Transitions to the Knowledge Economy in Germany, Sweden, and the Netherlands

The "digital revolution" that began in the late 1960s has transformed product markets and production processes in rich democracies.Observers depict the changes underway as a transition from the Fordist industrial economy to a new "knowledge economy," characterized by rapid technological innovation and associated with a heightened premium on higher education. 1Although the challenges of this transition are broadly similar across the rich democracies, individual countries have navigated the course differently.This article compares three countries that exhibit different trajectories of change: Germany, Sweden, and the Netherlands.Unlike their liberal counterparts (including the United States and the United Kingdom), all three countries feature strong social partnership between unions and organized employers, and they are all considered examples of coordinated market economies in the literature on varieties of capitalism.However, despite these similarities, each has adapted differently to the challenges and opportunities of the new knowledge economy.Germany has vigorously defended its strength in high quality manufacturing through the digital transformation of products and production within the traditional industrial core.Sweden, by contrast, has moved more strongly to compete directly in high-tech sectors, especially information and communications technologies (ICT).Finally, the Dutch have increasingly turned to high-end business services, deploying new technologies to return to the country's historic strengths in trade and finance.What accounts for these divergent trajectories?I argue that differences in the structure of organized labor and business interests, and in the institutions that structure their interactions with each other and with the state, produced different coalitional alignments that have led these countries onto divergent paths toward the knowledge economy today.In Germany, unions and employers are organized along industrial lines, and manufacturing interests dominate the producer-group landscape on both sides of the class divide.Market pressures since the 1970s have inspired intense cross-class cooperation within the industrial sector and forged a formidable political alliance