Published in 2005, Torben Iversen, tries in his book ?Capitalism, Democracy and Welfare', to build a general explanation on why within a group of countries labeled western type democracies there are such differences regarding economic equality and welfare protection. With an integrated framework and extensive research the author draws two groups of countries which decided to take a different economic and social path to manage their societies. Iversen argues that by the early 1970s, advanced economies had divided into two broad categories: "one with generous social protection, specific skills, and competitive advantages in established product markets, and one with low social protection, general skills, and comparative advantages in new product markets". The first group, labeled as "coordinated market economies" or "social market economies"3, represents Nordic and continental European countries. The second, called "liberal market economies", describes Anglo-Saxon states. The question that interests us today is why these two groups of similar types of democracy adopted different approaches to labor market and social protection.
[...] One of the key argument of Iversen's analysis is that, instead of globalization leading to convergence, persistent variations in patterns of social protection are systematically driven by a high international division of labor, which allows firms to specialize in different set of production depending on an abundant supply of workers with specific (or general) skills and hence high (low) demand for protection. My main critique of his work focuses on this point, where his account of social protection regimes in a fast moving world seems too static. [...]
[...] Why, according to Iversen, have the United States and Continental Europe adopted such different approaches to labor markets and social protection? Published in 2005, Torben Iversen tries in his book, Capitalism, Democracy and Welfare, to build a general explanation on why within a group of countries labeled western type of democracies there are such differences regarding economic equality and welfare protection. With an integrated framework and extensive research the author draws two groups of countries which decided to take a different economic and social path to manage its societies. [...]
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