Social Democratic Corporatism and Economic Growth

Abstract

Recent papers by Lange and Garrett and by Jackman have debated whether the political and economic power of the Left has had a sustained impact on the economic growth of relatively affluent capitalist democracies since 1973. This paper indicates that, consistent with theory and research by Lange and Garrett, they have had such an impact. Economic growth between 1974 and 1980-1982 accelerated where both unions were organizationally strong and Left parties were strong participants in governments; and this finding is not an artifact of a 1970s oil boom in Social Democratic Norway. In addition, it is robust in the presence of several key control variables drawn from economic theory. These variables indicate that less affluent and slower growers tended to catch up, and that capital formation tended to accelerate growth while progressive governmental redistribution of income tended to dampen it.