Características de la identidad corporativa

Blyth and Katz (2005) offer two explanations for parties turning their collective backs on competition and instead opting for collusion. The first is the fiscal limitation of catch-all

politics, while the second is based in the ‘rhetoric and reality of globalisation’. Both of these factors in turn create the conditions for the formation of a party cartel.

Fiscal Limitation

A party system might consist of two successful catch-all parties. Both parties pursue policies designed to expand the provision of public goods and these policies have proven popular among the electorate, so it may be assumed that the electorate generally favours generous rather than restricted welfare and public goods provision.

Even so, the population is only prepared to accept a certain fiscal burden. Eventually, parties face the prospect of either reducing the fiscal burden or restricting public goods provision, with both options threatening to lose voter share. Given that the previous basis for policy competition is no longer viable, electoral competition itself also becomes less feasible. Furthermore, a new network dilemma arises in this context (Blyth and Katz, 2005, p.40).

Election campaigns no longer rely solely on the mobilisation and input of large numbers of members and activists, thus reducing the value of organisations such as unions, which were previously useful sources of mobilised support in the run up to elections.

Instead, media marketing is favoured over and above mass participation. However, just as the electorate eventually considers a certain level of public goods provision too costly in fiscal terms, the party’s grassroots organisation (the party on the ground) similarly reaches a point where it no longer accepts the expenditure for direct, professional media campaigns. The catch-all party's ability to provide party success and stability reaches its limit and is no longer the optimum model to ‘promote party success and stability’ (ibid.). The solution to this dilemma is sought in the cartel party model.

The Rhetoric of Globalisation

One extremely important incentive, again with an economic context, is globalisation, defined as ‘the progressive disembedding of market transactions from regulation such that the role of the state — and thus the party — has diminished’ (Blyth and Katz, 2005, p.41). As both exports and flows of foreign direct investment (FDI) become increasingly important for economic growth, states are less able to practise an independent monetary policy, as this threatens currency stability, an essential factor in an open economy. Furthermore, under the rule of globalisation, it becomes necessary to deregulate production, employment and financial markets in order to attract capital inflows (Blyth et al., 2010, p.2), while at the same time restrict fiscal expansion, which

is of course the key support of welfare provision (Blyth and Katz, 2005, p.41). What is more, it is essential for globalisation to maintain conditions favoured by international finance in order to prevent its defection to more favourable environments (ibid., p.42).

The consequence is that the fiscal tools which could be used to stimulate demand and maintain maximum employment fall out of favour with governments and parties whose economic policy is determined by the requirements of international market opinion.

What is more, the fiscal constraints and deregulation restrict the scope of social democratic governments to implement a leftist redistributive policy programme (Blyth et al., 2010, p.2).

A further important aspect of the theory is that economic agents collectively are fully aware of the economic system and therefore make only correct decisions. Therefore, it is assumed that while an individual market participant could make a mistake, there could be no error on the part of ‘the market’ as a whole (Blyth and Katz, 2005, p.42).

Conversely, market distortions are by their nature deemed inefficient (Blyth et al., 2010, p.7). This concept is of great significance to the discussion concerning cartelisation because it sweeps aside any notion of choice or any possibility of alternatives, therefore ‘limiting what is in fact demandable’ (Blyth and Katz, 2005, p.45). For social democratic parties, which have traditionally pursued market interventionist policies, this means that such measures, whether intended to attract votes or boost economic growth in a particular sector, are also regarded as counterproductive (Blyth et al., 2010, p.7). In response, the social democratic parties in particular pursued two strategic approaches that allowed them to ‘reform social democracy back into power; or more appropriately, to cartelize it’ (ibid.).

The first of these strategic responses was to redress the expectations of voters. As described above, parties (and in particular social democratic parties) found themselves unable to continually fulfil the demand for increasingly expensive public goods. Blyth and Katz (2005, p.43) therefore point out that the perceptions of globalisation provided parties with the opportunity to emphasise that it was the (infallible) market, rather than the state that was best suited to meet this demand for public goods. This can be understood as signalling intention and cooperation — the collusive element — which created knowledge among parties and provided them with justification for the mutual withdrawal from public good provision (i.e., joint maximisation and limiting output) (Blyth et al., 2010, p.7). This occurred regardless of whether the parties were traditionally and ideologically supportive of or opposed to state intervention (Blyth and Katz, 2005, p.43).

Discourse, too, plays a key role in what Blyth et al. (2010, p.8) describe as ‘ratcheting down expectations’. For example, in the case of Germany, the concept of the ‘Neue Mitte’ created the justification for social democracy to cease producing public goods, ³⁹ because it was claimed the market could do so better and more efficiently. Supporting this justification is the notion of market infallibility. According to Blair and Schröder, ‘The essential function of markets must be complemented and improved by political action, not hampered by it’ (Blair and Schröder, 1998, p.2). Above all, the important consequence for social democracy was that it was absolved of the responsibility for the supply of public goods (Blyth et al., 2010, p.8). The discursive process underpinning the Neue Mitte can be understood not only as downsizing voter expectations concerning the role and activities of the state, but also as a signal from the centre-left parties to those on the centre-right, indicating their commitment to narrow policy scope, or, in the language of Cartel Theory, a willingness to cease competition and to restrict output.

Although the SPD had traditionally been an advocate of collectivism, labour rights and the social state, the Neue Mitte declared that ‘Modern social democrats want to transform the safety net of entitlements into a springboard to personal responsibility’ (Blair and Schröder, 1998, p.10). Agenda 2010 also marked a significant step for the Greens, who demonstrated they had clearly ‘arrived’ in the political mainstream and could no longer be considered outsider challengers to a ‘cartel’ of established parties.

The downsizing of expectations is reinforced by a second approach, the externalisation of policy (Blyth et al., 2010, p.7). This relates to the institutional framework, whereby policymaking is transferred to institutions with no direct accountability to those affected by its actions, thus ‘truncating supply’ of policy (Blyth and Katz, 2005, p.45). One example of this is European integration, which obliges Member State governments (and therefore parties) to maintain their commitments to EU policy, which can also be interpreted as quotas limiting domestic policy output. Similarly, an independent central bank limits the scope of democratically elected governments to manage economic outcomes and is therefore regarded as a safeguard against political ‘interference’ in the economy (Blyth et al., 2010, p.8). In both instances, voter preferences are unable to bring about change in an unpopular policy. In short, the institutional framework and

See Chapter One for an explanation of ‘The Third Way/Neue Mitte’.

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externalisation of policy function as ‘binding quotas’ (ibid.) on policy output, which in turn ‘effectively curtails the supply curve of policy, thus cartelising the party system’ (Blyth and Katz, 2005, p.44). In fact the resignation of Oskar Lafontaine, who favoured reflationary economic tools to stimulate domestic demand, can at least in part be regarded as an illustration of the strength of EU institutions, and the ECB in particular, over national government (policy externalisation) as well as an indicator of the deflationary policy established in the eurozone. The consequences apply not only to policy output and the provision of public goods, but also to the political parties themselves. The curtailed supply curve allows parties to maintain the status quo, which in turn reduces the risk of defection, previously the greatest threat to the formation and maintenance of cartels. What is more, the restricted policy output resulting from the institutional framework allows parties to predict each other’s policy and strategy, thus minimising the need for obvious inter-party collusion (Blyth and Katz, 2005, p.45).

A further aspect of this transformation centred on the parties' strategy of re-orientating policy and funding towards those constituencies which place fewer policy demands on the party (lower production costs) and involve less risk (cost of losing an election). The method employed by these 'post-catch-all parties' constitutes a shift in the relationship between the democratic principal and the democratic agent (ibid.). The importance of the mass electorate (the democratic principal) for the parties (democratic agents) is greatly diminished, for the electorate has a considerably reduced ability to bring about change, to influence parties or punish unpopular or unrepresentative governments at the polls, as a result of the narrowed policy field and — as a consequence of the rhetoric of globalisation — because of the perception that no alternative exists. In addition, considering the fact that parties can secure funding from sources other than the party basis, Blyth and Katz (ibid.) therefore conclude that parties may no longer be regarded as agents, but as principals who periodically utilise the support of voters, themselves now transformed into a resource for endorsement on demand, to add a legitimising aspect to the party.

This section has described how established parties are concerned with two main objectives regarding party political competition. First, they need to reduce instability and secondly they must minimise the negative effects of elections. The exclusion of newcomer parties and cooperation between government and opposition parties are the respective means of achieving these objectives. The threat presented by challengers can be measured in terms of their appeal to voters, the degree to which existing alignments are upset if established parties adopt the appeal of these new groups (for

example, by adopting aspects of their policy offer) and their chances of overcoming institutional barriers such as electoral thresholds.

Furthermore, fiscal limitation and the rhetoric of globalisation provide parties not only with incentives but also the tools to act in the manner of an economic oligopoly. The chief incentive to collude and restrict output (policy) is the maximisation of ‘profit’ — in other words, security of tenure — whether governmental or public. Key tools at parties’

disposal include the reduction in voter expectations and the externalisation of policy. As a result, the party is isolated from any defined constituency. These developments are of particular significance for social democracy. According to Blyth et al., (2010, p.6),

‘driven by organizational survival more than conviction, left parties began to not compete on the issue of unemployment’.

Arising from these conditions are four implications for parties, which in turn highlight the two key aspects of Cartel Theory (Blyth and Katz, 2005, p.45). The first two implications concern the internal aspect of the party and closely recall the characteristics of the cartel party type described at the beginning of this chapter:

Funding: There will be a shift from reliance on the party basis towards resources made directly available by the central party (reliance on state resources).

Internal organisation: Measures will be taken to give the party leadership greater autonomy with regard to the party basis (ascendancy of the party in central office).

The third and fourth implications concern the conditions in the competitive political

‘marketplace’ or, in other words, inter-party competition. Here, the emphasis is on the establishment of a cartel of parties (Blyth and Katz, 2005, p.46):

Inter-party relations: There will be growing cooperation and similarity among

‘oligopolistic’ parties in order to ensure that voter expectations are kept consistently low, thus absolving parties of responsibilities such as provision of public goods. Hand in hand with this, there is a strengthening of the institutional framework that facilitates the externalisation of policy.

Policy area: As parties converge and collude, ideology and principles will place increasing emphasis on managerial competencies as the chief differentiating factor between parties.