Revisiting the Party Paradox of Finance Capitalism: Social Democratic Preferences and Corporate Governance Reforms in Switzerland, Sweden, and the Netherlands

The “party paradox” thesis claims that in the context of the legal corporate governance reforms of the 1990s, which aimed at adjusting national corporate governance systems to the “finance capitalism” of the Anglo-American type, center-left parties promoted proshareholder corporate governance reforms, whereas center-right parties opposed such reforms. Based on case studies of Switzerland, Sweden, and the Netherlands, this article shows that this thesis does not apply to two of these cases: In Sweden and the Netherlands a broad coalition uniting center-right and center-left parties opposed— with considerable success—proshareholder reforms. Therefore, the author argues that firm-level explanations of the “party paradox” are insufficient to understand the variance in center-left preferences across different cases. Instead, the historical role of labor in different countries is critical in the formation of center-left preferences. Where labor was not excluded from the formation of corporate governance structures, center-left support for proshareholder reform was weak.