¹ See, for example, Loriaux, Michael, “States and Markets: French Financial Interventionism in the 1970s,” Comparative Politics 20 (January 1988CrossRefGoogle Scholar); Ikenberry, G. John, “Market Solutions for State Problems: The International and Domestic Politics of American Oil Policy,” International Organization 42 (Winter 1988CrossRefGoogle Scholar); Frieden, Jeffry, “Invested Interests: The Politics of National Economic Policies in a World of Global Finance,” International Organization 45 (Autumn 1991CrossRefGoogle Scholar); Pierson, Paul and Smith, Miriam, “Bourgeois Revolutions? The Policy Consequences of Resurgent Conservatism,” Comparative Political Studies 25 (January 1993CrossRefGoogle Scholar). Geoffrey Garrett and Peter Lange argue that reducedmacroeconomic policy autonomy has not hindered the ability of parties to promote partisan policies in other areas; see Garrett, and Lange, , “Political Responses to Interdependence: What's 'Left' for the Left?” International Organization 45 (Autumn 1991CrossRefGoogle Scholar).

² On British exceptionalism, see Pierson and Smith (fn. 1), esp. 489, 510—13; and Kreiger, Joel, Reagan, Thatcher, and the Politics of Decline (Oxford:Polity Press, 1986Google Scholar).

³ Gourevitch, Peter, “The Second Image Reversed: International Sources of Domestic Politics,” International Organization 32 (Autumn 1978CrossRefGoogle Scholar).

⁴ Indeed, some local observers noted similarities to Thatcherism: Boston, Jonathan, “Thatcherism and Rogernomics: Changing the Rules of the Game,” Political Science 39 (December 1987CrossRefGoogle Scholar); Christiansen, Neils Finn, “Denmark: End of the Idyll,” New Left Review, no. 144 (March-April 1984Google Scholar).

⁵ For example, in proportion to average 1988–92 GDP, New Zealand's privatization receipts are over three times larger than Britain's. New Zealand's receipts were 3.55 percent of GDP versus about 1 percent for Britain, 0.5 percent for Sweden and Australia, and less than 0.1 percent for Denmark. Economist, June 19, 1993, p. 112.

⁶ Esping-Andersen, Gøsta, Politics against Markets (Princeton:Princeton University Press, 1985Google Scholar); idem, Three Worlds of Welfare Capitalism (Princeton:Princeton University Press, 1990Google Scholar); Olson, Mancur, Logic of Collective Action (Cambridge:Harvard University Press, 1965Google Scholar); Buchanan, James, Tollison, Robert, and Tullock, Gordon, eds., Towards a Theory of the Rent-seeking Society (College Station:Texas A & M Press, 1980Google Scholar).

⁷ Pierson and Smith (fn. 1), 489, 513.

⁸ Esping-Andersen (fn. 6, 1985 and 1990).

⁹ Poulantzas, Nicos, Political Power and Social Classes (London:Verso, 1978Google Scholar); Marsh, James and Olsen, Johan, “The New Institutionalism: Organizational Factors in Political Life,” American Political Science Review 78(September 1984Google Scholar); Moe, Terry, “The Politics of Structural Choice: Towards a Theory of Bureaucracy,” in Williamson, Oliver, ed., Organization Theory (New York:Oxford University Press, 1990Google Scholar). The first two approach this problem primarily as one of hegemony/legitima-cy, Moe approaches it using the new economics of organizations.

¹⁰ For an interesting analysis, see Eliason, Leslie, “The Political Uses of Decentralization as a Policy Strategy: Education Reforms in Sweden, Denmark, and the United States” (Paper presented at the conference “Sweden and the New Europe,” University of Washington, Seattle, November 1992Google Scholar).

¹¹ Castles, Francis, Australian Public Policy and Economic Vulnerability (Sydney:Allen and Unwin, 1988Google Scholar); Katzenstein, Peter, Small States in World Markets (Ithaca, N.Y.: Cornell University Press, 1985Google Scholar).

¹² OECD, Economic Outlook June 1993 (Paris:OECD, 1993Google Scholar); the unweighted average structural fiscal deficit of the G 7 countries in 1993 is 3.2 percent of GDP. Even in the U.S., the world's largest and least vulnerable economy, the (re)organization of government and welfare spending understood broadly has become a political and competitiveness issue—vide Vice President Albert Gore's recent campaign, referenda on school choice, and such popular books as Osborne, David and Gaebler, Ted, Reinventing Government (Reading, Mass.:Addison-Wesley, 1992Google Scholar).

¹³ The complement to this—efforts to change private sector collective bargaining—is obviously important but beyond the scope of this paper. For instructive analyses, see Pontusson, Jonas and Swenson, Peter, “Markets, Production, Institutions and Politics” (Paper presented at the Eighth International Conference of Europeanists, Chicago, March 1992Google Scholar); Iversen, Torben, “Trends away from Corporatist Intermediation and the Logics of Consensual Wage Regulation” (Paper presented at the annual meeting of the American Political Science Association, Chicago, September 1992Google Scholar); and Niland, John, “The Light on the Horizon: Essentials of an Enterprise Focus” (Sydney: University of New South Wales School of Industrial Relations and Organizational Behavior Working Paper no. 80, June 1990Google Scholar).

¹⁴ Andersen, Torben, “Macro-economic Strategies towards Internal and External Balance in the Nordic Economies” (Århus:University Economic Institute Memo 1989-5, 1989Google Scholar); Mjøset, Lars, “Nordic Economic Policies of the 1970s and 1980s,” International Organization 41(Summer 1987CrossRefGoogle Scholar); Gould, John, The Rake's Progress (Auckland:Hodder Stoughton, 1982Google Scholar), chaps. 4, 5, 8; and Castles (fn. 11). A broad comparison can be found in Blondal, Gisli, Fiscal Policies in the Smaller Industrial Countries, 1972-1982 (Washington, D.C.:IMF, 1986Google Scholar).

¹⁵ Saunders, Peter, “Recent Trends in the Size and Growth of Government in OECD Countries” (Sydney:University of New South Wales, Public Sector Research Centre Discussion Paper no. 20, September 1991Google Scholar), 5. Including state-owned commercial enterprises would increase the share of public employment in Australia to about 26 percent. These peak levels reflected rapid expansion of the public sector's share of total employment. Between 1970 and 1979 this share grew in Sweden by 43 percent, in Denmark by 56 percent, in Australia by 37 percent, and in New Zealand by 31 percent.

¹⁶ See OECD, , Economic Surveys (Paris:OECDGoogle Scholar, various dates) for the various countries, particularly 1986-87 for Australia, 1982-83 and 1986-87 for Denmark, 1984-85 for New Zealand, and 1982 for Sweden.

¹⁷ The four-leaf clover coalition was comprised of the Conservative Peoples Party (14.5 percent of seats), Venstre (Agrarian) Party (11.3 percent), the Christian Peoples Party (2.6 percent), and the Center Democrats (3.2 percent). The two larger parties ejected the smaller parties in 1988 in favor of the midsize Det radikal Venstre (the Radical Left, which despite its name is rather like the German Free Democrats, and held 5.6 percent of seats in 1988), but from December 1990 until March 1993 those two parties governed as a minority coalition.

¹⁸ See, for example, Hawke, Bob and Evans, Gareth, Labor and the Quality of Government (Canberra:ALP, 1983Google Scholar); and Dawkins, John, Reforming the Australian Public Service (Canberra:Australian Government Publishing Service, 1983Google Scholar).

¹⁹ Pierre, Jon, “Legitimacy, Institutional Change, and the Politics of Public Administration in Sweden,” International Political Science Review 14 (Winter 1993CrossRefGoogle Scholar).

²⁰ Schwartz, Herman M., “Public Choice Theory and Public Choices: Bureaucrats and State Reorganization in Australia, Denmark, New Zealand, and Sweden in the 1980s,” Administration and Society 25 (May 1994Google Scholar).

²¹ Lash, Scott, “The End of Neo-corporatism? The Breakdown of Centralized Bargaining in Sweden,” British Journal of Industrial Relations 23 (November 1985CrossRefGoogle Scholar).

²² Plowman, David, Wages Indexation: A Study of Australian Wage Issues, 1975-1980 (Sydney:George Allen and Unwin, 1981Google Scholar); Boston, Jonathan, Incomes Policy in New Zealand, 1968-84 (Wellington:Victoria University Press, 1984Google Scholar); Nannestad, Peter, Danish Design or British Disease (Arhus:Arhus University Press, 1991Google Scholar).

²³ The best theoretical description of this process can be found in Swenson, Peter, Fair Shares: Unions, Pay and Politics (Ithaca, N.Y.:Cornell University Press, 1989Google Scholar). Swenson structures it as two “trilemmas” confronting individual unions. In the first unions try to balance full employment, maximization of the wage share, and internal wage leveling in pursuit of intraunion solidarity. In the second unions try to balance full employment, internal wage leveling, and external wage leveling (leveling across unions to preserve their own union's institutional existence). For individual discussions, see the sources cited in fn. 22; Singleton, Gwynneth, The Accord and the Australian Labor Movement (Melbourne:Melbourne University Press, 1990), 142Google Scholar-46; and Ahlen, Kristina, “Swedish Collective Bargaining under Pressure: Inter-union Rivalry and Incomes Policy,” British Journal of Industrial Relations 27 (November 1989CrossRefGoogle Scholar).

²⁴ Information in this section draws on author interviews with union, business organization, party, and finance ministry personnel conducted in 1988, 1990, and 1991, in New Zealand, Denmark, and Australia. The secondary literature also indicates the importance of private sector models. See Premfors, Rune, “The 'Swedish Model' and Public Sector Reform,” West European Politics 14 Quly 1991CrossRefGoogle Scholar); Easton, Brian, “From Reaganomics to Rogernomics,” in Bollard, Alan, ed., The Influence of United States Economics on New Zealand (Wellington:NZIER Research Monograph no. 42, 1988Google Scholar); Pusey, Michael, Economic Rationalism in Canberra (Melbourne:Cambridge University Press, 1991Google Scholar).

On private sector changes, see Kanter, Rosabeth, When Giants Learn to Dance: Mastering the Challenges of Strategy, Management, and Careers in the 1990s (New York:Simon and Schuster, 1989Google Scholar); and Sabel, Charles, “Moebius-strip Organizations and Open Labor Markets,” and Moss Kanter, Rosabeth, “The Future of Bureaucracy and Hierarchy in Organization Theory: A Report from the Field,” both in Bourdieu, Pierre and Coleman, James, eds., Social Theory for a Changing Society (Boulder, Colo.:Westview Press, 1991Google Scholar).

²⁵ See, for example, OECD, , Employment in the Public Sector (Paris:OECD, 1979Google Scholar); idem, Administration as Service, the Public as Client (Paris:OECD, 1987Google Scholar); idem, Survey of Public Management Developments (Paris:OECD, 1988Google Scholar); idem, Flexible Personnel Management in the Public Sector (Paris:OECD, 1990Google Scholar); idem, Financing Public Expenditure through User Charges (Paris:OECD, 1990Google Scholar).

²⁶ Savas, Emmanuel S., Privatizing the Public Sector (Chatham, N.J.:Chatham House, 1982Google Scholar); and idem, Privatization: The Key to Better Government (Chatham, N.J.:Chatham House, 1987Google Scholar).

²⁷ Schwartz (fn. 20) has a more detailed discussion.

²⁸ Campbell, Colin and Halligan, John, Political Leadership in an Age of Constraint (Pittsburgh, Pa.:University of Pittsburgh Press, 1992Google Scholar).

²⁹ Gustafsson, Lennart, “Renewal of the Public Sector in Sweden,” Public Administration 65(Summer 1987), 190CrossRefGoogle Scholar; Swenson, Peter, “Labor and the Limits of the Welfare State,” Comparative Politics 23 (July 1991Google Scholar); Wise, Lois, “Decentralization of Wage Setting: The Impact of International and Domestic Forces on the Swedish Public Sector” (Paper presented at the conference “Sweden in the New Europe,” Seattle, November 1992Google Scholar).

³⁰ Grennegard Christensen, Jergen, “Growth by Exception: Or the Vain Attempt to Impose Resource Scarcity on the Danish Public Sector,” Journal of Public Policy 2(Summer 1982Google Scholar); idem, “Interest Groups and Public Bureaucracy in Danish Regulatory Policy Making” (Manuscript, University of Arhus, April 1990); Kristensen, Ole P., Vaksten i den offentlige sektor: Institutioner og politik (Growth in the public sector: Institutions and politics) (Copenhagen:Jurist og økonomforbundets Forlag, 1987Google Scholar).

³¹ In Danish, målstyring; Swedish, målstyrning.

³² An overview of budget changes in the OECD can be found in Schick, Alan, “Micro-budgetary Adaptations to Fiscal Stress in Industrialized Democracies,” PublicAdministration Review 48(January 1988Google Scholar). Detailed surveys of change in Australia and New Zealand can be found in Forster, John and Wanna, John, eds., Budgetary Management and Control: The Public Sector in Australasia (South Melbourne:MacMillan Australia, 1990CrossRefGoogle Scholar). On Denmark, see Preben Melander, “Budgetreformen—et paradoks mellem finanspolitisk sikkerhed og organisatorisk forandring,” and Nielsen, Klaus, “Den Borgelige regerings styling afden offentlige sektors okonomi,” both in Bentzon, Karl Henrik, ed., Fra Vakst til Omstilling: Modernisering afden Offentlige Sektor (From growth to standstill: Modernization of the public sector) (Copenhagen:Frederiksberg Bogtrykkeri, 1988Google Scholar). On Sweden, see Gustafsson (fn. 29), 190; Wallin, Gunnar, Towards the Integrated and Fragmented State,” West European Politics 14 (July 1991), 107CrossRefGoogle Scholar–9; Pontusson, Jonas, “Triumph of Pragmatism: Nationalisation and Privatisation in Sweden,” West European Politics 11(October 1988CrossRefGoogle Scholar).

³³ Bent Schou, “Udgiftsstyring eller fornyelse,” in Bentzon (fn. 32); Elander, Ingemar and Montin, Stig, “Decentralisation and Control: Central-Local Government Relations in Sweden,” Politics and Policy 18, no. 3 (1990CrossRefGoogle Scholar); Pierre (fn. 19).

³⁴ Schwartz (fn. 20) has a more detailed discussion.

³⁵ Krieger (fn. 2); Gamble, Andrew, The Free Economy and the Strong State (Durham, N.C.:Duke University Press, 1988CrossRefGoogle Scholar); Pierson and Smith (fn. 1); Garrett, Geoffrey, “The Politics of Structural Change,” Comparative Political Studies 25(January 1993Google Scholar).

³⁶ See Iversen (fn. 13) for a systematic analysis of Scandinavian unions.

³⁷ Referenda in 1992 and 1993 mandated a change to a German-style mixed-member proportional system beginning with the next general election.

³⁸ Palmer, Geoffrey, Unbridled Power: An Interpretation of New Zealand's Constitution and Government (Wellington:Oxford University Press, 1979Google Scholar).

³⁹ For views on the role of the fiscal bureaus, see Jesson, Bruce, Behind the Mirror Glass (Auckland:Penguin, 1987Google Scholar); idem, Fragments of Labour (Auckland:Penguin, 1989Google Scholar); Oliver, W. Hugh, “The Labour Caucus and Economic Policy Formation, 1981—1984,” in Easton, Brian, ed., The Making of Rogernomics (Auckland:Auckland University Press, 1989Google Scholar); and Douglas, Roger and Callen, Louise, Towards Prosperity (Auckland:David Bateman, 1987Google Scholar). The Treasury's advice was published as Treasury Department, Economic Management: Brief to the Incoming Government, 1984 (Wellington:Government Printer, 1984Google Scholar); and idem, Government Management: Brief to the Incoming Government, 1987 (Wellington:Government Printer, 1987Google Scholar); for a critique, see Easton, Brian, “Government Management. A Review of Its Content,” Political Science 42(December 1990CrossRefGoogle Scholar).

⁴⁰ Vowles, Jack, “Nuclear-free New Zealand and Rogernomics: The Survival of a Labour Government,” Politics 25(May 1990Google Scholar).

⁴¹ Campbell and Halligan (fn. 28); Pusey (fn. 24).

⁴² Swenson (fn. 29), 383; see also Swenson and Pontusson (fn. 13); and Hernes, Gudmund, “Dilemmas of Social Democracies: The Case of Norway and Sweden,” Ada Sociologica 34(Winter 1991Google Scholar).

⁴³ Damgaard, Erik, “Denmark: Experiments in Parliamentary Government,” in Damgaard, , ed., Parliamentary Change in the Nordic Countries (Oslo:Scandinavian University Press, 1992Google Scholar).

⁴⁴ See, for example, Ingebritsen, Christine, “Scandinavia in Europe: Markets and Security” (Ph.d. diss., Cornell University, 1993Google Scholar).

⁴⁵ See Kahler, Miles, “Orthodoxy and Its Alternatives,” in Nelson, Joan, ed., Economic Crisis and Policy Choice (Princeton:Princeton University Press, 1990Google Scholar); and Schwartz, Herman, “Can Orthodox Stabilization and Adjustment Work?” International Organization 45(Spring 1991Google Scholar).

⁴⁶ This is particularly true in the post-1992 European Community, as public procurement must be open to firms from all EC members.

⁴⁷ Wolfe, Alan, Whose Keeper (Berkeley:University of California Press, 1989Google Scholar).

⁴⁸ Loriaux (fn. 1); Ikenberry (fn. 1).

⁴⁹ For general but diverging discussions of agency capture, see Buchanan, Tollison, and Tullock (fn. 6); and Offe, Claus, “The Divergent Rationalities of Administrative Action,” in Disorganized Capitalism (Cambridge:MIT Press, 1985Google Scholar). For the classic elaboration of the “overload” thesis, see Crozier, Michel, Huntington, Samuel, and Watanabe, Joji, Crisis of Democracy? (New York:New York University Press, 1975Google Scholar). Each country has developed a parallel literature: Pusey (fn. 24); Bertram, Geoff, “Middle Class Capture: A Brief Survey,” in Royal Commission on Social Policy, Future Directions (Wellington:Government Printer, 1988), vol. 3, pt. 2; Treasury (fn. 39, 1984 and 1987Google Scholar); Albffik, Erik and Munk Christiansen, Peter, “Velbjasgsstaten?” GRUS, no. 28 (October 1989Google Scholar); and SAMAK, , Fornya dent Offentliga Sektorn! (Stockholm:Xerox 1985Google Scholar).

⁵⁰ Katzenstein (fn. 11).