In this event, Professor Tim Vlandas (University of Oxford) and EUI Professor Anton Hemerijck offer complementary perspectives that highlight the shifting foundations of advanced capitalism and democracy, analysing how ageing societies, welfare state transformation, and democratic institutions influence each other and what consequences this has for economic growth.
‘The ageing paradox: Grey power lowers the social investments that ageing advanced capitalist democracies need to grow’
Speaker: Tim Vlandas
Across advanced capitalist democracies (ACDs), a quiet demographic revolution is reshaping the distribution of electoral power. The numbers tell the story. In the EU, the over-60s account for about one third of all adults and the over-50s now represent a majority of the electorate. In my forthcoming book, I argue that this grey power initiates a profound political economy transformation of ACDs. As societies grow older, voters’ priorities shift in understandable but problematic ways: the elderly logically care most about their pensions, whereas the working age population depends primarily on jobs and the investments that sustain them over time. When older voters dominate electorates, as they now do across many ACDs, democratic politics tilts toward preserving the security of the elderly in the present over maximising opportunity for the rest of the population in the future. As a result, ACDs are trapped in an ageing paradox: governments prioritise the protection of pensions at the expense of the social and public investments that ageing ACDs desperately need, resulting in lower growth and higher debt, which then further aggravates the negative consequences of ageing. Escaping this paradox requires implementing reforms that rebalance the interests and political power of different age groups.
'Capitalism, Democracy, and the Welfare State'
Speaker: Anton Hemerijck
This review essay focuses on the intimate, yet contingent, historical relationships between capitalism, democracy and the welfare state in the OECD region. Six landmark studies, published over the past decade, are reviewed: Daron Acemoglu and James A. Robinson in 'Why Nations Fail: The Origins of Power, Prosperity and Poverty' and 'The Narrow Corridor: How Nations Struggle for Liberty'; Thomas Piketty in 'Capital and Ideology'; Torben Iversen and David Soskice in 'Democracy and Prosperity: Reinventing Capitalism through a Turbulent Century'; Peter H. Lindert in 'Making Social Spending Work'; and Ayşe Buğra in 'Social Policy in Capitalist History'. All these books reveal the independent effect of historical political factors on the rise of the welfare state across advanced capitalist democracies. Contrary to received wisdom, the central argument put forward is that there is no trade-off between capitalism and democracy and, more importantly, that the welfare state has become an existentially important lubricant buttressing both advanced capitalism and liberal democracy.
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