Political responses to interdependence: what's “left” for the left?

Abstract

Heightened economic interdependence in recent years is commonly argued to have generated great pressures for convergence in economic policies across the advanced industrial democracies. Interdependence has clearly had a great impact on the types of economic policies that governments can pursue: they have been unable to pursue independent fiscal and monetary policies since the mid-1970s. Furthermore, all governments have been forced to attempt to promote the competitiveness of national goods and services in world markets and to increase the speed and efficiency with which national producers adjust to changes in global markets. There are, however, different policies consistent with these goals. Statistical analyses of economic policies since the mid-1970s show that governments of the left and the right continue to be able to enact distinctive supply-side policies that promote competitiveness and flexible adjustment and simultaneously further their partisan objectives.