Introduction

Austria and Switzerland are two small open European economies that share many similarities but also significant differences in their structures of economic governance. Both can be considered as strongly corporatist, since major aspects of their economic regulation rely upon a system of organised cooperation between labour and capital, but their respective positions on the “liberal” and “statist” axis (see Becker, this volume) vary to an important extent.

On the one hand, Austria and Switzerland have most commonly been identified as political economies where cooperation between economic actors has prevailed over arms-length competition. According to Katzenstein (1984; 1985), the dual strategy of external laissez-faire and domestic interventionism pursued by small European states was made possible by the co-operative stance prevailing among political and economic elites. Similarly, in the classification scheme of the varieties of capitalism approach (Hall & Soskice 2001), both countries are labelled coordinated market economies (CMEs), where non-market mechanisms of coordination play a crucial role in the setup of relations between economic actors. Aspects particularly worth mentioning are highly coordinated industrial relations, corporatist institutions (Katzenstein 1985) as well as a high degree of cartelisation in the domestic product market (Schröter 1999) and in the rules governing corporate governance (David & Mach 2004). In this perspective, both Austria and Switzerland are good examples of political economies where cooperative mechanisms of coordination have played a central role in the organisation of production processes.

On the other hand, the Austrian and Swiss political economies also display important differences in their underlying institutional arrange ments and power relationships. Most importantly, market mechanisms and private solutions have played a more privileged role in Switzerland than in Austria, where political control over the economy has been greater. Along this latter line, Katzenstein (1984; 1985) already made a distinction between the liberal variant (Switzerland, the Netherlands and Belgium) and the social variant (Austria, Denmark, Norway) of democratic corporatism. These two variants differed in the respective strengths of their employer and labour organisations. Switzerland was considered the most liberal example, with weak trade unions, well organised and strongly export-oriented employers, and essentially private adaptation strategies designed within strongly cohesive business organisations.