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This is the second of three chapters on the role of economic interests, and of systems for representing those interests, in the politics of welfare state reform. They explore the linkages between national welfare states and national economies, and examine the processes through which economic actors press their interests on policy makers. Section 1 of Manow's chapter offers a critical account of contributions that predict the formation of new political coalitions along the cleavage line between those firms and workers that are forced to adjust to international market pressures and those that enjoy domestic shelter from globalized markets; a brief discussion is included of the relative importance of the electorate in current welfare reforms as compared with the role played by organized interests of capital and labour. Section 2 presents a transaction cost argument that seeks to identify one central logic linking production and protection in continental welfare states and coordinated market economies, respectively; the central argument is that generous welfare state programmes may enhance and not diminish international competitiveness and can be part of the comparative institutional advantage of an economy rather than solely contributing to its comparative cost disadvantage. Section 3 concludes by briefly discussing the implications of the argument presented in Sect. 2 for the present debate on the compensatory role of the welfare state in a globalized economy.

Work on this study began as an answer to the protesters at the December 1999 WTO ministerial meeting in Seattle, who challenged the current institutional model of an interdependent, globalized economy. The WTO skeptics are in principle concerned about the impact of globalized markets on their jobs and the state of the world, and they question the role of the WTO in a world of multidimensional issues and problems. Much of the fear is associated with the uncertainties of change, as markets expand, competition supplants existing companies and jobs, and the profit motive sparks a supposed race to the bottom in terms of environmental regulations and wage rates. Avoiding the economically destructive consequences of terrorism and of other sources of international conflict will require a firm and viable global trading system. Ultimately, clarifying the extent of WTO's power—what it can and cannot do—will help to put the larger issues and conflicts into perspective.

This essay is a response to Amy Spellacy’s contribution in this book, Global Perspectives on the United States. While he largely concurs with Spellacy, Ibarra wonders about the persistence of Coca Cola as an iconic symbol of “America” in this period of ever-expanding global capitalism. He offers some hypotheses, too, about new ways that Coca Cola ads may be contributing to the current form of U.S. cultural hegemony. Highlighted among these is Ibarra’s idea that Coca Cola’s current messages focusing on diversity of national and ethnic groups may well work with their globalized market interests, and hence that they may display less marked racial and social differentiation than Spellacy found in the 1940s and 1950s ads. Ibarra argues that the contemporary images in Coca Cola ads are more visually egalitarian, but that seemingly successful individuals predominate, thereby imposing mainstream (middle class?) U.S. cultural values, nonetheless. The essay concludes that Coca Cola still functions as a cultural product available to everyone, epitomizing “America” and its values, and that it therefore materially contributes in profound ways to the rise of a new powerful U.S. around the planet.