Introduction

Neutrality constitutes one of the three fundamental institutions characterizing the Swiss political system. Today, only a few states in the world can be considered ‘neutral’ and in Europe only Austria, Finland, Ireland, Liechtenstein, Sweden and Switzerland belong to this category. Switzerland's neutrality, however, is the most longstanding. Historians of neutrality, such as Paul Schweizer (1895) and Edgar Bonjour (1965), believe that the sources of Swiss neutrality reach back as far as 1515, the year in which the Swiss armies suffered a major defeat against the armies of François I, King of France, at the battle of Marignano. More recent research on the history of neutrality challenges the assertion of such a longstanding tradition, showing that the latter is disputable (Suter 1999). Scholars agree, however, on the crucial role of the Congress of Vienna in 1815 in relation to Swiss neutrality. It was during this watershed event, as the map of Europe was being redrawn in the aftermath of the Napoleonic wars, that Swiss delegate Charles Pictet de Rochemont succeeded in persuading the great European powers to recognize and guarantee Switzerland's self-imposed ‘permanent and armed neutrality’ (Widmer 2003).

Since 1815, the principle of neutrality has unquestionably been the keystone of Switzerland's foreign policy. Equally unquestionable is the fact that neutrality never constituted a goal per se but was considered to be a means to an end, or rather two ends: preserving Switzerland's independence from external threats and maintaining internal unity.

Introduction

As we have seen, Swiss ‘consensus democracy’ is characterized by a high degree of power sharing between different institutions and political actors, and by a large number of veto points, where policy proposals can be blocked by coalitions of opposing actors. Following Neidhart's (1970) well-known argument, we have already pointed out that the direct-democratic opening of the Swiss political system has led to the transformation of a ‘plebiscitary democracy’ into a ‘negotiation democracy’ (chapter 4). In other words, all actors capable of making a credible referendum threat have been integrated into the decision-making process. This includes not only the major political parties that have all been integrated into a stable, grand coalition (see chapter 5), but also major interest groups, the cantons and even social movement organizations, which are usually integrated from the start into elaborate pre-parliamentary consultation and negotiation procedures.

As a result of its inclusive and complex character, the political decision-making process in Switzerland has traditionally been reactive, slow and incremental (Kriesi 1998a: 293–7). Thus, decision making with regard to major societal problems is usually only taken up under immense external pressure – either from the international environment, or from exogenous domestic sources such as the economy or the citizens. Moreover, the decision-making process usually takes a very long time. Poitry (1989) calculated the average duration of such a process for all the proposals adopted by Parliament during the legislative period 1971–6.

Introduction

Austrian post-war politics until the 1980s was a classic example of stability. For almost forty years after 1945, either the Social Democrats (SPÖ) or the Christian Democrats (ÖVP) governed the country: from 1945 to 1966 together in a grand coalition, the type of government most often associated with Austria. From 1966 to 1983, first the ÖVP, then the SPÖ (1970–83), managed to achieve majorities of their own and built five consecutive single-party governments. Until the early 1980s, voters were extremely loyal to the major parties not least because they were not affected by several social and economic problems experienced in other European countries, such as mass unemployment, strikes and riots, which famously inspired Pope Paul VI to call Austria an ‘Island of the Blessed’.

Since the 1980s, Austria has experienced far-reaching developments: the breakdown of Austro-Keynesianism and nationalized industries led to important changes in macro-economic policy, because market forces have become accepted as a legitimate instrument for achieving growth (Lauber 1992: 170; Winckler 1988). The end of the communist regimes in neighbouring countries redeemed Austria from its status as a Western border state, but civil wars in the Balkans gave rise to almost forgotten fears for security and led to waves of refugees. EU membership was finally achieved in 1995, but quarrels about neutrality, the ‘sanctions’ against the government in 2000, and the opening of borders to East European workers gave rise to Euroscepticism.

Introduction

The country chapters have shown how the structure of electoral competition has been affected by globalization in the recent period. In each of the six countries, we found strong evidence for a transformation of the main dimensions of the political space and for patterns of realignment. In the present chapter, we focus on the demand side of electoral competition, analyzing in more detail the formation of a potential for the new integration v. demarcation cleavage. We take here a comparative perspective and consider similarities and differences among countries in the nature of these developments. It must be emphasized that the nature of our data imposes some limitations on the extent to which voters' attitudes can be compared across elections. To be able to perform similar analyses and to rely on comparable categories of issues across space and time, it was necessary to standardize all scales measuring issue-orientations. This implies that differences among groups of voters are always expressed in a relative way. Absolute positions or absolute distances in the political space cannot be compared directly. This is certainly annoying, but it is unavoidable given the lack of survey questions and designs that are directly comparable across several countries and elections. While this problem limits the type of comparisons that can be performed, it leaves enough room to analyze several of the central implications of our theoretical argument.

Today, in 2008, the euro is the common currency of fifteen EU countries with around 320 million inhabitants, and most other member states are aiming to join the euro area in the near or not-so-distant future. With the issuance of euro-denominated banknotes and coins at the beginning of 2002, the former national currencies were taken out of circulation, their names henceforward consigned to the history books. The fact that isolated attacks by populist politicians fail to elicit much support for a return to the national currency only serves to confirm that the common currency has become an irreversible reality, and that going back is not really an option.

Globally, too, the euro has become firmly established as the second most important currency after the US dollar. By some measures, for example in terms of its share of global official reserves, the euro still lags a long way behind; but in other respects, notably in its role as currency of denomination for credit, the euro has more or less drawn level with the American currency. Investors all around the world put their faith in the euro and buy euro-denominated long-term paper. Confidence in the stability of the euro is reflected in inflation expectations that are firmly anchored at low levels, helping explain what are, historically, exceptionally low long-term nominal interest rates.

Orientations in the ECB Governing Council

When the Governing Council of the ECB convened for its first meeting in Frankfurt on 9 June 1998, the assumption of monetary policy responsibility for the euro still seemed such a distant prospect, and yet the calendar showed it to be so close at hand. As was to be expected, and out of sheer necessity, the first few meetings were dominated by organisational and technical matters such as procedural rules, budget issues or the conditions of employment for the ECB's staff.

In developing the policy instruments as part of the monetary policy preparations, consideration also had to be given to their organisational and legal framework. For the difficult task of producing macroeconomic projections for the future euro area, the groundwork had to be laid for efficient cooperation between the ECB and the national central banks.

Inevitably, little time remained to discuss the economic situation. Moreover, a lot of what the national central bank governors had to say was, understandably, still focused on the specific situation in the individual countries. The national institutions, after all, continued to bear responsibility for the national currencies. However, the Governing Council could not possibly wait for the start of monetary union to direct its attention towards the euro area as a whole.

Introduction

The UK constitutes the paradigmatic case of a majoritarian democracy. As we have argued in Chapter 2, such a system discourages the rise of new challengers in the party system. This implies a greater stability of partisan configurations, but it does not mean that party systems are not subject to change. Under conditions of majoritarian democracies, the transformation of the party system is, however, more likely to involve the transformation of mainstream parties. As we have argued in Chapter 2, in majoritarian systems, the number of mainstream parties is more limited and, as a consequence, their internal composition is likely to be more heterogeneous than in proportional systems. New structural cleavages are likely to cut across the mainstream parties and to put them under great tension. The strain is expected to be particularly strong in the mainstream party that finds itself in the opposition. Such a party is likely to expand the scope of conflict on issues linked to the new cleavage, i.e. to adopt a more radical stance with regard to such issues. Therefore, in a majoritarian system such as the UK, shifts of power within mainstream parties are not only more likely to occur than in PR systems, but they also take on a much greater significance.

In the period covered by our project, two decisive shifts have occurred in each one of the major parties – the Conservative Party and the Labour Party – with far-reaching implications for the restructuration of the party system as a whole.

The date 1 January 1999 marks a milestone in monetary history. Eleven national currencies – not least among them the D-Mark, held in such high esteem by the citizens of Germany – ceased to exist. Their place was taken by the euro, as the single currency for over 300 million people. In the meantime, the euro area has grown, and now encompasses a total of fifteen countries.

The birth of the euro is a unique event. Never before had sovereign states ceded their responsibility for monetary policy to a supranational institution. This constellation – on one side, a central bank (the European Central Bank, ECB) and a single monetary policy; on the other, nation states that largely retain their competencies in the areas of economic and fiscal policy – creates a particular kind of tension in the interrelationship. Quite a few observers, with probably the majority of economists to the fore, were more than sceptical as to the outcome of this experiment. To begin with, will the euro get off to a good start? Under the prevailing circumstances, how likely is it, if at all, that the euro can be a stable currency? And then: what about the future? Can European monetary union (EMU) survive in the absence of political union?

The subject has been comprehensively addressed both by economists and in the media. Since well before the start of EMU, and even more so afterwards, there has been a vast output of economic research.

This book is the result of a joint project of two teams of political scientists, one at the University of Zurich, the other at the University of Munich. The origins of this project date back to a hot summer afternoon in 2001, when Hanspeter Kriesi gave a presentation of some of his ideas about the impact of globalization on the transformation of Western European party systems before the special research programme (SFB) on ‘Reflexive modernization’ at the Technical University of Munich. The presentation was well received by the small audience of dedicated colleagues who did bear with the heat. Edgar Grande reacted by proposing to set up a joint comparative research project designed to test these largely speculative ideas. Eventually, the project got going in late 2002, with the joint support of the German Research Foundation (SFB 536 – Project C5), and of the Swiss National Science Foundation (1214-68010.02). Martin Dolezal together with several research assistants joined Edgar Grande to form the Munich team, while Simon Bornschier, Timotheos Frey, Romain Lachat and Hanspeter Kriesi constituted the Zurich team.

The two teams closely collaborated from the start, and evenly divided the challenging task of data collection in six selected countries – Austria, France, Germany, the Netherlands, Switzerland and the UK – between them. We assembled data both for the political supply by the parties, and for the political demand by the voters.

The political consequences of globalization are manifold. On the one hand, the processes covered by this term lead to the establishment of new forms of political authority and of new channels of political representation at the supranational level and open up new opportunities for transnational, international and supranational mobilization (Della Porta et al. 1999). On the other hand, the same processes have profound political implications at the national level. National politics are challenged both ‘from above’ – through new forms of international cooperation and a process of supranational integration – and ‘from below’, at the regional and local level. While the political consequences of globalization have most often been studied at the supra- or transnational level (Zürn 1998; Held et al. 1999; Greven and Pauly 2000; Hall and Biersteker 2002; Grande and Pauly 2005), we shall focus on the effects of globalization on national politics. We assume that, paradoxically, the political reactions to economic and cultural globalization are bound to manifest themselves above all at the national level: given that the democratic political inclusion of citizens is still mainly a national affair, nation-states still constitute the major arenas for political mobilization (Zürn et al. 2000). Our study focuses on Western European countries, where globalization means, first of all, European integration. For the present argument, however, this aspect of the European context is not essential. Europeanization and European integration can also be seen as special cases of the more general phenomenon of globalization (Schmidt 2003).

Globalizing West European politics: dimensions of comparative analysis

Has globalization resulted in a fundamental change of West European politics, its cleavage structures, parties and party systems? Although globalization has been one of the most important topics in social science research over the past decade, this question has thus far been widely neglected. In political science, most attention has been paid to the empirical analysis of the consequences of economic globalization on national state capacities and policies (e.g. Scharpf and Schmidt 2000a, 2000b; Weiss 2003) and to efforts at establishing new transnational institutions and organizations able to regulate effectively a rapidly globalizing capitalism (Zürn 1998; Held et al. 1999; Held 2004; Slaughter 2004; Grande and Pauly 2005). The impact of globalization on politics has received hardly any attention. This holds true in particular for political parties. While there are some studies on the reactions of interest groups to globalization (Zürn and Walter 2005; Streeck et al. 2006) and on the transnational organization of social movements (della Porta, Kriesi and Rucht 1999; Smith and Johnston 2002; Tarrow 2005; della Porta and Tarrow 2005), a systematic comparative analysis of the consequences of globalization on political cleavage structures, political parties and party systems is missing. Conventional wisdom still holds that political parties, their ideological profiles, their organizational capacities and their strategic interactions are all determined by domestic factors.

Without monetary stability, a stable society of free citizens cannot endure. Not for nothing did Lenin hold that the way to destroy bourgeois society is to debauch the currency Within European economic and monetary union (EMU), this may apply with even greater justification than within the boundaries of a nation state. After all, the single currency embodies in a special way a commonality of interest among the participants. Only if the euro is stable can it foster a sense of identification; a lack of confidence in the stability of the common currency would also undermine confidence in a ‘European community’.

Consequently, the central bank that is responsible for the currency occupies an important position in the structure of the nation state, and all the more so in a monetary union of largely sovereign states. Naturally, the central bank is not alone. It does not operate in a policy vacuum; the effects of its monetary policy depend very much on policy in other areas. Chief among these is fiscal policy. The state of labour markets, the behaviour of employers and labour, and the intensity of competition in the markets also play an important role. Finally, an overarching question needs to be answered: that of the relationship between monetary union and political union. Is EMU ultimately viable without political union?