No strings attached: Corporate welfare, state intervention, and the issue of conditionality

Abstract

This paper contributes to Comparative Political Economy (CPE) by developing an analytical concept of corporate welfare. Corporate welfare—the transfer of public funds and benefits to corporate actors with weak or no conditionality—is a prominent form of state-business relations that CPE scholarship regularly overlooks and misinterprets. Such transfers should be understood as a structural privilege of business in a globalized post-Fordist capitalism, and an increasingly common strategy through which states attempt to steward national economic dynamism within a highly constrained range of policy options. However, without a well-developed concept of corporate welfare—premised upon the key criterion of conditionality—studies that identify a “return” of the state in industrial planning misrepresent these transfers to business as a reassertion of state influence and control, rather than a reflection of state weakness and subordination. The paper provides the analytical building blocks to properly conceptualize transfers to business, works out the core challenges for empirical research, and provides empirical illustrations of this burgeoning phenomenon from the fields of unconventional monetary policy, privatization, and urban political economy.

The political economy of French industrial policymaking

“…As is often the case in other European countries, the horizontal aid was unconditional in order to preserve the national economic and industrial fabric (Bulfone et al 2022 ) — “whatever the cost” may be, in the words of President Macron. The crisis also served as a reminder of the weaknesses of the French productive apparatus, more particularly its dependence on third countries for supplies to the national health system.…”

The quiet side of debt: public debt management in advanced economies

“…Though not strictly unconditional (for participation depends on market activity), syndication fees may be seen as a form of corporate welfare to the extent that they do not depend on primary dealers' continued commitment to market making (cf. Bulfone et al 2022). Recently, for instance, the MP Mel Stride raised questions about the cost of the syndication deals, wondering whether these deals had 'not [been] priced keenly enough, to the taxpayers' detriment '.…”

States and Experts: Assembling Expertise for Climate Change and Pandemics

“…Whether this is indicative of state weakness and subordination (cf. Bulfone 2022) remains to be more comprehensively answered. What is, however, clear is that we need much more research on how and why the state organizes its relations with non-state actors to govern climate change in domestic settings in specific ways after decades of neoliberal climate policy ).…”

“…Detailed analyses of the institutional arrangements set up by states to organize green industrial policy are required. These studies should focus on the appointment processes that grant certain actors than others the power to allocate green subsidies, the formulation of selection criteria that decide in what directions subsidies should flow, green subsidy allocation conditionality (Bulfone 2022) as well as struggles over the role of private sectors actors in the field of green industrial policy and their rent seeking behavior (Schmitz et al 2015). Given green industrial policy's dual goal of increasing competitiveness while abating GHGs, future research should also focus on whether green industrial policy lives up to its environmental promise in light of the lack of accountability detected by the paper.…”

“…Based on analysis of the Danish state's infrastructural power in green industrial policy, the paper makes three claims. First, it argues that current claims about the return of the state as a central player in green transition suffer from an unsubstantiated approach to state power that tend to view it as a function of the size of state aid and not the institutional arrangements set up by states to allocate green public spending (Bulfone et al 2022). By taking into account the organizational and micro-level foundations of green industrial policy, I show that, even in the comparatively strong environmental state of Denmark, the state continues to organize green industrial policy in a way that enhances the infrastructural power of the private sector.…”