Reassuring the Markets: The New Politics of Social Concertation in Acute Crisis Times

Abstract

Why do governments facing economic crises sometimes engage organized producer groups in policymaking through social concertation, and sometimes proceed unilaterally? I argue that governments’ choices to exclude or include unions and employers’ organizations from policymaking can be underpinned by a motivation overlooked by prior corporatist theory: reassuring the markets. Under conditions of financialized globalization, international economic actors—creditors, credit rating agencies, investors, and international institutions—acquire a novel role as audiences to which policymakers seek to send signals to abate intensity of exogenous economic pressures. The article puts forward a novel theoretical account to explain governments’ choice of signaling strategy—concertation or unilateralism—for the purpose of reassuring the markets. The argument is substantiated through a comparative analysis of policymaking in labor market, industrial relations, and pensions policy in Portugal, Italy, and Ireland during the Eurozone sovereign debt crisis (2010–14), drawing on seventy-three qualitative interviews and in-depth process tracing.