The question if business groups might have an active interest in at least some progressive welfare reforms has sustained one of the major debates of comparative welfare state research. This question has been so controversial because it contradicts a basic assumption of dominant welfare state theories – namely, that the development of the modern welfare state has been the outcome of a class struggle between labor and capital. Revisionist welfare state scholars like Peter Swenson have argued that some business groups may indeed genuinely support the introduction of expansive or solidaristic social policies, primarily due to competitive advantages they can confer, and thus become part of a cross-class coalition behind welfare state development. Similarly, Varieties of Capitalism scholars have suggested that business groups will support the development of public social policies if they expect them to enhance human capital formation and ultimately productivity.
Business Interests and the Development of the Modern Welfare State, edited by Dennie Oude Nijhuis, revisits and seeks to resolve this debate. The edited volume empirically examines employer interests in a variety of welfare programs across a range of countries. The volume contains twelve empirical chapters, which are framed by an editorial introduction and conclusion. The empirical chapters include six single-country studies as well as three two-country, two three-country, and one eight-country comparison. The volume thus studies a total of 13 countries as either primary or shadow cases: namely, Denmark, Finland, France, Germany, Hungary, Italy, Netherlands, Norway, Poland, Sweden, Switzerland, the United Kingdom, and the United States. In terms of policy areas, the volume studies traditional social insurance programs (work injury, disability, sickness, old-age, and unemployment), job security regulations as well as active labor market policies, work-family policies, vocational training policies, and occupational pension policies.
The case selection of the book contributes to a welcome broadening of the so far very narrow geographic focus of the literature on business interests and welfare state development. Several of the chapters draw on previously published material. Novel empirical insights are therefore not among the main strengths of this book, at least from the perspective of scholars who are well versed in this literature. This is not a real problem, however, as the main strength of this book is arguably its contribution to a resolution of the business interest debate. In this regard, the book greatly benefits from its careful attention to differences between types of social policies and even between specific policy designs. Previous contributions to this debate have often overgeneralized from business support for specific welfare programs to business support for the welfare state in general.
The book emphasizes the heterogeneity and contingency of business interests in different welfare programs and draws several more general conclusions in this regard. The book documents that business interests in social insurance programs mostly depend on their implications for labor costs and work incentives. In consequence, “business groups will only express a genuine economic interest in the development of public and mandatory social insurance programs under specific economic circumstances, which are generally related to the desire to level the playing field among competitors and limit competition over labor” (p. 12). Regarding social policies such as active labor market policies and work-family policies, “which expand rather than limit the pool of workers available to businesses” (p. 20), the book demonstrates that employer support tends to depend on the tightness of labor markets and proposed policies’ potential to alleviate it. In contrast, the book specifically refutes the Varieties of Capitalism literature’s hypothesis that the prospect of future productivity improvements through human capital formation motivates employers to genuinely support the introduction of decommodifying welfare policies such as unemployment insurance or job security regulations.
Despite its many strengths, the book also reproduces two major blind spots that have long characterized the literature on business interests and welfare state development. First, the book largely equates business interests with employer interests. This comes at the neglect of private providers, such as financial service or healthcare providers, who play a powerful role in contemporary welfare state politics but often have very different interests than employers (Dorlach, Reference Dorlach2021; Naczyk, Reference Naczyk2013). While the book’s focus on employer interests is understandable, given the historical focus of many of its chapters, it limits its contemporary relevance. The second blind spot reproduced by the book concerns its geographical scope. The book largely focuses on core OECD countries in the Global North. There is no consideration of welfare state developments in Africa, Asia, or Latin America, even though many of the most interesting welfare reforms that have occurred in the Global South over the past two to three decades can arguably be explained with reference to business interests (Dorlach, Reference Dorlach2021; Özel, Reference Özel2021).
In a nutshell, the book does a great job of revisiting and contributing to a resolution of the long-standing debate on the nature and role of employer interests in the twentieth-century development of modern welfare states in the Global North. Thus, it is worthwhile reading for scholars of welfare state development, business politics, and comparative political economy. The book’s impact could become even larger, if it can serve as a stepping stone for expanding the scope of research on business interests and welfare state development beyond employers and beyond the Global North.
