The Choices for Scandinavian Social Democracy in Comparative Perspective

Scandinavian social democracy represents one of the most systematic attempts to shape economic institutions and policies in pursuit of equality and full employment. Increasingly, however, these goals have eluded governments, and their institutional supports have eroded. This paper seeks to understand this shift through a comparative analysis that places particular emphasis on the interaction between macroeconomic policies and wage-bargaining institutions. It is argued that the nature of this interaction, and the associated economic effects, have been changed by new technology, capital market integration, and service-sector expansion. As a result, centralized wage-bargaining institutions and accommodating macroeconomic policy regimes have been undermined, and social democracy increasingly faces a choice between the promotion of equality and employment for all.