What is the impact of globalization on labor in the advanced industrial countries? One body of work holds that globalization pushes all countries toward neoliberalism; another argues that the impact of globalization will vary according to prevailing institutional arrangements and predicts continued divergence between the so-called liberal and coordinated market economies. In an analysis of the German case that combines case-study and formal-modeling methods, we refute the first, neoliberal convergence, theory, showing that globalization in some ways empowers unions by rendering employers extremely vulnerable to industrial unrest. Furthermore, we suggest some revisions to the second, varieties of capitalism, perspective. We show that, in Germany, employers' increased vulnerability to conflict has shored up centralized bargaining arrangements in the short run, but at the same time, has also set in motion feedback effects that are deeply destabilizing to the system in the longer term.
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