Reassuring the markets : the new politics of social concertation in acute crisis times

Abstract

Why do governments facing economic and financial crises sometimes engage organised producer groups in policymaking through social concertation, and sometimes proceed unilaterally? This article argues that during financial crises, governments’ choices to exclude or include unions and employers organisations from policymaking can be underpinned by a political objective overlooked by prior theory: reassuring the markets. In the contemporary era of financialised globalisation, indeed, international economic actors – creditors, credit rating agencies (CRAs), investors and international institutions – acquire a novel role as audiences to which policymakers seek to send signals to abate the intensity of exogenous economic pressures. Two factors shape policymakers’ choices for either strategy of market reassurance: producer groups’ veto powers in a policy area, and policymakers’ views on the past legacies of social concertation as enablers or obstacles to liberalisation. The argument is substantiated through a comparative analysis of policymaking in Portugal, Italy, and Ireland during the Eurozone sovereign debt crisis (2010-2014), drawing on 81 qualitative interviews and in-depth process tracing.