The domestic socio-political context

As we already argued one of the problems with much of the literature on globalization is that it is economistic. It focuses on economic developments and sees them as determining, or strongly constraining, the political decisions of government.

The political structure

Political structures can clearly act as a constraint on radical change, and so mediate the effect of global economic pressures. Certainly, it is easier to change policy direction in systems characterized by strong executive government. So, Hirst and Thompson (1999: 174) argue:

Denmark... does not lack the elite voices that have been so successful in transforming countries like the UK and then New Zealand in an anti­welfare direction. What has been missing is political capacity. Most Danish governments have been coalitions without large majorities. Confronted with strong public support for welfare, political parties have hesitated to follow arguments for radical reform.

Indeed, the New Zealand case is particularly interesting here. The Labour government elected in 1984 embarked on a far-reaching programme of economic liberalism. With a secure parliamentary majority, the government was able to push through these changes, despite the fact that it had not campaigned on a programme of economic reform (Goldfinch 2000). However, in 1996 New Zealand introduced a mixed member proportional (MMP) system, after 150 years of majoritarian electoral rules, in large part in order to prevent any future government embarking on such radical new directions without a real mandate or consultation with social interests. It is hard to think that there could be better evidence of the role that political structures can play.

Federal structures can also affect a government’s capacity to respond to increased global competition.

Changes in social and political values

The 1980s and 1990s may have been marked by an increased international­ization of economic competition. However, there has also been a growth in the importance of environmental and gender issues in political terms and of social movements that campaigned on these issues both nationally and internationally. In addition, in countries like Australia, New Zealand and Canada, there has been a rise in the importance of issues surrounding the treatment of indigenous people. Two points are important here. First, these issues affected voters’ and governments’ behaviour (on their influence in Australia and New Zealand see Goldfinch 2000). Second, the relation­ship between such issues and increased economic competitiveness is a complicated, and often antagonistic, one. In particular, environmentalists and campaigners for indigenous rights often see TNCs as an important part of the problem. As such, in responding to such issues, for ideological or electoral reasons, governments may be going against the interest of TNCs of international financial markets.

In contrast, Keating (2000) presents a different picture of changing social and political values in Australia in this period. He suggests that increased education and a more open society has lead to increased prosperity for most. At the same time, economic changes have also resulted in less security, a greater scepticism about authority, political disaffection and, perhaps particularly, greater individualism and less willingness to support higher taxes. He argues that government policy is affected by these changes.

It is not our concern here to adjudicate on this debate or to claim Australia as a typical case. Rather, we want to emphasize two points. First, it is crucial to put the economic changes in the context of other social changes and not, by definition, to privilege them. Second, and this follows, it is also important to examine how economic change, economic values, social change and social and political values relate. Third, and this returns us to the main theme of this piece, one certainly can’t read off policy consequences, or present and future policy trajectories merely from a knowledge of increasing international competition (see, for instance, Kelly 1992).

Electoral constraints

Political parties exist, in large part, to try to win power. As such, the behaviour of governments is invariably influenced by their desire to be re-elected. Obviously, the economic performance of government has a crucial effect on their re-election chances; although, as we shall argue below, the discursive construction of that economic performance, and how it is perceived by the electorate, may also be particularly important. However, other factors, like those discussed in the last section also affect voting behaviour and govern­ment’s judgements of which policies will win or lose votes. In addition, governments may have particular links, structural, historical or ideological with particular interest that affect their policy decisions. In this vein, the Australian example is again revealing. While the Hawke and Keating governments pursued economic rationalist policies, driven in large part by international economic competitiveness pressures, they were also faced with other social developments that had electoral resonance and operated in a political context in which their historic links with the trade union move­ment were important.

(d)