The introductory chapter outlined a broad theoretical approach to the study of social protection and hypothesized close linkages between social protection, skills, firm strategies, and the political-institutional foundations of the welfare state. This chapter ties national and international developments to the emergence of a few national institutional equilibria or ideal types. Although the chapter will discuss causal mechanisms, the main purpose is to put some empirical meat on the conceptual bones presented in Chapter 1. I will provide the reader with a range of background information, and I will show some striking interconnections between skill systems, social protection, and political institutions that cry out for explanation. Building on a joint paper with Barry Eichengreen, I argue that these interconnections metamorphosed into very distinct regime clusters in response to the challenges of postwar reconstruction and international economic integration, and each cluster is associated with distinct economic advantages that are reinforced through the international division of labor. Relative advantages have been shifting over time, however, and I discuss these forces of change with a view to developing the themes that are explored in greater depth, and with a sharper analytical knife, in subsequent chapters.

Much of the political-institutional divergence that occurred during the postwar period, I argue, reflects the structural-institutional potential for postwar growth in particular countries, the strength of organized labor and capital, and the inherited capacity for centralized collective action.