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Varieties of Residential Capitalism in the International Political Economy: Old Welfare States and the New Politics of Housing

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Comparative European Politics Aims and scope

Abstract

Comparative and international political economy (CPE and IPE) are justifiably obsessed with finance as a source of power and as a key causal force for domestic and international economic outcomes. Yet both CPE and IPE ignore the single largest asset in people's everyday lives and one of the biggest financial assets in most economies: residential property and its associated mortgage debt. This special issue argues that residential housing and housing finance systems have important causal consequences for political behavior, social stability, the structure of welfare states, and macro-economic outcomes. The articles examine specific instances across a range of countries. This introduction has broader aims. First, it shows that housing finance systems are not politically neutral. We argue that the kind of housing people occupy and the property rights surrounding housing can constitute political subjectivities and objective preferences not only about the level of public spending, but also the level and nature of inflation and taxation. Second, like the varieties of capitalism literature, we show that housing finance systems also have important complementarities with the larger economy. But we diverge from the varieties literature, suggesting that ‘varieties of residential capitalism’ are not explained by domestic institutional complementarities alone. Rather, what we refer to as financially repressed and financially liberal systems are globally interdependent. While welfare and taxation systems show high degrees of path dependence, transnational trends in the deregulation of housing finance have altered incentives and preferences for financial institutions, home owners, and would-be home owners. Finally, the introduction offers some speculation about how pocketbooks will drive politics as the global housing busts tightens mortgage belts around the waists of average Organization for Economic Cooperation and Development home owners.

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Notes

  1. This project has been in generation since 2005. Our thanks to the University of Oslo Department of Political Science, the Research Council of Norway, and the think-tank Res Publica for sponsoring our final workshop in Oslo in April 2008. We also thank Ingrid Hjertaker, Lars Mjøset, Gunnar Trumbull, Sjur Kasa, Trygve Lie, and Øyvind Berge for their comments on papers. Our special thanks go to the editorial team at CEP for their patience and support for this project. Early versions of the papers were presented at the International Studies Association Annual meeting in March 2007.

  2. ‘The houses that saved the world — house prices and the world economy,’ The Economist, 30 March 2002.

  3. On the former see the OECD (2004) argument about the Netherlands.

  4. The pervasive regulatory laxity of the second Bush administration is an obvious exception.

  5. EU-wide MBS issues increased 10-fold from 1995 to 2005, and tripled during 2001–2005.

  6. http://www.abalert.com/Public/MarketPlace/Ranking/index.cfm?files=disp&article_id=1044674725.

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Schwartz, H., Seabrooke, L. Varieties of Residential Capitalism in the International Political Economy: Old Welfare States and the New Politics of Housing. Comp Eur Polit 6, 237–261 (2008). https://doi.org/10.1057/cep.2008.10

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