Is Globalization the Cause of the Crises of Welfare States?

Neil Fligstein

CCOP Working Paper #1999-02
January, 1999

Economic globalization refers to three related processes: 1) the growth in the world economy, 2) the change in the relations between first and third world countries that has resulted from the use of information technologies to reorganize production nationally and globally, and 3) the integration of world financial markets. These processes are often held responsible for deindustrialization in advanced industrial societies, increases in income inequality, and pressures on welfare states to transform worker protection and benefits. I demonstrate that the changes in the world economy are much smaller, more gradual, and unevenly spread across societies than the globalization thesis suggests. More importantly, the links between globalization and its alleged negative outcomes are tenuous at best. The Paper then explores what is generating the crises, particularly in Europe.