The Covid-19 pandemic has revealed stark differences across the world’s democracies. Whereas countries like Spain and Italy saw an explosion of Covid-19 cases that pushed their health systems to the breaking point, and the United States saw an explosion of cases even with limited testing, countries like Taiwan and Denmark have so far been able to contain the virus’s spread. These are all advanced capitalist democracies, but their ability to manage Covid-19 has varied dramatically.“Across the advanced democracies, Covid-19 has been contained most effectively in social democracies and developmental states.”
The question of how politics has affected responses to pandemics is bound to be a key point of inquiry for scholars of democracy in the coming years. And as Philip Lipscy recently argued on Twitter, we do not yet know enough about Covid-19 and how it spreads to draw firm conclusions about how political forces are shaping different national experiences of the pandemic. Still, taking stock of the comparative record as of mid-May, a pattern has already emerged. Across the advanced democracies, Covid-19 has been contained most effectively in social democracies and developmental states.
The social democratic advantage
To see this, I use data from sociologist Lane Kenworthy’s recent book Social Democratic Capitalism.1New York: Oxford University Press, 2019More Info → Alongside a range of useful comparative indicators that describe the differences among advanced capitalist democracies, this book contains an index of social democracy that provides a numerical summary of how well a country approximates the ideal-type social democracy: a large welfare state, active labor market policies, high employment, extensive pension systems, and broad and inclusive education. The Nordic countries, like Denmark and Sweden, score highest on this index, whereas countries like the United States, Spain, and South Korea score much lower. This last point is important, because countries can be “not social democracies” in many different ways. Countries like South Korea have relatively thin pension systems compared to the United States, whereas collective bargaining rights are enjoyed by far fewer workers in the United States and Korea relative to Spain or Italy. Although South Korea scores lowest on Kenworthy’s index of social democracy, as I will argue below, its state remains quite active and interventionist in other ways.
We can inspect the relationship between Kenworthy’s index of social democracy and confirmed Covid-19 cases. I obtained the latter from the Johns Hopkins University’s Covid-19 tracking database (the data I used were from May 15), converted to reflect the number of confirmed Covid-19 cases per 1,000 people. Two scatterplots of these two variables—one with the developmental states and one without, and with country names labeling the data points—appears in Figure 1.
Look first at the left-hand scatterplot. This is the overall correlation between Kenworthy’s index of social democracy and confirmed Covid-19 rates among the advanced capitalist democracies. It is basically flat, showing no relationship whatsoever between the two. The right-hand scatterplot removes South Korea and Japan, and re-runs this correlation. Here, we see a negative relationship between social democratic capitalism and Covid-19 rates. Simply put, social democracies have fewer confirmed Covid-19 cases (as a proportion of their population) than other capitalist democracies.
There are two questions to ask. First, how can we trust these data of confirmed cases to measure how well Covid-19 has been contained? Second, how can I just “remove Japan and South Korea” to obtain this result?“It seems that the countries that have tested the most aggressively are those that tend to have lower rates of confirmed Covid-19 diagnoses.”
Take first the point about measuring containment through confirmed diagnoses. We know that in countries like the United States, testing rates are still woefully low. But the countries that have relatively low numbers of confirmed cases relative to population are also those that have ramped up testing most extensively. Germany, for example, partnered with a number of private testing laboratories to test millions of people by early April. South Korea, likewise, provided public support for a mass testing system that enabled the country to aggressively monitor the spread of Covid-19. It seems that the countries that have tested the most aggressively are those that tend to have lower rates of confirmed Covid-19 diagnoses. Due to the prevalence of testing, it is unlikely that these countries are underreporting Covid-19, and more likely that the exact opposite is true.
That said, complete and unbiased data on Covid-19 prevalence would be superior to the data on confirmed diagnoses I have used. One promising direction is all-cause mortality, a statistic that represents the degree to which more people have died than expected given past trends (say, deaths in March–April of this year as opposed to any given year). Such data are not yet comprehensively available around the world, and they do not distinguish between the effects of Covid-19 itself and the effects of efforts to contain it. If, for example, 1,000 more people die of Covid-19, but 500 fewer people die of car accidents because fewer people are driving, then all-cause mortality will underestimate the effects of Covid-19. There is no way around this tricky measurement problem.
The second point I raised above, about excluding South Korea and Japan to reveal the correlation between social democracy and confirmed Covid-19 cases, gets to a core distinction among the countries in Figure 1: social democracy versus the legacies of developmental state.
The Asian success stories
The term “developmental state” was commonly used in the 1990s and 2000s to explain the success of the high-performing economies of Asia.2→Meredith Woo-Cumings, ed. The Developmental State (Ithaca, NY: Cornell University Press, 1999).
→Alice H. Amsden, Asia’s Next Giant: South Korea and Late Industrialization (New York: Oxford University Press, 1989). The concept draws on the experience of Japanese postwar economic growth,3Redwood City, CA: Stanford University Press, 1982More Info → emulated to greater or lesser degrees by South Korea, Taiwan, and Singapore. Each state was characterized by a strong, autonomous bureaucracy capable of formulating and implementing pro-growth economic policies. Geared toward exports, with strong formal and informal links between state and private enterprise, these states fostered sustained economic growth that transformed their economies into the powerhouses that we know today.
The erstwhile developmental states have changed as a result of the very developmental successes that they engineered. The tasks confronting them today are necessarily different from the challenges of late development that they faced half a century ago. This has led some observers of Asian political economy to question whether or not the concept of the developmental state is still relevant.4For a critical appraisal, see Robert H. Wade, “The Developmental State: Dead or Alive?,” Development and Change 49, no. 2 (2018): 518–546. But as Elizabeth Thurbon has argued, drawing on the Korean case, “the developmental ambition and elite consensus” and the “institutional capacities that help translate ambition into more or less effective policy outcomes” are characteristics that still distinguish these states from others.5Elizabeth Thurbon, “The Resurgence of the Developmental State: A Conceptual Defence,” Critique internationale 63, no. 2 (2014): 59–75.
Developmental state capitalism and social democratic capitalism are not the same. Like social democracies, developmental states also prioritize education and human capital formation. In both models, the state plays a more active and constructive role in steering the private sector than in countries like the United States. But the East Asian developmental states have histories of labor repression (often under formerly authoritarian regimes) and are not characterized by the same sorts of active labor market policies and generous pension schemes found in Europe’s social democracies.
We can see these differences in Kenworthy’s social democracy index. His data only measure social democratic capitalism among democracies (which means that authoritarian Singapore is not part of the dataset) and requires comparable international statistical data (which means that Taiwan, for which international data are inconsistently reported, is not part of the dataset either). But Taiwan would fit the pattern: it would score low on Kenworthy’s social democracy index, even though it has a minuscule number of cases (only 440 in total on May 15).
Singapore, too, would score low on the social democracy index. Although Singapore was considered a success story early on, its case load more than quadrupled in less than two weeks in late April (from 3,369 on April 15 to 14,951 on April 28). It has since nearly doubled again, standing at 26,891 as of May 15. I will return to this issue in my concluding remarks below, but authoritarian Singapore does not fit the pattern of the democratic developmental states.
Paths to Covid-19 control“While critics of state capitalism can point to many weaknesses and dangers of blurring the lines between state power and private enterprise, it may be that for managing a pandemic, an aggressive state-led response is essential.”
One provisional conclusion to draw from these data is that there are two paths to controlling Covid-19: the social democratic path and the developmental state path. And this makes sense. Stepping back, although developmental states and social democracies are not the same, they share some important features that might help them to develop efficacious responses to a global pandemic. In both models, the state plays an active role in steering the national economy, with active collaboration between the state and the private sector. The example of Germany and South Korea’s testing regimes shows how this can work; public-private links allowed both countries to roll out mass testing quickly. While critics of state capitalism can point to many weaknesses and dangers of blurring the lines between state power and private enterprise, it may be that for managing a pandemic, an aggressive state-led response is essential.
Of course, there may be other factors that explain these countries’ experiences. I have highlighted social democracy and the developmental state, but it could be that certain features of a country’s population have given the successful countries an inherent advantage. Perhaps countries with lower population density (Sweden, Norway, and especially Australia) don’t face as much of a risk of community spread as higher-density countries. Or, perhaps countries that are ethnically homogenous (South Korea, Austria, or Norway) find it easier to ask their citizens to make the sacrifices necessary—social distancing, washing hands, and other forms of prosocial behavior—than do countries that are ethnically heterogeneous.
Geography may also matter. Islands like Japan, Taiwan, and New Zealand (all top performers) may find it easier to control Covid-19’s spread by shutting down international travel. Likewise, some have suggested higher temperatures may inhibit Covid-19’s spread for now and both Australia and New Zealand are in the southern hemisphere, which was experiencing summer rather than winter when the pandemic began.
I have checked these possibilities using a variety of data sources, using multiple regression to adjust for various alternative explanations. The upshot is that I find consistent evidence that developmental states and countries that score high on Kenworthy’s index of social democracy have lower rates of confirmed Covid-19 cases. The only other variable that consistently predicts Covid-19 rates is what hemisphere a country is in.
We must be cautious in interpreting these correlations, since as Lipscy warns: we do not yet know enough about the epidemiology of Covid-19 to know how best to model its prevalence across countries, which means that any statistical correlation between government policies or social factors is probably missing the necessary epidemiological control variables. Still, this evidence is suggestive. Writing on May 15, 2020, we cannot explain the negative correlation between developmental states, social democracy, and confirmed Covid-19 cases with reference to geography, demography, or other factors.
Covid-19’s lasting economic impacts
That social democracies and developmental states have managed Covid-19 better so far is important evidence of how countries’ political economy shape their experience with the pandemic. All is not settled, however. High-performing Singapore has seen its Covid-19 cases explode since mid-April, largely among the country’s large population of migrant workers, and the current experiments with loosening restrictions on movement in countries like Germany may prove to have been premature. Even Angela Merkel has expressed concern that Germany’s states are loosening restrictions too quickly.“But social democracies and developmental states will prove to have an even bigger effect on how countries recover from the economic crisis that the pandemic has produced.”
But social democracies and developmental states will prove to have an even bigger effect on how countries recover from the economic crisis that the pandemic has produced. Social democracies prioritize high employment, with active welfare states and labor market policies. These policies are most useful during times of acute economic stress, as countries like Germany are able to ensure that workers keep earning salaries during the economic downturn. This will cushion the economic blow of the Covid-19 recession, and will make it easier, in turn, for economies to restart once the pandemic eventually passes.
In the cases of Japan and South Korea, which lack the social democratic traditions of active labor market protections, the still-influential tradition of lifetime employment at large firms may protect workers. Workers in these countries stand to benefit from the policy lineages of the developmental state even if they are not living in social democracies.
In other countries, the prospects are grim. The United States faces policy challenges that are closer to those faced by Spain and Italy—or, indeed, Indonesia and India—than those faced by Austria, France, or Japan. Of course, the United States’ political economy has long been marred by deep structural problems, such as massive inequality, a frayed social safety net, casualization, and informality.
But Covid-19 makes things acutely worse. The absence of a robust policy architecture to protect wages and employment means that the economic costs of the Covid-19 crisis are being widely felt. Uncomfortably, Americans must face the possibility that we must reopen before the pandemic has passed, because the United States lacks the capacity to handle the economic pain that our response to the pandemic has caused. The social democratic and developmental states are a reminder to Americans that this dilemma is, at its root, a product of politics. Sadly, there are no short-term solutions.
→Alice H. Amsden, Asia’s Next Giant: South Korea and Late Industrialization (New York: Oxford University Press, 1989).