A central implication of the theory developed in Chapter 2 is that legislative majorities in the Bundestag will be strongly tempted to evade judicial decisions that touch on interests that are fundamental to the parties, and that this temptation is particularly strong whenever public support or transparency is low. The theory further implies that judges of the FCC anticipate this potential for evasion and adjust their behavior in two ways. First, they will be sensitive to the preferences of legislative majorities and employ methods to reduce the costs of their decisions. Second, when they choose to annul a statute, they will try to increase the transparency surrounding the decision to generate greater pressure for compliance.

In the previous chapter, we found considerable evidence for the various components of this argument. Legislators reported that the costs of a decision affect their response to a judicial decision, and judges discussed a number of strategies they employ to reduce the political costs of their rulings. In this chapter, I illustrate these interactions in greater detail through a case study of the interactions between the Bundesverfassungsgericht and Bundestag in a particular policy area: public financing of political parties. This case study is particularly valuable because it traces the dynamics of the often contentious relationship between the FCC and the Bundestag as they interact repeatedly over the same issue.

The principal argument of this book, laid out in Chapter 2, takes off from the observation that the decisions of a constitutional court like the Bundesverfassungsgericht are not self-enforcing. Implementation of judicial decisions often requires the cooperation of other actors who may not wish to comply with a specific ruling, most importantly – for our purposes – legislative majorities. As a result, the incentives that legislators face in deciding how to respond to a judicial ruling take on central significance. The greater the pressure to implement a court's rulings faithfully, the more influential and effective a court will be. One important mechanism that creates such pressure for elected officials like legislators is the potential for a public backlash if they are perceived to flaunt a judicial decision. As I argued in greater detail in Chapter 2, two factors are central to this mechanism:

1. The degree of public support a court enjoys and

2. The likelihood that a sufficiently large number of citizens will become aware/convinced that a judicial decision has not been complied with if evasion is attempted (transparency).

As I stated at the end of Chapter 2, the second condition (transparency) is conditioned by a range of factors that work to decrease or increase the likelihood that citizens will become aware of evasive attempts by a legislative majority. Thus, transparency is generally higher in cases that are salient and attract more public attention.

In the previous chapter, I provided systematic statistical support for a central implication of the theory presented in Chapter 2. This implication focuses on the fact that if the potential to lose public support for evasion represents a key enforcement mechanism for judicial decisions, the Bundesverfassungsgericht will be more aggressive in using its veto powers the more transparent its political environment is. The evidence was overwhelmingly consistent with this prediction. The court is considerably more likely to annul legislation when public awareness of a case is high, when the court enjoys outside political support for an annulment, and when the issue involved is noncomplex and easy to police. Although critical, this relationship between transparency and judicial deference constitutes only on aspect of the theoretical argument. In this chapter, we explore other implications of the theory. Before I outline these implications, a few remarks about the approach taken in this chapter are useful.

Methodologically, we change tracks in this chapter. Instead of analyzing data statistically, we will consider qualitative evidence – specifically, interviews with judges of the FCC and members of the Bundestag. What makes such qualitative evidence particularly relevant? Rational choice theories (like the one presented here) posit that actors are conscious decision makers who act in ways that they believe will maximize their welfare as they perceive it. In other words, the subjective perceptions of the actors whose behavior is being explained constitute a crucial ingredient in rational choice approaches.

In much of the Western world, the institution of constitutional review has become a central component of constitutional democracy. In the previous chapter, I argued that how and under what circumstances courts are able to exercise influence over the policymaking process poses a puzzle. While many courts have successfully established a claim to the power of constitutional review, most have few means at their disposal to force compliance with their decisions. President Andrew Jackson's apocryphal reaction to the U.S. Supreme Court's decision (written by Chief Justice John Marshall) in Worcester v. Georgia (31 U.S. 515), invalidating attempts by the State of Georgia to assert jurisdiction over the Cherokee Indians provides a poignant illustration: “John Marshall has made his decision, now let him enforce it” (see Smith 1996:518). This lack of formal enforcement powers is potentially significant because implementation of a judicial decision often requires or induces a response by other policymakers. As the examples presented in the previous chapter suggest, governing majorities may be tempted to exploit the opportunity to evade, or at least limit, the impact of unwelcome judicial decisions. How then do courts constrain other political institutions?

Scholars have investigated various bases of judicial authority, including the value that political parties that alternate between government and opposition may place on judicial independence (Landes and Posner 1975; Ramseyer 1994), the fact that courts can help parties to solve Prisoner's Dilemma–type problems (Carrubba 2003), and the informational gain that legislative majorities may achieve from judicial review (Rogers 2001).

Constitutional review – defined as the power of judicial bodies to set aside ordinary legislative or administrative acts if judges conclude that they conflict with the constitution – has emerged as an almost universal feature of Western-style democracy. The commitment to this institution has become so pervasive that it is now virtually unthinkable to draft a democratic constitution without providing for its inclusion. Whether in postfascist Spain, postapartheid South Africa, or postcommunist Eastern Europe, recent transitions to democracy have been transitions to constitutional democracy, including judicial oversight of the political process. As Mauro Cappelletti has observed, in much of the Western world, constitutional review has come to be understood as “the necessary ‘crowning’ of the rule of law” (1989:205).

The experiences of totalitarianism provided a natural impetus for this development. In writing his monumental survey of American democracy in the 1830s, Alexis de Tocqueville praised the role of the judiciary in the new political system, arguing that “the power granted to American courts to pronounce on the constitutionality of laws is yet one of the most powerful barriers ever erected against the tyranny of political assemblies” (1835/1988:103f.). Similarly, constitution writers following World War II, and again in the wake of the peaceful revolutions of 1989 in Eastern Europe, turned to courts armed with the power of constitutional review in the hope of creating effective limitations on the power of legislative majorities.

In the remainder of the book, I explore and test the empirical implications of the theory laid out in the previous chapter by applying the framework to the FCC. In the roughly fifty years since its creation, this court has emerged as “the most active and powerful constitutional court in Europe” (Kommers 1994:470), and it has served as a model for many of the new constitutional courts of Eastern Europe (Schwartz 2000). Aside from the intrinsic importance of this court as one of the most significant legal actors in the world today, the FCC therefore provides an appropriate testing ground for the argument. Before we dive into the details of the politics of constitutional review in Germany, it is useful to briefly survey the Bundesverfassungsgericht and its history. How was this court established? How is it organized, and what are its powers? And how does it compare to other European constitutional courts? This chapter provides answers to these (and other) questions. Readers who are already familiar with the structure, jurisdiction, and powers of the FCC can skip without much loss to the next chapter.

I begin with a short account of the history and establishment of the court. One of the implications of the argument in the previous two chapters is that establishing a court, maintaining its institutional integrity, and generating compliance with its decisions constitute separate (though interrelated) problems.

Around the world, courts with the power to declare legislative and executive actions unconstitutional are playing a more and more prominent role. Establishing a constitutional court to act as the guardian of the constitution is often seen as a necessary part of making a transition to democracy (Howard 1993; Schwartz 2000; Widner 2001). Thus, in one of the most sweeping waves of democratic transition in history, each of the newly democratic states in Eastern Europe chose to include judicial review in its new constitutional order (Elster, Offe, and Preuss 1998:102). Nor is the influence of courts limited to new democracies. In countries where constitutional review has been a part of the political process for decades, courts appear to be playing a more and more active role (e.g., Shapiro and Stone 1994, 2002; Stone Sweet 2000). The reach of courts extends even beyond the nation-state. Supranational courts like the ECJ that can rule on the validity of national legislation are growing increasingly influential (Alter 2001; Mattli and Slaughter 1998; Stone Sweet and Brunell 1998). It is perhaps not surprising that scholars have begun to speak of a “globalization of judicial power” (Tate and Valinder 1995) and a “judicialization of politics” (Stone Sweet 2000).

Given these trends, understanding how courts interact with legislative majorities and other institutions of governance is of central importance in understanding politics in constitutional democracies today. And yet, comparative political scientists have traditionally devoted surprisingly little attention to studying courts.

Previous chapters have focused primarily on explaining variations across the four countries that are the subject of this study, and have traced the roots of important differences in vocational training institutions back to the political dynamics and coalitions that were forged around the turn of the century and into the 1920s. This chapter takes up the German case again and tracks its further development through National Socialism and into the post-World War II period. This involves a shift in focus, away from the origins of cross-national differences to variations over time within a single country. This shift allows us to address a related but distinct set of questions and theoretical issues concerning institutional stability and change.

As discussed in Chapter 1, the most commonly invoked metaphor for institutional change is the punctuated equilibrium model as it was adapted from the work of evolutionary biologists and interpreted for politics by Krasner in 1988 (Krasner 1988). This model emphasizes long stretches of institutional “stasis” periodically punctuated by episodes of relatively rapid innovation. In most treatments, innovation occurs as a result of some kind of exogenous shock that disrupts the stable reproduction of institutions and provides an opening for substantial institutional reconfiguration. This view of political and institutional change is pervasive, finding expression in a good deal of the literature on “critical junctures” as well as some treatments of path dependence. This kind of model captures one important mode of change in political life.

The German case provides a good point of departure for a study of the politics of skill formation. Germany has long been considered exemplary for its vocational training system, which even despite current strains (discussed in Chapter 5) continues to attract large numbers of German youth and to produce an abundance of high-quality skills (Streeck 1992b; Culpepper and Finegold 1999; Green and Sakamoto 2001: 73). Since the turn of the century, observers from abroad have looked to the German training model as a source of ideas and inspiration (see, for example, Cooley 1912; and, more recently, Reich 1991). This chapter examines the genesis and early evolution of the German system. As we will see, this system was not created “of a piece” but rather, evolved as successive layers were patched on to a rudimentary framework developed at the end of the nineteenth century. The critical legislative innovation around which the whole system was constructed was passed by an authoritarian government, initiated and originally conceived as part of a deeply conservative political strategy aimed mostly against the country's nascent organized labor movement. This chapter begins to track the processes through which this system evolved subsequently into what is now considered a pillar of social partnership between labor and capital in Germany today.

To preview the argument: The crucial starting point in Germany was the survival of an independent artisanal sector, formally (and legally) endowed with rights to regulate training and to certify skills.

The past two decades have witnessed an enormous outpouring of literature on the putative effects of “globalization” on the political economies of the advanced industrial countries. A good deal of this literature was inspired by early, sometimes rather breathless predictions of a trend toward convergence in the institutional arrangements governing these political economies. Such convergence, it was argued by some, would result from the pressures imposed by footloose firms engaged in “regime shopping” which would in turn drive competitive deregulation among the advanced countries (see, for example, Kapstein 1996; Kurzer 1993). These prospects were especially worrisome to students of Europe's “corporatist” political economies, which had long been admired as models of economic efficiency and social equality.

In the meantime, however, a good deal of evidence has accumulated that calls into question arguments about a convergence among the institutional arrangements that characterize different political economies (Berger and Dore 1996; Brown, Green, and Lauder 2001; Ferner and Hyman 1998; Garrett 1998; Iversen, Pontusson, and Soskice 2000; Kitschelt et al. 1999; Streeck and Yamamura 2002; Vogel 2001; Wallerstein and Golden 1997). Although there are certainly changes afoot in all countries, a number of scholars have pointed to systematic and apparently enduring differences in the organization of capitalism across the advanced industrial countries. Different authors characterize these differences each in his or her own way, but the consensus that has emerged is truly striking.

In the case of Germany, we saw that state policy in the early industrial period was crucial to establishing the trajectory that skill formation there would take. Legislation targeted at the artisanal sector contributed to the survival of a relatively stable system of apprenticeship, and at the same time discouraged unions from pursuing skill-based strategies for labor market control. Firms in industries that depended heavily on skills drew on the artisanal sector as a source of skilled labor but they also competed with Handwerk as a corporate actor, especially over skill certification. This produced a dynamic through which industry was pushed and pulled toward training practices that built on, and in some ways paralleled, those developed in the artisanal sector.

In Britain, state policy worked in the opposite direction, contributing to the deregulation of traditional apprenticeship and indirectly encouraging the development of skill-based unions pursuing strategies premised on craft control. The legal framework in place in the nineteenth century discouraged the formation of unions among unskilled laborers while encouraging skilled workers to organize around the provision of friendly society benefits. Responding to this set of incentives and constraints, early trade unions organized their strategies around the attempt to influence wages and employment by manipulating the supply of skilled labor. This set up a completely different set of dynamics in Britain in which apprenticeship was contested not – as in Germany – between an independent artisanal sector and an emerging industrial sector, but rather between craft unions and employers in skill-dependent industries.

This chapter extends the analysis and the line of argumentation developed for Germany and Britain to two further cases, Japan and the United States. Japan provides an important counterpoint to Germany, for there, too, firm-based training rests on institutional arrangements that ameliorate costly competition among firms and mitigate the collective action problems typically associated with private-sector training. Both German and Japanese employers overcame their collective action problems in the area of training, but they did so in radically different ways: in Germany through the construction of a national system that generates a plentiful supply of workers with portable skills, and in Japan, through plant-based training in the context of stronger internal labor markets. Applying the terms introduced in Chapter 1, we note a broad difference between skill formation regimes based on “collectivism” in the German case and “segmentalism” or “autarky” in the Japanese case.

The other case considered in this chapter, the United States, provides a useful counterpoint to that of the British. In both countries, apprenticeship was a source of conflict between employers and craft unions, and therefore, strongly contested across the class divide. As in Britain, so too in the United States only in rare cases (the construction industry is an example) could an accommodation be reached that stabilized coordination across firms and between organized labor and employers in the area of apprentice training. The U.S. case also shares some similarities with Japan, however.

I am well aware that vocational training is not going to strike some readers as the most scintillating of topics, but I hope they persevere long enough for me to make the case that this subject holds many valuable insights for political economy and comparative politics generally. I myself became interested in skill regimes as an offshoot of my interest in what defines and sustains different models of capitalism. Wolfgang Streeck's pioneering work first drew my attention to the importance of training in Germany's successful manufacturing economy in the 1980s. In the meantime, a broad consensus has emerged that skill formation is a crucial component in the institutional constellations that define distinctive “varieties of capitalism” in the developed democracies and very possibly beyond. This literature has made it very clear that different skill formation regimes have important consequences for a variety of contemporary political economic outcomes, but it had nothing to say about where these institutions had come from in the first place. This is what I wanted to find out.

The cross-national component of this book, therefore, explores the genesis of some striking institutional differences across four countries – Germany, Britain, the United States, and Japan – asking the question: “Why did these countries pursue such different trajectories with respect to skill formation and plant-based training?” My research led me back to the nineteenth century and pointed specifically to differences in the coalitional alignments among three key groups – employers in skill-intensive industries (especially metalworking), traditional artisans, and early trade unions.

This chapter summarizes the main empirical findings of the analysis, both the cross-national and the longitudinal dimensions, and relates these findings to several major theoretical debates in the literature. The analysis of cross-national differences in the institutions governing in-plant training and the over-time analysis tracking the evolution of the German system over a longer period speak to debates in the political–economic literature on “varieties of capitalism” concerning institutional origins and institutional complementarities. Moreover, the analysis here provides insights into a broader literature in political science concerning issues of institutional reproduction, institutional change, and path dependence in politics.

Cross-National Comparisons: The Origins of Divergent Skill Regimes

The single variable that mattered most crucially to the divergent trajectories of skill formation documented here was the behavior and strategies of leading firms in skill-intensive industries, particularly the machine and metalworking industries. Around the turn of the century, large machine and metalworking firms across all four countries shared similar interests and were pursuing roughly similar strategies with respect to skill formation. Circa 1895 firms like M.A.N., Mather and Platt, Yokosuka, and General Electric were all engaged in efforts to develop their own in-plant capacities for skill formation and combining these with various policies designed to co-opt workers and exclude unions. From then on, however, trajectories diverged as these firms adapted their strategies to the particular constellation of incentives and constraints they faced in their separate countries.