Challenging Varieties of Capitalism's Account of Business Interests: Neo-Liberal Think-Tanks and Employers' Quest for Liberalization in Germany and Sweden

My paper contributes to the debate on employer preferences. Varieties of Capitalism theorists argue that employers in Coordinated Market Economies (CMEs) will tend to defend non-liberal institutions because of the comparative institutional advantage that they provide. My paper examines two critical cases in this debate: Germany and Sweden. It is based on interviews with key officials and an in-depth examination of the New Social Market Initiative (INSM) and Timbro, large-scale campaigns / think-tanks sponsored by German and Swedish employers to shape public opinion. I argue that German and Swedish employers have a strong preference for liberalization: the INSM has pushed hard for the liberalization of labor markets, the reduction of government expenditures, the expansion of market-oriented freedoms, and cuts to social protection, employment protection and benefit entitlements. I find no empirical support for the claim that the INSM is an attempt to appease discontented firms within employers’ associations. Following the discrediting of the Anglo-American model in the financial crisis, far-reaching concessions by employees and the unexpected revitalization of the German economy, employers have moderated their demands in the domestic sphere while pushing for austerity at the EU-level. The positions of Timbro and of the Swedish free market movement are if anything even more radical. In both cases, employers have responded to left-wing threats, institutional constraints and a situation of crisis by launching a counteroffensive. Rather than defending traditional institutions, German and Swedish employers have used the INSM and Timbro to pursue an aggressive liberalizing agenda and attack institutions that required active deregulation on the part of the state.