, continued

30  The gold standard=fixed exchange rate, breakdown 1930  International causes: change of hegemon  Domestic causes: interventionist policies, speculation  Bretton Woods and the dollar: IMF, IBRD, (GATT)  Motives: reduced risks, national autonomy  Why globalization: diversification, efficiency  Risks: unstable, ”impossible trinity” (autonomy, openness, stable exchange rates)  Distrbutive consequences Money and finance (Helleiner 2011)

31  The strong dollar allowed the US to finance deficits  Loss of benefits for the US, loss of stability?  Managed exchange rates 1982Plaza, 1987 Louvre  Manipulating competitiveness?  China buying dollars to keep their currency low?  EMU and the Euro  (Why has it failed? Is it still needed? What can be done?) Money and finance, continued

32  Allocates resources where needed? Unstable?  Lender of last resort vs Moral hazard -> regulation  More difficult to interpret information: uncertainty  Coordinated policies or discipline by the market?  Loss of political sovereignty  Bank regulation: systemic risk, public and private  BIS, Basel Committee etc. (box 8.3)  Illiquidity or insolvency? (Firms and countries)  The crisis 2008: solved, but more systemic risk, high costs Global financial crises (Pauly 2011)

33  Stockholm, Rio, Kyoto, Johannesburg, Copenhagen  Growth to reduce poverty? Kuznets curve  Trade for efficiency, standards, technologies  Unequal consumption etc.  Distance from effects, pollution havens  GEF: Assistance to the south benefits the north  Regimes are Common: Weak implementation?  Ozon (CFC substitutes) vs Climate change and Forests Environment (Dauvergne 2011)

34  China and India grow fast. 38% of world population  Better with more globalization? Trade?  Inequality  Government failure worse than market failure?  Industrial/military policies for growth (mercantilism) even in the US Development (Wade 2011)

35  Modernization and catching up vs dependency  East Asia: due to the market or the state? Export  Import-substituting industrialization, ISI  The Washington Consensus: one size fits all  Governance, state capacity, ownership etc.  ”The poor are excluded from globalization” or ”globalized markets impose obstacles to development” Development (Phillips 2011)

36  A process of re-ordering regulation beyond the state  ”Transnational” is more humble than ”global”  More actors, soft modes of regulation and sanction  What: Governance without/with government, networks  Regulatory states, regulation as distrust  By whom? Epistemic communities (Politics below)  Institutional frames, fields, homogenization, ideas, forces  Ideas travel: translation, hybridization, institutionalization  Multi-level interaction Transnational regulation (MLD & KSA 2006)

37  Law firms in competiton regulation (Morgan 2006)  Transnational social space, actors, institutions  EU and US competition regulation, need for advice from transnational law firms  Standard-setting in accounting (Botzem & Quack 06)  Globalization of financial reporting and auditing  OECD, EU, UK alternative models. IASC  Shift to financial market regulation Transnational regulation: ”private regulation”

38  Soft regulation: ”suggestions”? (Mörth 2006)  Governance: soft law, public/private, networks  Collaboration = Deliberative democracy beyond the state?  Dahl, Held, Dryzek, Hirst  Compare EU: Open Method of Coordination (=no mandate)  Dynamics of soft law (Jacobsson & Sahlin-Andersson 2006)  Diversification and convergence  Non-state organizations interrelate with states  Rule-setting, monitoring, agenda-settings (interrelated)  Authority by organizing, expertise, association. Webs. Soft law: a new kind of regulation

39  International regulation has an impact on the structural forces of globalization (technology and economy) by setting limits to public and private action.  International organizations are an important arena for work on globalization?  Private organisations are less visible.  Not enough? Not the right policies? Etc. Implications for globalisation?

40  International organizations: operations (and design)  IMF, World Bank, WTO (frozen ideas?)  A motive for states to collaborate  From Realism/Nationalism to Liberalism. Marxism (Watson)  Theoretical or Normative positions?  Cooperation (Aggarwal & Dupont)  International negotiations  Rational, Rules of the game, Ideas.  Who is in power?  Path dependence, difficult to change  Unintended consequences  (Transnational ideas) 3. International politics and paths

41  What are they?  RTAs: EU, ASEAN, NAFTA etc.  Bretton Woods: IMF, IBRD, WTO  Environmental agreements: Rio, Kyoto etc.  Financial regulation: BIS, Basle Committee etc.  Transnational organizations International organizations as arena for international politics

42  How do they operate?  Membership, stringency, scope, delegation, centralization: Because of type of problem? (Aggarwal & Dupont, table 3.1 Below)  States as members? Delegated powers?  Suprantional? Intergovernmental? Private?  Politics? Civil servants? Accountability? Democracy?  What role for civil society, NGOs etc? International organizations, continued

43  Interdependence: economic gains in the long run but political motives in the short run to ”free ride”  Prisoners’ Dilemma (dominant strategy to cheat)  ”Inhibiting fear” (mistakes): Assurance Game  Where to meet”: Battle of the Sexes  Mixed games, repeated games  Solutions: Insulation, corporatism, international regimes and organizations (enforcement, information, fairness)  Why? Hegemonic power (realism), demand, paths, nesting, linkages (liberalism), ideas (constr.) Motives for states to cooperate (Aggarwal & Dupont 2011)

44 Source: Aggarwal & Dupont table 3.1 Free riding temptation Inhibiting fearWhere to meet Strategic gamePrisoners’ DilemmaStag HuntBattle of the sexes IllustrationsTrade liberalization Debt rescheduling Financial integration Trade specialization Managing adjustments Multilateral negotiations Role(s) of institutions Enforce contractsEnhancers of cooperation Providers of solutions Examples of international solutions Monitoring Sanctions Quota systems Knowledge Capacity Negotiation forum Agenda setting Institutional solutions

45  Intergovernmentalism = focus on negotiations by states (especially in the EU)  Why these positions? Look inside the state:  Interests = domestic politics (below)  = governmens help their exporting industry (the winners)  Ideas = a convincing framing, discourse (below)  = a new economic theory, such as monetarism  Bargaining strategies: interdependence, within rules  Game theory (above), nested games International negotiations

46  Politics continues along a path  Some actions are easier than other becasue of previous choices  International and national politics  Schmidt on UK, Germany, France below  It is a logic of the situation (time and place: history)  Also unintended consequences: new paths  Example: Rulings by the European Court of Justice on ”mutual recognition” (implicit in the Rome Treaty?)  Neofunctionalism: crises lead to action, a self-moving process Path-dependence

47  International organizations make rules, evaluations  Embedded states (and agencies): Europeanization  States need to respond = recreates the state  Rule-followers more than rule-makers?  (=the logic of the field? A kind of path?)  Scripts, translation, such as the Employment Strategy  Fragmentation (epistemic communties)  De-coupling A kind of path: regulatory fields (Jacobsson 2006)

48  International competition network (Djelic & Kleiner)  From positive to negative views on trust  1890 Sherman Antitrust Act led to more mergers  Europe: Cartels better than the chaos of competition  American influence after WWII: Germany, EEC  1990: EU, end of communism, globalization  Inconsistent and conflicting regulation->coordination  Experts (OECD), statism (WTO) or community (ICN) Transnational regulation driven by networks of agencies

49 Source: Djelic & Kleiner 2006 Experts (OECD) Statist (WTO) Community (ICN) Rule makers vs rule followers Separate Combined Product of governance process StandardsBinding rulesBeliefs Mode, logic of rule making Expert drivenPolitical negotiations Negotiations, Expert input Mode, logic of rule monitoring ”Expert awe”Coercion, constraints Socialization +/-Presupposes legitimacy EfficientEasy to start Three possible scenarios for transnational governance (table 14.2)

50  Networks of central bankers (Marcussen 2006)  Central banks and their governors  An epistemic community, a network  Where do they meet? BIS, IMF etc.  Networks produce standards, knowledge and identity Transnational regulation by epistemic communities

51  A self-reinforcing governance spiral: distrust, control  Competition, a market for regulation  Distrust by scientization, marketization, deliberative democracy (Institutional forces, meta-rules, undetected)  Responsibility becomes unclear  Control achieved through rival regulation  Incremental change, complex but similar processes  Anti-globalists reinforce these patterns, a stabilizing order  Spaces, actors, relations. Efficiency based on power  First-mover advantage for the US (=entrepreneur) Institutional dynamics (MLD & KSA 2006)

52  ”Markets for pollution” to create property rights  Pollution = negative externality  Quasi-market: Commensuration is difficult  Sociologists: states organize markets  Supranational and national regulatory process  An international process after Kyoto  Three spaces: BP, UN and EU  Transnational actors Why CO₂-emissions trading? (Engels 2006)

53  Independent certification: A green premium. Market or state? Complement or threat to existing regulation?  At the intersection of producers and consumers  Can change over time, by entrepreneurs  FSC, Forest Stewardship Council 1993  Consensus and cooperation, universal criteria/local variation, several dimensions of sustainability  Success and uncertainties, conflicts  An articulated para-regulatory advocacy coalition: FSC initiated by retailers, moderate NGOs, eco-entrepreneurs  Four strategic action fields, competitors, states as allies Why certification of forestry? (McNichol 2006)

54  Winners and losers  Institutions again (the regulation of politics determines/shapes the outcome of politics)  Ideas? Discourses (Schmidt below)  Epistemic communities?  Impact of globalization  Developed countries (Hay 2011, above)  Developing countries (Wade 2011, Dauvergne 2011, above) 4. Domestic politics

55  Interests are based on material position: holders of abundant vs scarce resources (?)  Unions and their firms on the same side  The repeal of the Corn Laws 1848: new majority  Heckscher-Ohlin, Stolper-Samuelson  But: Why import cars from other countries?  Also immigration, investment and exchange rates Winners and losers? (Hiscox 2011)

56  Institutions: elections, legislatures, agencies etc.  Proportional voting, strong parties=more trade  Delegating power to the president. Reality more complex: ”bootleggers & baptists”, nested games, framing/ideas  Rational choice institutionalism: rational action within the rules (institutions/constitutions)  ”Economic analysis of political rules”  Example: bargaining outcomes in bicameral legislatures Institutions/constitutions lead to different politics

57 Lectures 3-4

58  A variety of patterns, no convergence?  Institutions: LME and CME (Schmidt, K&L, L&R)  Institutions are equilibria?  Self-enforcing, but how?  Institutions shape the economy?  Patterns of specialization  Or: the economy shapes the institutions?  Firms, entrepreneurs  Nordic model or models (K&L)  Political institutions determine economies? (L&R) 5. National patterns: countries are different

59  What is the impact of globalization on France, Germany, UK? (Sweden?) Different reactions  Challenges, policies, adjustment, discourses  Britain (liberalism) changed early, anticipated EU policies, a transformative discourse  Germany (corporatism) changed lately, late change of post-war discourse  France (statism) tremendous policy adjustments without a legitimating discourse European Capitalism (Schmidt 2002)

60  Historical institutionalism (+interests, norms) + ideas, discourses  Policy without politics: assumes interests and paths, overlooks alternatives and culture  Practices without policy/politics: economic determinism and paths  Politics without policy/practice: ideas without economic factors, institutions and interests  = economic background factors + politics (ideas)  Push and pull  IR too abstract and theoretical, not empirical (p 60f) Policy, Politcs, Practice (Schmidt 2002)

61  Loss of national autonomy: monetary policy, tariffs, subsidies, nationalization, benefits. Still variety  Loss of national control: MNCs more independent but still ties to home countries (identity, legal), exit costs  Gains in supranational autonomy and control (EU, WTO, IMF) but also networks and private regulation  Europeanization (and different views of the EU)  EU as a shield, creating new risks: EMU (national wage bargaining without national monetary policy) Autonomy and control: losses and gains (Schmidt 2002)

62  Mediating factors, mechanics of adjustment explain responses to pressures (table 2.1):  Economic vulnerability: Competitiveness  Political institutional capacity: veto-points  Policy legacies: fit/misfit with paths  Policy preferenes: openness to the new  Discourse: new perceptions change preferences  Sequence of change: monetary, industrial, social  EU pressures vary: specified (highly/less), suggested, no specification (competition, mututal recognition) table 2.2  Outcomes: inertia, absorption, transformation (figure 2.2) National policy adjustments (Schmidt 2002)

63 Source: Schmidt 2002, table 3.1 Market cap (US, UK) Managed cap. (D, NL, S) State cap. (F, I) Business rel.Market-drivenNon-marketState organized - interfirmCompetitiveNetworksState-mediated - firm/financeDistantCloseState-mediated -InvestmentShort-termLong-termMedium-term Government relArm’s lengthNegotiatedState-directed -StateLiberal, arbiterEnabling, facilitatorInterventionist, leader Labor rel.AdversarialCooperativeAdversarial - Wage barg.Market-reliantCoordinatedState-controlled - State reg.BystanderCo-equal or bystander State imposes Three ideal-types of Capitalism (Schmidt 2002)

64  Evolution rather than convergence  Differing impacts of financial markets, differing roles of the state, differences in production profile  Comparative advantages and disadvantages of the three models  Still three models  Table 3.6, Figure 3.1  Ch 4 on the dynamics of adjustment in UK, D, F Convergence? (Schmidt 2002)

65  Varieties of Capitalism and how they react to globalization  Nordic capitalism unexpectedly successful  Firms’ (subsidiaries) strategies in local context  Social inventions leading to experimenting firms  Liberalization + new forms of corporatism  Nordic welfare: bad shape 80s, reform 90s  Enabling welfare state and individualized services  Strong in Chandlerian innovation (Germany crafts-based)  Networking firms: need for skills, more than R&D The Nordic models (Kristensen & Lilja 2011)

66  The Nordic countries  Different in types of industry, R&D  Similar in learning work organization  Welfare systems support learning organizations  Flexicurity  Public sector experiments (private providers) Supportive welfare? (Kristensen & Lilja 2011)

67  Finland: Flagship-driven + subsidiaries  Denmark: More SMEs, 20% change job every year  Norway: Natural resources, international, learning  Sweden: MNCs, knowledge-driven?  BUT: Is Sweden similar to Denmark? Flexicurity?  Lessons: Beyond Keynesianism and Neoliberalism  Different kinds of risk-sharing/risk-taking  Enabling welfare states Four countries (Kristensen & Lilja 2011)

68  ”Medicine for Sweden” (Arvidsson et al 2006)  Leading firms in pharmaceuticals and medtech  Big investments in medical research  Public health care was an important intermediary  User, developer of products  Now companies work with US hospitals  What can be done?  Smarter regulation (”neomercantilism”)  Are there risks with the government?  What else is important? Entrepreneurship? Deregulation? Implications: What can be done to stimulate firms?

69  Rational utility-maximizers  Rational risk-minimizers  Entrepreneurs see opportunities  Schumpeter: Creative destruction, structural change  Muddling through: wait and see  Complex regulation leads to de-coupling  Copy what others do, follow the trends  Trends and ideas can come ”from the side” What drives firms? (and politics?) Economists vs. Sociologists

70  Complex corporate governance  Owners and managers: reciprocal relationship  Owners, governments, media, civil society  Handle uncertainty through boundary-spanning units  Internal gate-keepers to handle relations  External intermediaries: consultants, NGOs (CIO) How are firms regulated? (Engwall 2006)

71  New ”products”/ideas from the US:  Management education, MBA, on the margin  Accreditation, ranking: soft regulation, competing  By media and professional organizations  Demand from business schools  Field = interlinked system  Regulation unintended/uncoordinated consequences?  Isomorphism: coercive, mimetic and normative  Effects: Americanization? Homogenization? Regulation of universities (Hedmo, Sahlin-Andersson, Wedlin)

72  Are all actors ”rational”?  Why does politics change?  Dominant idea: ”Comparative advantage” (Hiscox box 4.8)  New discourses (Schmidt)  (Merkel et al on what governments can do) 6. The importance of ideas

73  How governments manage to gain agreement  Explains change  Ideational dimension (contents):  Cognitive (necessary) and normative (appropriate) content  Change in policy discourse and programme (table 5.3)  Crisis, contradictions, lack of coherence  Interactive dimension (process):  Coordinative and communicative stages (fig 5.2-5.5)  Epistemic communities, ”norm cascade” etc.  Context (single-/multi-actor systems), causal influence Discourses (Schmidt 2002)

74  Britain: constructing a transformative discourse  France: in search of a legitimizing discourse  Germany: recasting the traditional discourse  Synthesis: fig 7.1  When practices no longer work  And policies no longer facilitate  And ideas no longer explain:  (Depending on mediating factors)  New ideas generate/legitimize…  New policies which facilitate…  New practices, which work The role of discourses (Schmidt 2002)

75 The room for manouvre (Merkel et al)

76 Lecture 5

77  Beyond rational self-interest  It is ”rational” to do what others do (Hayek!)  Governments and firms  ”Muddling through”  Do the appropriate vs calculate what is best  New ideas spread quickly, Follow the fashion  Deep ideas: scientization, rationalization 7. Fashions

78  Scientific rationalization (Drori & Meyer 2006)  Handle risks, organizing/rationalizing  Why science? It works? Power? Modern religion?  Marketization (Djelic 2006)  Why? Modernization? Diffusion of ideas?  Smith and Menger vs mercantilism and historicism  Keynes vs Monetarism (Chicago, Austria, Freiburg)  Better ideas or spread by politicians and IMF etc.?  Routines, networks, symbols, imitation, structuration Deep ideas: structures of the mind?

79  Organizing (Ahrne & Brunsson 2006)  Culture and organization. Standardization  Meta-organizations  Rationalization of virtue (Boli 2006)  Awards, certification etc.  Rationalization of universities (Ramirez 2006)  Expansion, socially useful, flexible, exports  European regulation of universities (Hedmo, KSA, Wedlin 2006, above) Deep ideas, continued

80  1. The impact of politics on firms  Regulatory frameworks, ideas  2. The impact of firms on politics  Lobbying, ideas  All factors are relevant, but when and how?  Simplification needed? Conclusions

81  Lindvall & Rothstein  Arvidsson et al  Lichbach & Zuckerman  Merkel et al on governments Additional readings

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