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Political Institutions and the Finnish Market Regime

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Led by Professor Niilo Kauppi, this project will study the political preconditions and consequences of the Finnish market regime. Using comparative case studies, we argue, first, that several changes in the central political institutions were needed to implement reforms and, second, that these changes reorganised the space of governing and political power.

The individual studies show that market mechanisms and the generalized emphasis on efficiency, strategy and leadership as principles of government paradoxically entail a more thoroughgoing politicization of government than the bureaucratic rationality they were designed to replace. Here we stand in contrast to the application oriented literature that often embraces the reforms, but also to those who criticize the reforms for substituting market forces for political judgment.

Four major developments stand out:

1. Following membership in the European Union, Finnish authorities started paying more attention to free competition as a framework for governing.
2. In state budgeting, old incrementalism was replaced by budget frames and budgeting by results, restricting the attention of elected politicians to macro level public economy.
3. Constitutional parliamentary minority rules were replaced by simple majority, and the powers of the president were drastically trimmed down, allowing government to rule without interference from the opposition and the president.
4. Allocations to municipalities for specified expenses were replaced by grants which the municipalities are free to allocate for different expenses.

Theoretically we are not merely interested in the institutions’ capacities for action. We are also interested in studying the reasons and justifications of the reforms and the ideas, concepts and “rationalities” informing them. Power cannot be understood simply in terms of actions it allows or forbids, encourages or discourages. Understanding power requires that we identify its “logic” and legitimacy, as well as the logic and legitimacy of resistance to it.  Power and resistance feed on each other. This dual process, we hypothesize, has led to a situation in which market models, instead of being simply technical means used to cloaking political ends in apparent neutrality, have become “a matrix” against which the legitimacy of political power is articulated by ruling elites.

In addition to their own case specific questions, the individual studies will focus on the following research problems:

1. In what ways did changes in political institutions contribute to furthering the market-inspired methods of running the public sector?
2. What concepts and ideas were used in justifying institutional changes? Was this language based on economic rationality or a completely different language?
3. Did or did not the institutional changes involve changes in the ways government and political power were conceptualized as means to control administration and citizens?
4. Can we see changes in the relative positions and tactics of political actors?