Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-23T13:43:14.103Z Has data issue: false hasContentIssue false
  • English
  • Français

Private Debt and the Anglo-Liberal Growth Model

Published online by Cambridge University Press:  02 July 2015

Lucy Barnes
Get access Rights & Permissions [Opens in a new window]

Abstract

Was there really a debt-fuelled ‘liberal growth model’ that preceded the 2008 financial crisis? The accepted narrative about the pre-crisis boom is that some liberal countries relied on domestic consumption to fuel economic growth, and on household debt to fuel this consumption. In this, they contrasted with coordinated economies. While eventually unsustainable, the growth strategy was politically necessary to maintain middle-class living standards in the context of increasing income inequality. In this article, I take these contentions to the data. Economic evidence from 1995–2007 and political data from the Comparative Manifesto Project Database undermine this received wisdom: while household debt increased in the liberal countries, it does not differentiate this particular growth model. Further, there is no evidence that politicians in liberal countries advocate different economic policies, including those concerning borrowing, to claim credit and stay in power. Differences in the importance of finance between countries, however, suggest a more elite-driven divergence.

Keywords

debtborrowingfinancial crisisvarieties of capitalism,growth models
Type
Articles
Information
Government and Opposition , Volume 51 , Supplement 4 , October 2016 , pp. 529 - 552
Copyright
Copyright © The Author(s). Published by Government and Opposition Limited and Cambridge University Press 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

Lucy Barnes is a lecturer in the School of Politics and International Relations at the University of Kent. Contact email: [email protected].

References

Ahlquist, J.S. and Breunig, C. (2012), ‘Model-based Clustering and Typologies in the Social Sciences’, Political Analysis, 20(1): 92–112.Google Scholar
Barnes, L. and Wren, A. (2012), ‘The Liberal Model in (the) Crisis: Continuity and Change in Great Britain and Ireland’, in N. Bermeo and J. Pontusson (eds), Coping with Crisis: Government Reactions to the Great Recession (New York: Russell Sage Foundation Press): 287–324.Google Scholar
Bartels, L.F. (2008), Unequal Democracy: The Political Economy of the New Gilded Age (Princeton: Princeton University Press).Google Scholar
Benoit, K., Laver, M. and Mikhaylov, S. (2009), ‘Treating Words as Data with Error: Uncertainty in Text Statements of Policy Positions’, American Journal of Political Science, 53(2): 495–513.CrossRefGoogle Scholar
Budge, I., Klingemann, H., Volkens, A. and Bara, J. (2001) (eds), Mapping Policy Preferences: Estimates for Parties, Electors, and Governments 1945–1998 (Oxford: Oxford University Press).Google Scholar
Casper, S. (2001), ‘The Legal Framework for Corporate Governance: The Influence of Contract Law on Company Strategies in Germany and the United States’, in P.A. Hall and D. Soskice (eds), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New York: Oxford University Press): 387–416.Google Scholar
Crouch, C. (2009), ‘Privatised Keynesianism: An Unacknowledged Policy Regime’, British Journal of Politics and International Relations, 11(3): 382–399.Google Scholar
Culpepper, P.D. (2011), Quiet Politics and Business Power: Corporate Control in Europe and Japan (New York: Cambridge University Press).CrossRefGoogle Scholar
Dinas, E. and Gemenis, K. (2010), ‘Measuring Parties’ Ideological Positions with Manifesto Data: A Critical Evaluation of the Competing Methods’, Party Politics, 16(4): 427–450.Google Scholar
Duch, R.M. and Stevenson, R. (2006), ‘Assessing the Magnitude of the Economic Vote Over Time and Across Nations’, Electoral Studies, 25(3): 528–547.Google Scholar
Fourcade, M., Steiner, P., Streeck, W. and Woll, C. (2013), ‘Moral Categories in the Financial Crisis’, Socio-Economic Review, 11(3): 601–627.CrossRefGoogle Scholar
Frank, R.H. (2001), Luxury Fever: Why Money Fails to Satisfy in an Era of Excess (New York: The Free Press).Google Scholar
Gamble, A. (2009), The Spectre at the Feast: Capitalist Crisis and the Politics of Recession (New York: Palgrave Macmillan).Google Scholar
Gemenis, K. (2012), ‘Proxy Documents as a Source of Measurement Error in the Comparative Manifestos Project’, Electoral Studies, 31(3): 594–604.Google Scholar
Gemenis, K. (2013), ‘What to Do (and Not to Do) with the Comparative Manifestos Project Data’, Political Studies, 61(S1): 3–23.Google Scholar
Gilens, M. (2005), ‘Inequality and Democratic Responsiveness’, Public Opinion Quarterly, 69(5): 778–796.Google Scholar
Green, M. and Hudak, K. (2009), ‘Congress and the Bailout: Explaining the Bailout Votes and their Electoral Effect’, Legislative Studies Section Newsletter (Americal Political Science Association), 32 (1).Google Scholar
Greenwood, R. and Scharfstein, D. (2012), The Growth of Modern Finance, Harvard Business School Working Paper, www.people.hbs.edu/dscharfstein/growth_of_modern_finance.pdf.Google Scholar
Hacker, J.S. and Pierson, P. (2005), ‘Abandoning the Middle: The Bush Tax Cuts and the Limits of Democratic Control’, Perspectives on Politics, 3(1): 33–53.CrossRefGoogle Scholar
Hall, P.A. and Soskice, D. (2001), ‘An Introduction to Varieties of Capitalism’, in P.A. Hall and D. Soskice (eds), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New York: Oxford University Press): 1–68.CrossRefGoogle Scholar
Hansard (2011), Hansard Parliamentary Debates, House of Commons (23 March), col. 952.Google Scholar
Hay, C. (2011), ‘Pathology Without Crisis? The Strange Demise of the Anglo-Liberal Growth Model’, Government and Opposition, 46(1): 1–31.Google Scholar
Healy, A. and Lenz, G.S. (2014), ‘Substituting the End for the Whole: Why Voters Respond Primarily to the Election-Year Economy’, American Journal of Political Science, 58(1): 31–47.Google Scholar
Iversen, T. and Soskice, D. (2010), ‘Real Exchange Rates and Competitiveness: The Political Economy of Skill Formation, Wage Compression, and Electoral Systems’, American Political Science Review, 104(3): 601–623.Google Scholar
Iversen, T. and Soskice, D. (2012), ‘Modern Capitalism and the Advanced Nation State: Understanding the Causes of the Crisis’, in N. Bermeo and J. Pontusson (eds), Coping with Crisis: Government Reactions to the Great Recession (New York: Russell Sage Foundation Press): 35–64.Google Scholar
Iversen, T. and Stephens, J.D. (2008), ‘Partisan Politics, the Welfare State, and Three Worlds of Human Capital Formation’, Comparative Political Studies, 41(4–5): 600–637.Google Scholar
Johnson, S. (2009), ‘The Quiet Coup’, The Atlantic, 303(4): 46–56.Google Scholar
Kalinowski, T. (2013), ‘Regulating International Finance and the Diversity of Capitalism’, Socio-Economic Review , 11(3): 471–496.Google Scholar
Kayser, M.A. and Peress, M. (2012), ‘Benchmarking across Borders: Electoral Accountability and the Necessity of Comparison’, American Political Science Review, 106(3): 661–684.Google Scholar
Klingemann, H., Volkens, A., Bara, J., Budge, I. and McDonald, M. (2006)(eds), Mapping Policy Preferences II Estimates for Parties, Electors, and Governments in Eastern Europe, European Union, and OECD 1990–2003 (Oxford: Oxford University Press).Google Scholar
Kotz, D.M. (2009), ‘The Financial and Economic Crisis of 2008: A Systematic Crisis of Neoliberal Capitalism’, Review of Radical Political Economy, 41: 305–317.Google Scholar
Kotz, D.M., McDonough, T. and Reich, M. (1994)(eds), Social Structures of Accumulation: The Political Economy of Growth and Crisis (Cambridge: Cambridge University Press).Google Scholar
Krippner, G. (2011), Capitalizing on Crisis: The Political Origins of the Rise of Finance (Cambridge, MA: Harvard University Press).Google Scholar
McCarty, N. (2012), ‘The Politics of the Pop’, in N. Bermeo and J. Pontusson (eds), Coping with Crisis: Government Reactions to the Great Recession (New York: Russell Sage Foundation Press): 201–232.Google Scholar
OECD (2014a), ‘Organization for Economic Cooperation and Development Financial Indicators: Stocks, and GDP Reference Series’, OECD national accounts series, http://stats.oecd.org.Google Scholar
OECD (2014b), ‘Organization for Economic Cooperation and Development Employment by Activities and Status’, OECD labour force statistics series, http://stats.oecd.org.Google Scholar
Prasad, M. (2012), The Land of Too Much: American Abundance and the Paradox of Poverty (Cambridge, MA: Harvard University Press).Google Scholar
Rajan, R.G. (2010), Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton: Princeton University Press).Google Scholar
Rueda, D. and Pontusson, J. (2000), ‘Wage Inequality and Varieties of Capitalism’, World Politics, 52(3): 350–383.Google Scholar
Soskice, D. (2007), ‘Macroeconomics and Varieties of Capitalism’, in B. Hancké, M. Rhodes and M. Thatcher (eds), Beyond Varieties of Capitalism: Conflict, Contradictions and Complementarities in the European Economy (Oxford: Oxford University Press): 89–121.CrossRefGoogle Scholar
Streeck, W. (2011), ‘The Crises of Democratic Capitalism’, New Left Review, 71.Google Scholar
Thompson, H. (2013), ‘UK Debt in Comparative Perspective: The Pernicious Legacy of Financial Sector Debt’, British Journal of Politics and International Relations, 15(3): 476–492.CrossRefGoogle Scholar
Vitols, S. (2001), ‘Varieties of Corporate Governance: Comparing Germany and the UK’, in P.A. Hall and D. Soskice (eds), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (New York: Oxford University Press): 337–360.Google Scholar
Volkens, A., Bara, J., Best, R.E. and Budge, I. (2013), ‘Manifesto Project Database’, Wissenschaftszentrum Berlin für Sozialforschung, http://manifesto-project.wzb.eu/datasets.Google Scholar
Warren, E. and Warren Tyagi, A. (2003), The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke (New York: Basic Books).Google Scholar
Supplementary material: PDF

Barnes Supplementary Material

Tables

Download Barnes Supplementary Material(PDF)
PDF 1.3 MB