"Change and Continuity: The Adaptation of Austrian Consociationalism To New Realities"

Heinisch, Reinhard. (2005) "Change and Continuity: The Adaptation of Austrian Consociationalism To New Realities". In: UNSPECIFIED, Austin, Texas. (Unpublished)

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Abstract

[From the Introduction]. Over the past decade and a half Austria experienced no less than two exogenous shocks and one endogenous shock, each of which was capable of throwing into turmoil the country’s political and economic system as it had existed since the end of World War II. The collapse of the Iron Curtain, Austria’s integration into the Single European Market, and the rapid rise of the radical populist right threatened the existing socio-economic and political fabric precisely because the country had always been regarded as a model of ultra-stability. Yet, unlike, for example, the Italian Partitocrazia, where the end of the Cold War triggered a complete collapse of the ancien regime, Austria’s political arrangements survived into the late 1990s. Even thereafter, the system managed to adapt, preserving several of its key elements. Unlike fellow corporatist Sweden, whose economy and economic system underwent a major crisis in the 1990s, Austria emerged from the difficult process of internationalization without a similar disruption. Instead, change came gradually and largely in an organized fashion. Moreover, unlike Germany, Austria’s large northern neighbor, most important trading partner, and erstwhile role model, the Alpine nation continually managed to combine low unemployment with a reasonably solid economic performance. Since 1999, Austria surpassed (West) Germany in terms of per capita economic output, while maintaining unemployment at rates lower than most OECD countries. Although the jobless rate never exceeded 4.5% (even in the recent recession), the Austrian government managed to presented a balanced budget by 2001; a goal which had seemed unattainable just a few years earlier. Moreover, compared with Germany, Austria boosts a higher per capita purchasing power (€17,699 vs. 17,087), lower corporate taxes (25% vs. 39%), longer working hours (1750 vs. 1786), and a better earnings-to-productivity ratio (1:1.8 vs 1:1.2). In fact, when adjusted for purchasing power parity, Austria, along with Luxembourg, Denmark, Ireland, the Netherlands, is now among the richest member states of the European Union, surpassing even such successful economies as Sweden, Finland, and Belgium. A cross-national study released in 2005, which compared 1207 regions in 25 EU countries, found that five of the top 20 areas were located in Austria. Overall, the Alpine Republic took the second rank after only Ireland. Yet, Austria’s relative success at adapting itself to new political and economic realities was neither a foregone conclusion nor free from severe problems and moments of crisis. Only five years ago, Austria found itself under political sanctions by its 14 EU partners and faced an uncertain political future. This paper is an attempt to provide an overview of Austria’s coping mechanisms and seeks to explain their considerable success. Furthermore, the article also argues that the simultaneity of three major challenges - integration, the end of the Cold War, and the rise of the radical right - each served to stabilize certain components of the Austrian model at a critical juncture, while other elements were undergoing a necessary transformation. In many ways, the different shocks not only induced change but also served to mutually reinforce the Austrian system enough to allow for both a gradual and sequential adaptation.

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