Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-04T19:01:54.877Z Has data issue: false hasContentIssue false
  • English
  • Français

A Game-Theoretical Interpretation of Inflation and Unemployment in Western Europe*

Published online by Cambridge University Press:  28 November 2008

Fritz W. Scharpf
Fritz W. Scharpf
Affiliation:
Max-Planck-Institut fur Gesellschaftsforschung, Cologne
Get access Rights & Permissions [Opens in a new window]

Abstract

The paper aims at a more complete, yet still parsimonious, explanation of macro-economic policy failure and success during the ‘stagflation’ period of the 1970s. Focusing on four countries, Austria, Great Britain, Sweden and West Germany, it is shown that both runaway inflation and rising unemployment could be avoided whenever it was possible to achieve a Keynesian concertation between fiscal and monetary expansion on the one hand and union wage restraint on the other. The actual policy experiences of the four countries are then explained in terms of the linkage between a ‘coordination game’ played between the government and the unions in which macro-economic outcomes are determined, and a politics game in which the government tries to anticipate the electoral responses of different voter strata to these outcomes.

Type
Articles
Information
Journal of Public Policy , Volume 7 , Issue 3 , July 1987 , pp. 227 - 257
Copyright
Copyright © Cambridge University Press 1987

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Barnes, Denis and Reid, Eileen (1980) Governments and Trade Unions. The British Experience 1964–1979. London: Heinemann.Google Scholar
Berger, Suzanne, ed. (1981) Organizing Interests in Western Europe. Cambridge: Cambridge University Press.Google Scholar
Bornstein, Stephen and Gourevitch, Peter (1984) Unions in a Declining Economy: The Case of the British TUC. In Gourevitch et al. 13–88.Google Scholar
Cameron, David R. (1978) The Expansion of the Public Economy: A Comparative Analysis. American Political Science Review 72: 1243–1261.CrossRefGoogle Scholar
Cameron, David R. (1984) Social Democracy, Corporatism, Labor Quiescence, and the Representation of Economic Interest in Advanced Capitalist Society. In Goldthorpe, , ed. 143–178.Google Scholar
Coleman, James S. (1974) Power and the Structure of Society. New York: W. W. Norton Co.Google Scholar
Crouch, Colin (1982) The Politics of Industrial Relations, London: Fontana Paperbacks, 2nd ed.Google Scholar
Crouch, Colin and Pizzorno, A., ed. (1978) The Resources of Class Conflict in Western Europe since 1968. London: Macmillan.Google Scholar
Denzau, Arthur, Riker, William and Shepsle, Kenneth (1985) Farquharson and Fenno: Sophisticated Voting and the Home Style. American Political Science Review 79: 1117–1134.CrossRefGoogle Scholar
Elster, Jon (1979) Ulysses and the Sirens. Studies in Rationality and Irrationality. Cambridge: Cambridge University Press.Google Scholar
Esping-Andersen, Göosta (1985) Politics against Markets. The Social-Democratic Road to Power. Princeton: Princeton University Press.Google Scholar
Fiorina, Morris P. (1978) Economic Retrospective Voting in American National Elections: A Microanalysis. American Journal of Political Science 11: 426–473.CrossRefGoogle Scholar
Flanagan, Robert J., Soskice, David W. and Ulman, Lloyd (1983) Unionism, Economic Stabilization and Incomes Policies: The European Experience. Washington, DC: Brookings.Google Scholar
Frey, Bruno S. and Schneider, Friedrich (1978) An Empirical Study of Politico-economic Interaction in the United States. Review of Economics and Statistics 60: 174–183.CrossRefGoogle Scholar
Frey, Bruno S. and Schneider, Friedrich (1979) An Econometric Model with an Endogenous Government Sector. Public Choice 34: 29–43.Google Scholar
Frye, Jon and Gordon, Robert J. (1981) Government Intervention in the Inflation Process: The Econometrics of ‘Self-Inflicted Wounds.’ American Economic Review 71: 288–294.Google Scholar
Funke, Michael (1986) Nominalzinsen, Realzinsen und internationale Kapitalbewegungen. Wissenschaftszentrum Berlin: Discussion Paper IIM/LMP 86–11.Google Scholar
Garrett, Geoffrey and Lange, Peter (1978) Performance in a Hostile World: Economic Growth in Capitalist Democracies, 1974–80. World Politics 38: 517–545.CrossRefGoogle Scholar
Goldthorpe, J. H. ed. (1984) Order and Conflict in Contemporary Capitalism. Oxford. Clarendon Press.Google Scholar
Gourevitch, Peter ed. (1984) Unions and Economic Crisis: Britain, West Germany and Sweden. London: Allen and Unwin.Google Scholar
Hall, Peter (1986) Governing the Economy. The Politics of State Intervention in Britain and France. London: Polity Press.Google Scholar
Hibbs, Douglas A. (1977) Political Parties and Macroeconomic Policy. American Political Science Review 71: 1467–1487.CrossRefGoogle Scholar
Kahneman, David and Tversky, Amos (1984) Choice, Values, Frames. American Psychologist 39: 341–350.CrossRefGoogle Scholar
Kelley, Harold H. (1984) The Theoretical Description of Interdependence by Means ofTransition Lists. Journal of Personality and Social Psychology 47: 956–982.CrossRefGoogle Scholar
Kloten, Norbert, Ketterer, Karl-Heinz and Vollmer, Rainer (1985) West Germany's Stabilization Performance. In: Lindberg, and Maier, , eds. 353–402.Google Scholar
Korpi, Walter (1983) The Democratic Class Struggle. London: Routledge & Kegan Paul.Google Scholar
Lange, Peter and Garrett, Geoffrey (1985) The Politics of Growth: Strategic Interaction and Economic Performance in the Advanced Industrial Democracies, 1974–1980.youmal of Politics 47: 792–827.CrossRefGoogle Scholar
Lehmbruch, Gerhard and Schmitter, Philippe C, eds. (1982) Patterns of Corporatist Policy-Making, London: Sage.Google Scholar
Lindberg, Leon N. and Maier, C. S., eds (1985) The Politics of Inflation and Economic Stagnation. Washington DC: Brookings Institution.Google Scholar
Lowery, David (1985) The Keynesian and Political Determinants of Unbalanced Budgets: US Fiscal Policy from Eisenhower to Reagan. American Journal of Political Science 29: 428–460.CrossRefGoogle Scholar
Duncan, MacRae C. (1977) A Political Model of the Business Cycle. Journal of Political Economy 85: 239–263.Google Scholar
Maital, Shlomo and Benjamini, Yael (1979) Inflation as a Prisoner's Dilemma.Journal of Post Keynesian Economics 2: 459–481.CrossRefGoogle Scholar
Malinvaud, Edmond (1977) The Theory of Unemployment Reconsidered. Oxford: Basil Blackwell.Google Scholar
Marin, Bernd (1982) Die Paritatische Kommission. Aufgeklarter Technokorporatismus in Osterreich. Vienna: Internationale Publikationen.Google Scholar
Marin, Bernd (1985) Generalized Political Exchange: Preliminary Considerations. Florencel: EUI Working Paper No. 85/190.Google Scholar
Martin, Andrew (1984) Trade Unions in Sweden: Strategic Responses to Change and Crisis. In: , Gourevitch et al. 189–359.Google Scholar
Martin, Andrew (1986a) The Politics of Employment and Welfare: National Policies and International Interdependence. In: Banting, ed. 157–240.Google Scholar
Martin, Andrew (1986b) The End of the ‘Swedish Model? ’ Recent Developments in Swedish Industrial Relations MS, Center For European Studies, Harvard University.Google Scholar
Messick, David M. and McClelland, Carol L. (1983) Social Traps and Temporal Traps. Personality and Social Psychology Bulletin 9: 105–110.CrossRefGoogle Scholar
Miegel, Meinhard (1981) Sicherheit im Alter. Pladoyerfur die Weiterentwicklung des Rentensystems. Stuttgart: Bonn Aktuell.Google Scholar
Neck, Reinhard (1985) Das osterreichische System der Sozial- und Wirtschaftspartnerschaft aus politisch-okonomischer Sicht. Journal fir Sozialforschung 25: 375–403.Google Scholar
Nordhaus, William (1975) The Political Business Cycle. Review of Economic Studies 42: 169–190.CrossRefGoogle Scholar
Olson, Mancur (1982) The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale University Press.Google Scholar
Paloheimo, Heikki (1984) Distributive Struggle, Corporatist Power Structures and Economic Policy of the 1970s in Developed Capitalist Countries. In: Paloheimo, ed. 1–46.Google Scholar
Paloheimo, Heikki, ed. (1984) Politics in the Era of Corporatism and Planning. Tampere: The Finnish Political Science Association.Google Scholar
Panitch, Leo (1979) The Development of Corporatism in Liberal Democracies. In: Schmitter, and Lehmbruch, , eds. 119–146.Google Scholar
Peel, David A. (1982) The Political Business Cycle - Have We Seen the End of it? Long Range Planning 15:30–33.CrossRefGoogle Scholar
Piore, Michael J., ed. (1979) Unemployment and Inflation. Institutionalist and Structuralist Views. White Plains, NY: M. E. Sharpe.Google Scholar
Pizzorno, Alessandro (1978) Political Exchange and Collective Identity in Industrial Conflict. In: Crouch and Pizzorno, eds. 277–298.Google Scholar
Przeworski, Adam and Teune, Henry (1970) The Logic of Comparative Social Inquiry. New York: Wiley-Interscience.Google Scholar
Putnam, Robert D. (1986) The Logic of Two-Level Games: International Cooperation, and Western Summitry, 1975–1986. Ms. Department of Government, Harvard University.Google Scholar
Putnam, Robert D. and Bayne, Nicholas (1984) Hanging Together. The Seven-Power Summits. London: Heinemann.Google Scholar
Rapoport, Anatol, Guyer, Melvin J. and Gordon, David G. (1976) The 2X2 Game. Ann Arbor: University of Michigan Press.Google Scholar
Scharpf, Fritz W. (1981) The Political Economy of Inflation and Unemployment in Western Europe: An Outline. Wissenschaftszentrum Berlin: Discussion Paper IIM/LMP 81–21.Google Scholar
Scharpf, Fritz W. (1984) Economic and Institutional Constraints of Full-Employment Strategies: Sweden, Austria and West Germany. In: Goldthorpe, , ed. 257–290.Google Scholar
Scharpf, Fritz W. (1987b) Sozialdemokratische Krisenpolitik in Europa. Das ‘Modell Deutschland ‘ im Vergleich. Frankfurt: Campus.Google Scholar
Schelling, Thomas C. (1984) Choice and Consequence. Cambridge, MA: Harvard University Press.Google Scholar
Schmidt, Manfred G. (1982) Does Corporatism Matter? Economic Crisis, Politics and Rates of Unemployment in Capitalist Democracies in the 1970s. In: Lehmbruch, and Schmitter, , eds. 237–258.Google Scholar
Schmidt, Manfred G. (1983) The Welfare State and the Economy in Periods of Economic Crisis: A Comparative Study of Twenty-Three OECD Nations. European Journal of Political Research 11: 1–26.CrossRefGoogle Scholar
Schmidt, Manfred G. (1985) Der Schweizerische Wegzur Vollbeschaftigung. Eine Bilanzder Beschaftigung, der Arbeitslosigkeit und der Arbeitsmarktpolitik. Frankfurt: Campus.Google Scholar
Schmidt, Manfred G. (1986) Politische Bedingungen erfolgreicher Wirtschaftspolitik - Eine vergleichende Analyse westlicher Industrielander.Journal für Sozialforschun, 1986, Heft 3.Google Scholar
Schmitter, Philippe C. (1974) Still the Century of Corporatism? Review of Politics 36: 85–131.CrossRefGoogle Scholar
Schmitter, Philippe C. (1981) Interest Intermediation and Regime Governability in Contemporary Western Europe and North America. In: Berger, ed. 287–327.Google Scholar
Schmitter, Philippe C. and Lehmbruch, Gerhard, eds. (1979) Trends Toward Corporatist Intermediation. London: Sage Publications.Google Scholar
Shepsle, Kenneth A. (1986) Cooperation and Institutional Arrangements. Paper prepared for the Harvard Conference on International Regimes and Cooperation, 02 13–15, 1986.Google Scholar
Streeck, Wolfgang (1981) Gewerkschaftliche Organisationsprobleme in der sozialstaatlichen Demokratie. Konigstein: Athenaum.Google Scholar
Streeck, Wolfgang, (1982) Organizational Consequences of Neo-Corporatist Cooperation in West German Labor Unions. Lehmbruch, and Schmitter, , eds. 29–81.Google Scholar
Streeck, Wolfgang (1984) Neo-Corporatist Industrial Relations and the Economic Crisis in West Germany. Goldthorpe, , ed. 291–314.Google Scholar
Streeck, Wolfgang and Schmitter, Philippe C. (1985) Private Interest Government. Beyond Market and State. London: Sage.Google Scholar
Therborn, Goran (1986) Why Some Peoples Are More Unemployed Than Others. The Strange Paradox of Growth and Unemployment. London: Verso.Google Scholar
Tufte, Edward R. (1978) The Political Control of the Economy. Princeton: Princeton University Press.CrossRefGoogle Scholar
Weintraub, Sidney (1978) Capitalism 's Inflation and Unemployment Crisis. Reading, MA: Addison-Wesley.Google Scholar
Wilensky, Harold L. and Turner, Lowell (1987) Democratic Corporatism and Policy Linkages. The Interdependence of Industrial, Labor-Market, Incomes, and Social Policies in Eight Countries. Berkeley: Institute of International Studies.Google Scholar
Woolley, John T. (1985) Central Banks and Inflation. In: Lindberg and Maier, eds. 318–351.Google Scholar