2 November 1998. Chris Burk and Nicole Mellow
After summarizing the book's five case studies of financial liberalization,
Loriaux's introductory chapter raises the fundamental question of the
volume: given similar domestic institutions, international market
pressures, and contemporaneous reforms, what explains the variations in the
reforms undertaken in each country and their eventual impacts? While
liberalization in France, Mexico, and Korea was driven mainly by
international factors, deregulation in Japan and Spain was primarily a
product of domestic level factors.
Regarding this brief comparison, four points are noteworthy. First, the
pace of policy liberalization (once embraced) correlates with the primary
locus of pressure. Counties reacting to external pressures enacted reforms
more rapidly and with greater vigor than those motivated by domestic
pressures. Second, the variation in source of liberalization does not
correlate with a country's level of development or regional affiliation
(i.e. a possible tie-in to Stalling's argument). Since all five countries
were essentially state-led capitalist economies, this suggests further
variation within the Zysman typology. Third, to the extent that
domestically driven liberalization occurred more incrementally, are these
countries' reforms likely to be more or less durable? Finally, to what
extent is analytic comparison biased by integrating different authors'
perspectives? In other words, the variation may be more among authors than
among countries. Since all five authors concede that both international
and domestic factors influence liberalization, it is not unreasonable to
argue that the privileging of the role of one or the other reflects the
individual author's preferred explanation.
The difficulty in isolating the effect of the factors which lead to
liberalizing reform is evident in Kent Calder's chapter on Japan
specifically. He suggests that Japan's liberalization and the subsequent
erosion of state capacity has come about primarily through the pull of
market opportunities. As changing economic conditions restructured power
relations, interests such as businesses, some banks, and securities firms
increasingly sought a slightly more liberalized environment and thus worked
to alter the traditional linkages that had locked them into the state-led
political economy.
There are five points worth raising regarding Calder's account. First, he
claims that market enticements stimulated the domestic politics which were
responsible for reforms, yet he also suggests that international political
pressures played a "decisive" role propelling liberalization (page 55).
One reading of his analysis is that everything is important: markets,
domestic politics, and international political pressures. In this case,
perhaps financial liberalization defies parsimonious explanations (either
international and structural or domestic).
Second, complexity is further suggested by his specific accountings of the
politics of liberalization. Although there are examples of interests who
have become increasingly powerful (securities, for example), there are also
examples of interests who have suffered both gains and losses with
liberalization (small businesses, for example). Understanding the
conditions under which an interest succeeds with liberalization pressures
versus when it does not may help to elucidate the politics at work, yet it
also threatens to make modeling liberalization more messy.
Third, Calder's focus on the specifics of particular political battles and
policy reforms obscures the overall significance of the liberalization. It
is unclear whether these reforms compose mere tinkering at the edge of the
developmental state or a wholesale restructuring. Acknowledging that
despite reforms, developmentalism is still quite intact, Calder does not
provide a satisfactory indication of whether we are witnessing converging
capitalisms or a new brand of developmentalist state.
Fourth, the Calder piece intersects with several class themes. If Calder's
analysis of domestic politics is placed alongside of Evan's notion of
embedded autonomy, one conclusion is that the state is losing autonomy as
the business and financial interests that it once guided become stronger,
more independent, and more effective at contesting state policy. Another
conclusion could be that during the heyday of state-led growth, the
interests of the state and prominent economic groups were intertwined but
have since diverged as a result of changing economic and geo-political
conditions. This would be consistent with Maxfield and Schneider's
emphasis on state-business collaboration: the impetus lies in the
perception of external threat. In this scenario, Japan's economic success
has lessened the need for collaboration and has created new divergent
interests which play out in Calder's pluralistic politics. This also nicely
links up with Henry's argument that strengthening the financial sectors can
lead to greater pluralism as well as to resistance from entrenched
political elites.
Finally, the questions of instability and change originally raised by
Haggard and Kaufman are revisited. While they focus on economic crisis
creating opportunities for political change, Calder notes the extent to
which the window for accommodating interests became wider in Japan when the
governing party was weak. In this sense, the interaction of economic and
politics works both ways. Economic liberalization often proceeded when
conditions of political uncertainty made it possible, yet it was the
economic crisis of the early 1990s that allowed for the re-strengthening of
the state.