Switzerland in Europe
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Switzerland in Europe

Christine Trampusch, André Mach, Christine Trampusch, André Mach

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eBook - ePub

Switzerland in Europe

Christine Trampusch, André Mach, Christine Trampusch, André Mach

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About This Book

While Switzerland is well known for its specific political institutions, such as direct democracy, federalism and neutrality, or for its banking secrecy, its socio-economic institutions, which decisively contributed to its prosperity, remain relatively unexplored.

This book gives the first systematic overview of Swiss political economy in comparative perspectives. Divided into four sections, the first offers an introduction to Swiss political economy, its major political institutions and Switzerland' relationship to the EU. The remaining three sections provide case studies on different parts of the political economy and policy fields. The case studies with in part two and three focus on economic actors, major socio-economic institutions addressing corporate governance, finance, labour market, skills and training. Part four addresses social and economic policies, including welfare, liberalization and economic regulatory reforms. Switzerland in Europe also offers several insights into important literature in comparative political economy: the varieties of capitalism, small states, institutional change and patterns of democracy.

This will be of interest students and scholars of comparative politics, political economy, Switzerland, small states and European Studies.

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Publisher
Routledge
Year
2011
ISBN
9781136815010

1 Introduction

André Mach and Christine Trampusch
This edited volume explores Switzerland's position in Europe, and the title indicates the leitmotif of the volume. This book provides the first systematic overview of the peculiarities of different aspects of the Swiss political economy in comparison to other Western European countries. ‘Continuity and change’ is meant to imply that the empirical studies included in the volume take a dynamic and historically informed perspective, while emphasizing the recent changes that have occurred since the beginning of the 1990s. In sum, the volume combines a cross-sectional and cross-country perspective with a longitudinal one.
The aims of the book are twofold. First, it offers the first systematic and comprehensive study of the Swiss political economy. It provides an analysis of economic actors, major socio-economic institutions, economic and social policies and political institutions, as well as the changes these have undergone since the 1990s. Second, the book is not only about Switzerland. By studying the Swiss case in detail, it also offers several insights into important literature in comparative political economy, namely the varieties of capitalism approach (Hall and Soskice 2001), small states (Katzenstein 1984, 1985), welfare regimes (Esping-Andersen 1990) and patterns of democracy (Lijphart 1999). While Switzerland is well known for its unique political institutions, such as direct democracy, federalism and neutrality, or for its banking secrecy, its socio-economic institutions, which made a crucial contribution to its prosperity, remain relatively unexplored. In the comparative literature, Switzerland is an important, but also an exceptional and largely neglected case.
Switzerland's uniqueness is reflected first and foremost in its political system (Lijphart 1999; Church 2004; Kriesi and Trechsel 2008; Linder 2010) and in its position with regard to the European Union (Linder 1999; Church 2007; Lavenex and Lehmkuhl 2009). Federalism, direct democracy and consociational democracy make Switzerland's political system truly unique. Although not a member of the EU, the EU has strongly influenced Switzerland in recent years (Fischer 2003; Sciarini et al. 2004; Papadopoulos 2008). However, in terms also of its socio-economic institutions, the Swiss case is difficult to classify. On the one hand, Switzerland is a good example of a coordinated market economy (Hall and Soskice 2001; Mach 2006). Industrial relations (Fluder and Hotz-Hart 1998; Mach and Oesch 2003), the system of corporate governance and inter-company relations (Schnyder et al. 2005; Mach et al. 2007), vocational education and training (Trampusch 2010a), social policies (Armingeon 2001; Bonoli 2001; Häusermann et al. 2004; Obinger et al. 2010; Trampusch 2010b) as well as economic policy (Armingeon and Emmenegger 2007) are not only coordinated by markets and hierarchies but also by private interest governments and networks. On the other hand, compared to other coordinated market economies (like other small European states, or Germany and France for instance), the Swiss political economy also exhibits strong liberal traits (Katzenstein 1984; Bonoli and Mach 2000; Armingeon 2001; Mach 2006), making it a hybrid case.
Although these peculiarities have been analysed and recognized in various studies of the comparative political economy literature, until now there have not been any studies that explore and explain the exceptionality and specificities of Switzerland not only in detail, but also comprehensively by incorporating various subsystems, political institutions, policy fields and collective actors. This volume also aims to fill this gap.
In the following, we will briefly outline the general analytical framework of the volume, and explain its structure.
This volume takes a political economic perspective. In general, our perspective comprises the analysis of how the economic system and political institutions influence one another and stresses the central role of political and economic institutions in shaping actors’ strategies. To be more precise: first, we contend that markets and the economic system are governed not only by competition and state inference in the regulation of economic competition, but also by other governance mechanisms such as norms, networks and associations (Streeck and Schmitter 1985). Second, we presume that the preferences of political and socio-economic actors are socially constructed and strongly influenced not only by changing socio-economic and political conditions, but also by the governance mechanisms as well as developments and change in these mechanisms. Third, we contend that economies are the result not only of individual benefit and profit calculations, but that political and social regimes as actors may also be guided by political interests, ideas and norms and strongly influenced by the distribution of power and economic resources.
Accordingly, our political economy perspective partly follows the varieties of capitalism approach suggested by Hall and Soskice (2001) by referring to the importance of governance mechanisms beyond the market and the state. However, we supplement this approach by placing greater emphasis on historical-institutionalist accounts. Instead of following a rational choice perspective – which assumes rationally calculating actors who are independent from each other and view institutions as a means to reduce the costs of transactions, to solve collective action problems, and as self-reinforcing equilibria (Hall and Taylor 1996: 20) FI, our historical-institutionalist perspective emphasizes the fact that actors may neglect performance questions and pursue other targets such as gaining economic and political power. Consequently, we contend that institutions may be in conflict with the functional needs of economic efficiency (Beckert 2009) as their political and historical foundations also matter. We take a more complex perspective by viewing institutions as ‘formal rules’, ‘compliance procedures’ and ‘standard operating practices’ (Hall 1986: 19) which not only affect the construction of actors’ preferences and strategies but are also changed by the behaviour of those actors (Pontusson 1995; Hall and Taylor 1996: 5–10; Mahoney 2000; Streeck and Thelen 2005; Streeck 2009). In agreement with Steinmo and Thelen (1992: 9), we maintain that:
By taking goals, strategies and preferences as something to be explained, historical institutionalists show that, unless something is known about the context, broad assumptions about ‘self-interested behavior’ are empty … historical institutionalists would not have trouble with the rational choice idea that political actors are acting strategically to achieve their ends. But clearly it is not very useful simply to leave it at that. We need a historically based analysis to tell us what they are trying to maximize and why they emphasize certain goals over others.
From a methodological point of view, the case studies in this volume draw heavily on induction by ‘scour[ing] the historical record for evidence about why the historical actors behaved as they did’ (Hall and Taylor 1996: 21).
Based on these assumptions, the main characteristic of our political economy perspective is that we analyse the continuous and reciprocal links between economic and political action as well as between economic and political institutions. Whereas economic action comprises the exchange of goods where the price mechanism determines their allocation, political action comprises the making of collectively binding decisions by political parties and political-administrative actors which are more or less influenced by and responsive to voters, firms and associations (similar Busemeyer 2009: 20). To quote Beckert and Streeck (2008: 10), the political economy approach analyses ‘the capacities and possibilities of politics and policy to influence economic performance and economic outcomes, as well as the way in which economic conditions affected policy and, to a growing extent, politics’.
This book is divided into four main parts, which comprise twelve chapters in the following four domains. The first part contains three background chapters on the Swiss political economy, political system and Switzerland's relationship with the EU. The second, third and fourth parts comprise sectoral case studies on economic actors (second part), major socio-economic institutions (third part) and economic and social policies (fourth part). This structure serves to address different interests in the readership. Whereas the three background chapters in the first part offer basic knowledge on the Swiss political economy, political system and Switzerland's relationship with the EU in order to introduce the non-Swiss readership to the peculiarities of the Swiss political and socio-economic institutions in general, the remaining three parts provide sectoral case studies on different parts of the political economy and policy fields. As the main aim of the volume is to examine continuity and change in the political economy, the sectoral case studies focus on socio-economic areas. All sectoral case study chapters begin by providing a short description of the historical origin and the main trends in the development of the subject matter until the end of the 1980s, with particular attention to the institutions, collective actors or policies concerned. Based on this analysis, they sketch out what has happened since the beginning of the 1990s, which represented an important period of change and reform (increase in unemployment and growing international pressure). In addition, each chapter, in discussing the developments since the 1990s, will also take a comparative perspective in the in-depth analysis by including other European countries as ‘shadow cases’.
André Mach and Christine Trampusch critically discuss the location of the Swiss political economy in the various typologies provided by the comparative literature. They argue that three major specificities of the Swiss political economy (the constrained policy capacity of the federal state, the prominence of self-regulation mechanisms by private actors in regulating important socio-economic institutions and the dominance of right-wing parties with close ties to business associations) explain its hybrid character. The chapter by Fritz Sager and Christine Zollinger on the political system shows that the Swiss political institutions and the way of policy making – semi-direct democracy, strong federalism and the system of concordance – are being challenged not only by globalization and Europeanization, but also by ‘increasing polarization of the presented interests and values’ due to the rise of the Swiss People's Party (SVP). Nevertheless, the main characteristics of the Swiss way of policy making and implementation also preserve its unique peculiarities. In his chapter on the relationship between the EU and Switzerland, Wolf Linder discusses in depth the pull and push dynamics of Europeanization in Switzerland, accentuating three illusions regarding the bilateral approach. In addition, he observes change due to the fact that international treaty making affords a faster pace than the Swiss policy-making system can offer. He cites direct democracy as a hot spot in the relationship between the EU and Switzerland. Part II, on economic actors, analyses Swiss business interest associations (BIAs), trade unions and industrial relations. Here, Pierre Eichenberger and André Mach reveal continuity in the organizational structure of the Swiss BIAs, which has developed over time, but they also describe profound changes triggered by the liberal challenge of the 1990s. They attribute these changes, on the one hand, to changing dynamics in the logic of membership, and, on the other hand, in the logic of influence of business interests. Likewise, Daniel Oesch sees both change and continuity in Swiss trade unions and industrial relations systems. He points out that Swiss trade unions have undergone a fundamental internal restructuring process as a reaction to the economic crisis of the early 1990s. However, recently the collective bargaining system has also been strengthened and consolidated, partly in response to European integration, and partly due to the revision of trade unions’ strategies. Part III, on major socio-economic institutions, reveals that changes in the actors involved and the actors' practices go hand in hand with changed institutions. Gerhard Schnyder and Frédéric Widmer show that the Swiss corporate governance system is taking the direction of a more shareholder-value-oriented corporate governance system and that changes in corporate governance practices have triggered legal changes. However, they insist on the dual dynamic of change: the largest companies clearly evolved towards the more liberal system, whereas smaller ones, which are not listed on the Swiss Stock Exchange, preserved their traditional practices. In his chapter on labour market regulation, Patrick Emmenegger argues that as a result of the reforms since the 1990s, the liberal Swiss labour market has ‘become ever more liberal’ with respect to job security and working time, although European integration and direct democratic instruments ‘have given the Swiss labour movement the opportunity to stop some of these deregulation processes’. Linda Rohrer and Christine Trampusch argue that in the vocational training system institutions are challenged by a countervailing logic of change, namely the duality of self-preserving (incremental) change, on the one hand, and transformative change on the other, which is strongly affected by the power relationship within the employers' camp. Finally, Part IV, on economic and social policies, reveals change and continuity in Swiss corporatism, the welfare state and regulatory policies. Klaus Armingeon points out from a comparative perspective those peculiarities of Swiss corporatism which, on the one hand, make Switzerland less vulnerable to the challenges of the ‘liberalized and de-nationalized era’, but on the other hand, also make it more dependent on the dynamics within the employers' camp. He also argues that Swiss corporatism has shifted from the ‘social’ to the ‘liberal’ category as far as protectionism is concerned and from the ‘liberal’ to the ‘social type’ as regards the welfare state. According to Guiliano Bonoli and Silja Häusermann, the pace of Swiss social policy reforms varies from one area to another, with reforms in labour market policy and pensions following the general European trajectory of cost containment, while family policy and social assistance lag behind many European countries. Martino Maggetti, Alexandre Afonso and Marie-Christine Fontana compare regulatory reforms in different economic sectors, namely telecommunications, electricity, banking and the construction sector and show that these reforms are often adaptive rather than transformative.
Finally, the concluding chapter by Yannis Papadopoulos is devoted to the following questions: How much, and in what way is Switzerland changing? Are we seeing convergence or continued divergence across the different domains? Further questions dealt with include: Are the current amplitude and pace of change greater than in the past? Do the contributions in this volume conclude to the (or to a further) liberalization of the Swiss political economy?

References

Armingeon, K. (2001) ‘Institutionalising the Swiss Welf...

Table of contents