In this chapter, I examine the international capital mobility thesis, namely, that notable post-1970 rises in transnational capital mobility have significantly diminished the capacity of democratically elected governments to pursue social welfare policies that depart from market-conforming principles. I initially provide an overview of the internationalization of markets, focusing especially on trends in the liberalization of capital controls, international capital flows, and financial market integration. Next, I offer an exegesis of the theory of diminished democracy, outlining the economic and political logics that link capital mobility to retrenchment and neoliberal restructuring of the welfare state. I also confront the theory with the counterclaim that, in reality, the postwar structure of embedded liberalism, or the combination of international liberalism with substantial state intervention and social compensation, continues to have relevance to the contemporary period. Finally, I devote the bulk of the chapter to the development of my alternative argument that the institutional structure of the polity and welfare state – national systems of group and electoral interest representation, the organization of policy-making authority within the polity, and programmatic structures of welfare states – determine the direction and magnitude of the social policy impacts of internationalization. I conclude with an empirical analysis of focal dimensions of national institutions, an exercise that sets the stage for the empirical assessments of theory in subsequent chapters.

International Capital Mobility: An Overview

Facilitated by national policy change, technological innovations, new financial institutions, and market forces, international flows of capital and the potential for such movements have increased notably since the early 1970s.

Despite the evidence against conventional globalization theory generated in the preceding chapters, it may still be the case that increases in international capital mobility and financial integration contribute indirectly to rollbacks in social protection and otherwise constrain democratically elected governments from pursuing their social policy goals. Specifically, international capital mobility may contribute to the retrenchment of the welfare state through its impacts on the funding basis of the welfare state, the strength of political institutions that support the welfare state – most notably social corporatism – and the efficacy of macroeconomic policy to control unemployment and promote economic growth (and hence prevent fiscal stress that can lead to retrenchment). In the pages that follow, I go beyond my treatment of these issues in early sections of the volume and provide more detailed assessments of each argument. In the case of taxation, I provide a relatively developed analysis of the widely debated relationship between globalization and revenue raising by extending arguments I have offered elsewhere about internationalization and tax policy (Swank 1998) and by providing new evidence on international capital mobility's effects on tax burdens on capital, labor, and consumption, as well as on the tax share of GDP. In the case of the linkage between internationalization and social corporatism, I review the arguments, weigh the best recent evidence, and provide some new analysis. Finally, I provide a succinct assessment – relying on the best recent treatments of the topic, as well as analytic summaries of my case-study evidence – of the view that the decline in the efficacy of monetary, exchange rate, and related policies associated with rises in capital mobility forces governments, through a deterioration in economic performance (most notably, escalating unemployment rates), to rollback social protection to restrain rising welfare state costs.

In this chapter, I explore the welfare state impacts of international capital mobility in the corporatist conservative welfare states of continental Europe. First, I consider Austria, Belgium, France, Germany, and Italy as a group and then provide analyses of internationalization and social policy change in Germany, France, and Italy. Germany is often regarded as an exemplar of the “corporatist conservative,” or Christian Democratic, welfare state and I supplement the analysis of secondary material with interview and other primary data. Given the relatively large size of the French and Italian welfare states and the centrality of the French and Italian economies, I also provide individual case studies of these countries.

I proceed with analysis of the conservative welfare states in the same fashion as I did for the Nordic cases. After an overview of basic features of welfare states, I examine, in turn, trends in international capital mobility and the politics of social welfare reform within individual countries. I conclude with a comparative analysis of the roles of internationalization in influencing social welfare policy change and an assessment of the ways in which national institutions shape the social policy impacts of globalization. As to key hypotheses, globalization theory predicts that we should observe clear evidence of retrenchment subsequent to rises in international capital mobility in the relatively generous and expensive corporatist conservative systems of social protection. On the other hand, my alternative theory argues that we should see differential effects of internationalization across varieties of national political and welfare state institutions.

This book finds its origins in my early 1990s work on the political economy of redistribution in the developed capitalist democracies. I have accumulated many debts since then and they ought now to be gratefully acknowledged. First, I wish to express my appreciation to the German Marshall Fund of the United States for providing a GMF Research Fellowship that made possible invaluable research, travel, and writing time during 1996 and 1997. In addition, the Marquette University Committee on Research provided generous financial support in the form of regular and summer faculty fellowships during 1996 and 1997. Second, I would like to thank the many individuals who provided helpful comments on my arguments and analyses. In particular, Keith Banting, Hans-Georg Betz, Markus Crepaz, Bernhard Ebbinghaus, John Freeman, Miriam Golden, Peter Hall, Torben Iversen, Desmond King, Anders Lindbom, Andrew Martin, Cathie Jo Martin, Kathleen McNamara, John Myles, Jonas Pontusson, Michael Shalev, and Sven Steinmo provided especially helpful suggestions and criticisms at one or more junctures (as have many other colleagues at the forums listed below). I am especially grateful to Francis Castles, Geoffrey Garrett, Paul Pierson, Dennis Quinn, John Stephens, and Michael Wallerstein for extensive discussions or written comments on material in the book. I have also learned a good deal about the political economy of advanced industrial societies by reading their work. Third, I wish to thank Lewis Bateman, Political Science Editor at Cambridge University Press, for sage advice and support of this manuscript, and to Cambridge's anonymous readers for very helpful comments on the first draft.

In this chapter and the next, I offer a largely qualitative analysis of globalization and the timing and character of social welfare policy change in the large social democratic and corporatist conservative welfare states. In the present chapter, I offer a case-oriented analysis of social policy reform in the Nordic political economies – Denmark, Finland, Norway, and Sweden. In comparative perspective, the Nordic welfare states are the most developed among the rich democracies, representing Esping-Andersen's (1990) social democratic welfare state regime and closely approximating what Titmuss (1974) has called the “institutional welfare state.” The Nordic welfare states are characterized by comprehensive, universal, and egalitarian income maintenance programs, as well as relatively high levels of universally and publically provided social services (e.g., Esping-Andersen [1990; 1996b]; Huber and Stephens [1996]). Traditionally, the Nordic welfare states have been supported by redistributive general taxation and strong work orientations (i.e., in program structure and in economic policy) and they have produced the highest levels of income and gender equality within the advanced market-oriented democracies (see analysis below).

I proceed with the case-oriented analysis of the Nordic welfare states as follows. First, I provide a comparative overview of the structure of the welfare state and recent social policy change. I then examine absolute and relative levels and trends in capital mobility. Next, I explore the character and timing of social policy change – retrenchments, restructurings, and extensions of social protection – in individual welfare states from the late 1970s through the mid-1990s.

The predominately liberal welfare states of Britain, North America, and Australasia are characterized by a mixture of moderate to low flat-rate, social insurance, and extensively means-tested benefits, as well as significant private social insurance and relatively small public commitments to government-provided social services. Comparative data presented in preceding chapters have highlighted these features of liberal welfare states, as well as their relatively modest impacts in ameliorating poverty and income inequalities. As I have also illustrated, programmatic features of some of these welfare states create significant departures from the liberal prototype. Most notably, Britain (especially prior to 1980) exhibits significant elements of universalism in program structure (especially through the National Health Service and flat-rate benefits based on citizenship). In addition, the Australian (and New Zealand) welfare state represents an interesting variation of the liberal model. Prior to the 1980s, low and heavily means-tested social benefits have been embedded in a state regulated system of relatively high minimum wages, protectionism for domestic industry, and progressive taxation (e.g., Castles [1996]; Castles and Mitchell [1993]). Although public social protection is modest, (pre-1980s) wage compression and full employment have combined with social welfare programs to create a “wage earners welfare state” (Castles, 1985).

In this chapter, I provide succinct case studies of contemporary social welfare policy change and the sources of that change in two liberal systems, the United States and Britain, and brief analyses of globalization, political institutions, and social welfare state reforms in Australia, Canada, and New Zealand.

In the preceding chapters, I have assessed the argument that internationalization, especially the dramatic increases in international capital mobility over the past 25 years or so, has contributed significantly to the retrenchment of the welfare state in the developed capitalist democracies. As I have discussed, the heart of the globalization thesis is an argument about “diminished democracy,” or the general diminution of the ability of democratically elected governments to pursue social policy goals that depart from market-oriented principles. I have also offered and assessed an alternative theory about the relationship between internationalization of markets and contemporary social welfare policy change. In this alternative view, the domestic policy impacts of internationalization vary notably across political contexts. The institutional structures of the polity and welfare state shape the structure of opportunities for representation of pro–welfare state interests (i.e., programmatic coalitions, collective actors, and national alliances). Institutions also have long-term structural effects on the relative political capacities of pro–welfare state interests and on the prevailing norms and values embedded in the policy process. Hence, configurations of national institutions play a large role in determining the ways in which national policy makers respond to the economic and political pressures associated with globalization. Overall, the evidence has been disproportionately in favor of this latter view.

In the subsequent pages, I state my principal conclusions about the relationships between international capital mobility and policy change in developed welfare states and about how national political institutions shape the social welfare impacts of globalization.

Introduction

If there is one image that captures and explains the impact of the West on the media, it is the printing press. Although the first presses were invented in China and Korea, it was the Europeans who exploited it for mass consumption. Accompanying the technology are the values of the country of its origin; in the case of Singapore, the source was Britain. Singapore's early newspapers, as well as its first radio station, were started by Britons under colonial British media laws. From the British, Singapore derived the more universally accepted restrictions of defamation and copyright (once, the right given by the monarch to make copies), as well as the Official Secrets Act, the Internal Security Act, and the much-amended Newspaper and Printing Presses Act.

The modern image that captures and explains the impact of America on the media in Singapore and around the world is a computer wired to the Internet. The key components that make up the Internet — a computer chip running on software and connected to other units by a telephone system — were invented in the United States. Already, American values are being passed along through the adoption of the Internet.

For the foreseeable future, the influences on the media will likely come from the United States. This chapter argues that even if controls on the media could be said to have worked in the 1970s and 1980s, and perhaps even in the 1990s, they are unlikely to work in the foreseeable future. Because of technology and other reasons, Singapore's media laws and regulations will need to be revisited to realize her ambition to become a major world city. Just as the traditional mass media have developed differently in Singapore compared with Great Britain, so the use of the Internet is likely to develop differently in Singapore compared with the United States. This means the laws and controls on the media will not mirror that of the United States.

Colonial Legacy

The history of press regulation by the British Government has not been linear. In 1835, the British Government abolished a law that required newspapers to submit pre-publication copies of the paper to the colonial governor for vetting. In celebration, the Singapore Free Presswas started that year.

Introduction

The 19 July 1999 issue of Timemagazine had this blurb on its cover: “Singapore Swings: Can Asia's Nanny State Give Up its Authoritarian Ways?”. The magazine said, “Culturally, Singapore is permitting artists to stage a range of socially and politically controversial performances”. The major moment of change, it argued, came with the 1990 naming of Goh Chok Tong as the politician who would replace Lee Kuan Yew as Prime Minister, and this led to a formulation of cultural policy by the People's Action Party (PAP) Government. The National Arts Council was set up in 1991 and the Ministry of Information and the Arts created. This ministry had — as Timeput it, in its inimically over-wrought literary style — “PAP intellectual-in-waiting [George] Yeo in charge”. It said: “The new minister enthused about fostering a global renaissance city, about making Singaporeans more creative, about forging a civic society — the buzzwords flew like hornets among government departments.”

While it may be argued that Timeexaggerates the extent to which the Singapore state has changed in its attitude towards high culture and its relation to civil society at large — articulated as “civic society” by Minister Yeo — there is no doubt that, first, there has been a burst of high cultural energy since the 1980s and that, second, the state now has a discernible cultural policy in place — a key feature of which is a desire for Singapore to become a ldquo;Global City for the Arts” — in sharp contrast to the utilitarian and instrumental-rationalist 1960s and 1970s.

This chapter examines some of the developments that have occurred in the arts since the 1980s, along with the rapid attempts by the state to exploit the commercial potential of such developments, and considers how the arts ave to a fair degree been concerned with issues of identity, multiculturalism, cultural heritage, and history as a reaction to the Singapore state's top-down approach to economic orientation, along with an intensive modernization of society that allowed little space for cultural issues.

The volume of literature on Singapore society, politics, and economics continues to grow at a steady rate. Few other countries of similar size have been so extensively written on. The reason why Singapore continues to come under the microscope of intellectual analysis is that it is unique in many ways. From the way it is governed to the way it conducts its commerce, Singapore has generally charted its own course different from what is generally pursued by most other countries.

Another book on Singapore can only be justified if there are new things to say. In that respect, if this book does reveal to the reader something new, it is a consequence of the impact on Singapore of the significant changes taking place in an increasingly interdependent world, and the equally significant geopolitical changes that have taken place in Singapore's own neighbourhood — Southeast Asia. These changes have occasioned economic, political, intellectual, and societal responses from both the Singaporean state and people, whose defining feature is to keep pace and anticipate change.

This book grew out of a one-day conference of the same name organized by the Institute of Southeast Asian Studies in August 1999. Eight papers were presented at that conference, of which seven were selected, revised in 2001, and now appear as chapters in this book. The editor then commissioned three more chapters, so as to make the book more rounded. The conclusion draws together some of the major themes in the various chapters, highlighting some key challenges that Singapore is likely to face in the years ahead and also reflecting on the significance of the 2001 general election.

The editor would like to thank Mr Jesse Cortes, a graduate student at the University of California, San Diego, for assistance in editing this volume. He would also like to thank the authors of the various chapters for their patience in waiting for the book's publication.

The turn of the millennium appears to be an exciting time for Singapore. There is constant talk of the need to re-examine old ways of thinking and doing things, and of the concomitant need for creativity and innovation. The Singapore 21document is a key example of this government-initiated push for change. Education policy has been a prime instrument for the fostering of both economic development and social cohesion ever since the ruling People's Action Party (PAP) came to power in 1959. It is, therefore, unsurprising that education policy-makers, schools, principals, teachers, and students are being swept along in a literal tide of newly launched policy directives.

This chapter poses questions about ongoing and future challenges and dilemmas facing Singapore's education system, as it moves into the twenty-first century. It is divided into two major sections. The first section focuses on the ways in which schools are being urged to foster creativity and innovation, in order to enhance national economic competitiveness in the global economy. t examines several key policy initiatives such as “Thinking Schools, Learning Nation”, the “Masterplan for Information Technology in Education”, and the revised university admission criteria. It draws from relevant research literature and raises troubling and thought-provoking questions about the launching of these initiatives. It argues that attention to the technical aspects of policy implementation is insufficient to ensure successful implementation in schools. Rather, greater attention needs to be focused on the human aspects, such as teachers' beliefs about knowledge and their role as teachers. At the same time, questions are raised about the move towards the marketization of education, as manifested, for instance, in the independent schools scheme, the autonomous schools scheme, and the push for intense inter-school competition. The second section looks at social cohesion and points out the persistence of policy challenges and dilemmas with regard to language and values education, ethnic disparities in educational attainment, and social class disparities in educational attainment. The chapter concludes by summarizing several key challenges and dilemmas in education policy-making in the early years of the twenty-first century.

1. Introduction

Singapore is sui generisas a sovereign city-state. Its very economic success is a bold contradiction of its geographical size. While the title of this chapter suggests some negativism, the subtitle is meant to provoke a revisit of traditional constraints of natural resources and resulting options and strategies. The chapter presents an alternative reassessment, given shifts in capabilities enabled by an internal reorientation of an open society, which has largely been a cause and effect of globalization and technology, especially information technology. The important change in mindset and psychology as a city-state is also moulded and sculpted as a response to the emerging environment. Both spatially and intellectually, the changing regional and international frameworks offer both opportunities and threats to Singapore as a city-state. To what extent and how can Singapore drive itself forward requires an intense scrutiny into the political economy of its viability and survival, and also the perceptions of others.

As Singapore is both a city-state and world city, a conceptual distinction between the two is a necessary preamble. Both geographical constructs exist on the same global extensions and networks, but a world city is perhaps less sensitive politically to how the regional or international hinterland gives it sustenance. A city-state connotes deeper economic, social, security. sovereignty, and political dimensions, and has to deal with them more explicitly, especially if other countries demand that it does. The world city hypothesis, and where Singapore stands, is discussed in Section 2 of the chapter. Singapore as a sovereign city-state, in both the traditional and new thinking, is sorted out in Section 3. The crucial domestic and regional implications of the convergence of both for Singapore are identified and discussed in Section 4. With Hong Kong a Special Administrative Region (SAR) of China, Singapore may well be alone as a city-state in its sovereign status. The issues and strategies of the political economy of a city-state are analysed in Section 5, and some policy suggestions are tendered in the concluding section.