Varieties of Strategies: Societal Influences on British and German Responses to the Global Economic Crisis

Abstract

The current global financial and economic crisis has led to widespread calls for multilateral policy co-ordination. However, national strategies towards financial market regulation and domestic stimulus programmes considerably diverge in cross-country comparison. Why do policy reactions to the crisis differ? Following a societal approach to preference formation, I argue that national strategies are strongly shaped by value-based ideas and by sectoral interests. While ideas on the role of politics in governing the economy can, for example, lean more towards trust in market forces or instead favour governmental regulation, interests may influence governmental positions according to the economic relevance of the respective sector. An analysis of the discourse and the measures regarding stimulus packages and financial market regulation in Britain and Germany supports this argument and shows that ideas as expectations, institutionalised ideas and material interests reinforced one another in influencing governmental strategies.

Keywords:

• economic policy
• financial market regulation
• societal approach
• Germany
• United Kingdom

Acknowledgements

An earlier version of this paper was presented at the ECPR Joint Sessions, Lisbon 14–19 April 2009, workshop 17 ‘European Domestic Societies in the Face of European Integration and Globalisation’. I am grateful to the participants of the workshop and to the anonymous reviewers for valuable comments.