The theory of the competitive state created a stir and attracted the interest of the Chinese government

Businesses compete and so do nation’s president Bill Clinton stated over 20 years ago. In Denmark Ove K. Pedersen, Professor, framed the now well-known theory of the competition state based on how western capitalism has changed the role of companies, states and nations in the last 25 years or so. In the book Konkurrencestaten he analysed the impact of a new world order on European welfare states, especially the Danish.

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Interview with professor Ove Kaj Pedersen

How did you get the idea for the research project?

On 20 January 1993 Bill Clinton, 42nd President of the United States, gave his inaugural address. In it he used the concept nations compete, subsequently elaborated in his first economic programme. Thereby he became the first high-ranking politician to use a concept later adopted by EC leaders during the summit in Copenhagen in May the same year - and later again, by the EU, made the basis of a strategy still pursued today in its effort to further Europa's competitiveness. Several top-level economists resented the concept, among others Paul Krugmann (Nobel Prize winner in economics in 2008, ed.) whose first reaction was quite brutal: “companies compete, not nations”, he stated. Years later - in a much more self-critical vein - he accepted the concept and also emphasised the need for political economy as an academic discipline to be revitalised in the light of neo-classical economics’ failure to understand the causes and consequences of the financial crisis 2008. 

I became interested in how European integration and globalisation influenced European welfare states when in 2004 I was called to become professor of comparative political economy at CBS. Finn Junge-Jensen, the then President of CBS, asked me to build a research centre around the topic and to reinstate political economy as a research discipline in Denmark. Accordingly I spent months reading, and travelling around the world, giving lectures and talking with international colleagues to figure out how to frame research and teaching at a new centre. I decided to introduce the subject of Institutional Competitiveness as the framework for the newly established International Centre of Business and Politics, to put special emphasis on the question of how small open economies like Denmark adapted to European integration and globalisation, and how this challenged long-lasting relations between governments and markets. Based on my own research and that done by many others it became increasingly clear that Denmark from the early 1990´s aimed to establish favourable competitive conditions for Danish companies by reforming its institutional infrastructure. But it also became clear that countries differed in the way they changed and that the main difference was between countries (like Denmark) where governments were in charge of adaptation and reforms, and countries (like the US) where companies and households were managing change. The concept of the competitive state thus was introduced to underline the difference between countries and also how, in the case of small open economies like Denmark, the state plays a major role in adapting to new geo-political and geo-economic circumstances.

Can you point to how your research has influenced the public debate?

There are three tracks that have produced a great number of invitations to conferences and various advisory circles and also influenced the public debate in Denmark and abroad. 

One is the question of the welfare state's transformation in relation to labour markets and work. The concept of mobication, introduced in 2010, was accepted as a valuable description of how the employability of the individual has gained focus in policy programmes and has put emphasis on the coordination of employment-, education- and training policies, thereby creating new challenges for labour market organisations as well as for public institutions. 

Another track is the changes in relationship between governments, labour market organisations and companies; the end of the corporatists era, so to speak, and the introduction of a negotiated economy. The concept of a negotiated economy was introduced early on but gained influenced in in the Nordic countries, and also in a few other countries, in line with the tendency in Northern Europe to dismantle well-established tripartite institutions and introduce much more flexible and fluent forms of cooperation between public and private institutions in a constant effort to negotiate and lobby for competitive conditions for companies.  

The third track, and the one that has perhaps received the most attention, is the question of how all this has influenced the role of education and pedagogy and opened up for basic questions related to values and programmes taken for granted during the post-war period. Especially the thesis that educational reforms introduce a new understanding of the individual as an opportunistic and self-interested person and thus also changes the role of teachers in the process has sparked controversy and led to numerous discussions and invitations.  

What is universal about these debates?

At the core of the debates is the fact that the conditions for creating welfare have changed. It used to be that a country could indebt itself to finance a welfare state but also rely on a constant positive development in economic growth. This is no longer the case. In the 1950's countries with comparable political economies competed against the backdrop of a Europe in ruins. Today economies compete not with very comparable but very different economies such as China, which is neither democratic nor capitalistic. Europe has also been rebuilt and annual growth rates that used to be relatively high are now relatively low. There is also a higher degree of dynamics and unpredictability in the international context – both when we look at geo-political and geo-economic factors as well as technological changes, all this setting new standards for competiveness. Also, welfare states are in a fiscal pinch. Today, creating growth as a precondition for financing welfare is a much bigger challenge than it used to be; and states as well as nations are forced to build strategies for enhancing their comparative advantages and ensuring their future competitiveness.

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Photo: Shutterstock

What is the conclusion of your research?

That, over the past 25 years, there has been a significant shift in the way we view the tasks of the welfare state and how they are funded. That has enormous consequences for how governments act and for how political conflicts are fought out.  Also many values and norms previously taken for granted are challenged and new identity policies developed. In sum: We live in a new historical period forcing us to reconsider how we understand and research the role of markets and states. 

Who is affected by this research?

My entire generation, who grew up with the building of the of the welfare state, today have an outmoded understanding of the welfare state and find it hard to understand the need for welfare reforms and the transformation into a competitive state. The majority of this generation is protesting this development and fighting for status quo with possible dire consequences for next generations. Today there are ideological and political conflicts and differences of an importance only comparable to what happened when the welfare states were established just after WWII. Conflicts are found among social groups as well as between generations and it is my hope that research can help ease and guide the transformation, also in the process of safeguarding the welfare state for the next generations. 

In what sense is the research relevant to society?

In the sense that the research frames and impacts the current debates. It is also relevant in the sense that those who take an interest in the development of society and have a responsibility for its future find the research relevant and useable. A lot of good research goes unnoticed and unfortunately there is no one recipe for how to get attention and become involved in public discourse. The research must match the time, the time must match the research and chance plays into it. It also takes a lot of years to achieve the attention of not only scholars and your colleagues but also of the public at large and to reach a position where people notice what you do and think. I have been a scholar for over 30 years; written scores of research articles, delivered key note speeches at conferences, seminars, universities around the world; published a great number of books, talked to journalists, written features, given lectures to companies, politicians and organisations; advised governments and international organisations and so on. It is a prerequisite to achieving relevance and gaining attention. It is not enough to do research, to teach and to publish in highly esteemed research publications; it takes years of efforts on quite many fronts and for many different audiences.

What is the strongest example of this research making a positive difference to the companies or organisations involved?

That it has stirred a considerable and intense public discussion. Today the concept competitive state is widely recognised and used and it is fascinating to see how threads have spread from academics to politics and into public discourse. The book has triggered research projects in places as different as Singapore, Spain, Germany, the US - and a lot in China. I have participated in off-the-record debates and executive training programmes with members of the Chinese government for years. The Chinese are interested in the Danish combination of socialism and liberalism and I have been involved in a project on sketching ideas for a Chinese welfare state.  

The book has not only stirred debate but also ignited conflicts. It has presented a diagnosis of the present transformations of nation states in a globalising world and as such framed a discussion of the actual conditions for politics and policy making accepted by some, criticised by others. But I believe there is general agreement that the book provides a relatively objective frame of analysis for the discussion. It was therefore a personal challenge when the Danish Finance Minister publicly stated that he believed in the competitive state. I had not met him before, but his statement had the side effect that the book was politicised. I was criticised for being an ideologist, even a master thinker for social democratic ideas, by people who had never analysed anything themselves, and were unable to come up with an alternative analysis. The book is analytical and not an anti-welfare-state ideology. I consider myself first as a man of science, who does analyses, and second as a citizen, who enjoys freedom of speech - and I also seek to separate the two roles as much as possible.

What perspectives does the research have - which new questions of societal relevance does it raise, which have been taken up since the publication or which should be taken up by you or other researchers? 

Konkurrencestaten is the first book in a trilogy. In 2014 I published Markedsstaten (The Market State) and right now I am writing the last book, Staten (The State). The Market State has raised questions about the individual freedom to dispose of your own capacity to work; and about the history of the idea of the free labourer that is behind the Danish welfare state and also the competitive state. Right now I am in Italy, taking part in a research project on the reformation - the 500 year anniversary is in 2017 and this has given me the opportunity to recognise the immense difference between how Protestants and Catholics understand the ethics of work. The Market State can be seen as a history of a Protestant work ethics which developed over centuries in Denmark and are still behind much of the welfare programmes. The book shows that the obligation to work and to earn your own income very much sets the tone of the Danish welfare state. Where does this idea come from and how was it transformed into discourse, institutions and organisations to become what today is called “the Danish model”? In the book I chased the long history of the idea, and found that the way we Danes understand our ‘community‘ has developed over centuries, making the right to work one of the most salient values behind the welfare state. 

The third book in the trilogy is just called the State, and will raise questions like: Why are we in Denmark so focused on the state; why are all issues politicised to a degree seldom found in other places? But also: How is it that the state is viewed as something positive, even beneficiary for most, while in other countries it is taken to be a distanced, threatening monolith to be kept on a short leash?

The page was last edited by: Communications // 12/17/2017