Challenging varieties of capitalism's account of business interests: The new social market initiative and German employers' quest for liberalization, 2000-2014

Do employers in coordinated market economies (CME's) actively defend the non-liberal, market- constraining institutions upon which their strategic coordination and competitive success depends? This paper revisits the debate over firms' employer preferences with an in-depth examination of employers in Germany - a paradigmatic CME and crucial "test case" for Varieties of Capitalism. It is based on interviews with key officials and an in-depth examination of a large-scale campaign - the New Social Market Initiative or INMS - founded and funded by German metalworking employers to shape public opinion. The paper argues that German employers have a strong preference for liberalization: they have pushed hard for the liberalization of labor markets, the reduction of government expenditures, the expansion of market-oriented freedoms, and cuts to social protection, employment protection and benefit entitlements. I find no empirical support for the claim that the INSM is an attempt to appease discontented firms within employers' associations. On the contrary: for many employers, the Agenda 2010 reforms did not go far enough. Following the discrediting of the Anglo-American model in the financial crisis, far-reaching concessions by employees, and the unexpected revitalization of the German economy, employers have moderated their demands - but liberalization remains their default preference. This paper also addresses the role of ideas and the conditions under which employer campaigns can influence policy.