The MPIfG’s Research Program
Our approach will distinguish between policy formation and consensus mobilization. In line with the producer group approach, key policy decisions are seen as being shaped by “dominant growth coalitions,” which are held together by common interests possibly cutting across class lines. However, borrowing from the democratic turn perspective, consensus mobilization in democratic capitalism cannot be taken for granted or ignored. The dominant growth coalition will have to build an electoral majority willing to support its key policies. This will be easier to achieve if the growth model produces an adequate rate of growth that can be partly used to compensate those who lose from it – something that is only possible if this compensation does not conflict with the structural foundations of the growth model. We also hypothesize, and intend to test, that a dominant growth coalition exerts hegemony, in the sense that it is able to shape the views of a broader coalition than the growth model core. In order to chart the size and composition of supporting coalitions in different countries, various methods will be used, including large surveys.
Future research will investigate not just the comparative political economy dimension of growth models but also the international political economy dimension. Growth models depend on each other and are embedded in a highly structured international financial hierarchy. Furthermore, in the past two decades production has been reorganized in global value chains. Export-led and consumption-led growth models require each other because the export surpluses in one country contribute to financing the credit-based consumption in another. By recycling their export surpluses in dollars, export-led economies buttress the dollar’s role as international currency. An international political economy perspective helps to distinguish between “core” and “peripheral” growth models. Core consumption-led growth models are able to accumulate foreign debt with little need for a correction because the rest of the world is willing to lend to them. In other words, they do not face a binding current account constraint. Instead, peripheral consumption-led growth models are fully exposed to the vagaries of cross-border financial flows. A core export-led growth model has key national firms at the top of global value chains, while a peripheral export-led growth model is one in which the ownership of export companies is in foreign hands, or, alternatively, domestic companies are suppliers to supply chains with foreign companies at the helm. This may limit the domestic firms’ ability to appropriate rents and their opportunities for upgrading, and may force the host state into subservience vis-à-vis foreign capital.
Understanding growth models as being embedded in a hierarchically structured international political economy requires engaging with the “knowledge economy” as well. In important strands of social science research, the knowledge economy is being presented as the result of long-term trends taking place on the supply side of the economy: a generalized increase in educational qualifications combined with skill-biased technical change and new forms of complementarity between high skills and capital (colocation). It is argued that this combination causes an attitudinal shift in the electorate and a withering away of the old fordist alliance between skilled and semi-skilled workers. As a consequence, the “decisive” voter moves away from supporting traditional redistributive policies and is more willing to embrace policies of “social investment.” Managing the knowledge economy is seen as a matter of competent management of supply-side policies, particularly with regard to human capital development and R&D.
Yet the knowledge economy is one side of a broader shift towards “intellectual monopoly capitalism.” There has been a change in the hierarchy of top firms internationally. Capital-intensive firms such as General Motors have been replaced by intangible capital-intensive firms such as Google and Facebook. These firms’ key capital is their intellectual property rights, whose economic value depends on an international regulatory regime that protects them. These firms reap a disproportionate share of global profits, which they only partly share with their core workers but, more importantly, use to prevent entry by new challengers, for example through preventive acquisitions. This shift to intangible capital and intellectual property rights has important implications for the demand side and contributes to secular stagnation, since firms relying on intangible capital are much less investment-prone and employment-generating than previous top firms, and more likely to retain their earnings or return them to their shareholders.