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Knowledge Production, Power, and Global Social Change: The Interplay between the OECD and Nation States Project Application Pertti Alasuutari University of Tampere Abstract In order to shed more light on the forms and dynamics of the interaction between nation states and international organizations in the current era of increasing interdependence of countries throughout the globe, this research project studies the role of the OECD in affecting global social change. The project is comprised of case studies of OECD projects and their links with and impact on one member country, Finland. The cases are selected in such a way that they cover different aspects of the functions of the OECD and highlight different ways in which the OECD has appeared in the Finnish public sphere. The OECD programmes analyzed are (1) the Public Management (PUMA) Programme, (2) the Regulatory Reform Programme, (3) the Programme for International Student Assessment (PISA), (4) the Jobs Study, (5) Taxation Policy, and (6) the Multilateral Agreement on Investment (MAI). Every case study has its own specific questions or hypotheses, but in each case we also ask how the topic was brought to the agenda of OECD activities, how the OECD programme was organized, and how the programme was used in Finland, thus affecting legislation and social and cultural change. On the basis of these case studies highlighting different ways in which the OECD figures at the national and international levels, we can form a more universal model of the types of influence that international organizations have on global social change. The data consist of the OECD publications, unpublished documents related to the cases acquired from the OECD Centre for Documentation & Information and from the OECD Archives Section, preambles of reforms in Finnish legislation related to the OECD programmes, media coverage of the programmes and the related reforms in Finland, and qualitative interviews of OECD officials and key people related to the programmes in Finland. Michel Foucault’s ‘governmentality framework’ will be used as the theoretical frame of reference. Within it, we analyze whether the role of the OECD is due to its ability to affect the frameworks and discourses within which national economies and economic and social policies are perceived and assessed, including the criteria by which the OECD countries are compared with each other. In this continuously ongoing process, including different subject positions from OECD civil servants all the way to voters, political parties and non-governmental organizations, dominant discourses are materialized in organizational forms, which in turn give rise to new discourses and forms of knowledge, thus directing the path-dependent trajectory that advanced industrialized countries follow. There will be several research methods used in the project, but in a general sense they are informed by Foucault’s framework. The empirical materials are used as information about the situation in which recommendations or policies are made, which is done by making an inventory of the discursive field in terms of which actors perceive the situation. Secondly, public documents related to the cases are treated as interventions, which may reframe the situation and create new forms of knowledge and, especially in the case of legal documents or international agreements, change existing practices and thus give rise to changes in forms of subjectivity.

1 Knowledge Production, Power, and Global Social Change: The Interplay between the OECD and Nation States

Table of contents Background ..........................................................................................................................................1 Objectives and methods .......................................................................................................................4 The Public Management Programme...............................................................................................5 The Regulatory Reform Programme................................................................................................6 The PISA Survey .............................................................................................................................7 The Jobs Study .................................................................................................................................7 Taxation Policy ................................................................................................................................8 Multilateral Agreement on Investment ............................................................................................8 Schedule for the research .................................................................................................................9 Researchers and resources .................................................................................................................10 Results................................................................................................................................................10 References..........................................................................................................................................11

Background The classic sociological question, what are the dynamics of social change, is often addressed within the framework of a single polity. Yet it is well-known that development in a society does not follow any internally determined law-like path. Instead, the processes of change in one country are dependent on developments in other countries; in their policies governments adopt models from other countries, and they also make multilateral agreements. For instance, when we think about the history of the post-World War II era, the Organisation for Economic Co-operation and Development (OECD) has played a key role in defining the direction that the so-called Western European and world market economies were to take in their development. The OECD grew out of the Organisation for European Economic Cooperation (OEEC), which was set up in 1947 with support from the United States and Canada to coordinate the Marshall Plan for the reconstruction of Western Europe after World War II. Created as an economic counterpart to NATO, the OECD’s mission has been to advocate the market economy. The OECD has not only given its member countries statistical information about their performance as compared with others and recommendations about how to improve. By making multilateral agreements, applying peer pressure to members countries’ governments (Pagani 2002), and by less evident means such as establishing the measures used in gathering comparative statistical information, the OECD has set the standards for desirable social development and thus contributed to defining what being a modern society and modernization mean, and thus, the future direction of global socio-economic change. Unless we believe that history has a predetermined direction,1 it is evident that as one of the international governmental organizations (IGOs) the OECD has greatly contributed to the path-dependent trajectory that the developed and developing countries have followed. 1

The idea that history has a goal and that the market democracies show the way to others is not unheard of in the postWorld War II history. The Cold War and the simultaneous disintegration of the European colonial empires made the US government and American social scientists interested in the economic, political and social development of Third World societies. Consequently, Talcott Parsons and his followers developed the ideal types of traditional and modern societies into real stages in an evolutionary course and into criteria by which to assess the relative “modernity” of a society in question. (Parsons 1951; 1966; Shils 1970; for a critique see Alexander 1994)

2 Compared with the importance of the OECD as a prime example of the interesting role that the IGOs play, there is surprisingly little research that assesses its role in world politics and in social and economic development. There is an obvious need for such research especially at the moment when, along with the increasing interdependence of countries throughout the globe (see e.g., Held et al. 1999), managing economic and social policy in any region or nation state is more and more dependent on global developments and networks of dominance. Therefore, in this research project we want to take up the challenge to study the role of the OECD in affecting global social change with the more or less subtle means discussed above. Previous research about the impact of the OECD shows that there is need for research that better captures the nature of IGOs like the OECD. There are several studies about the developmental trends in a policy area in OECD countries2 or about policy convergence in OECD countries3 but these studies analyze the role the OECD plays only indirectly. Most of these studies do not even pose the question as to whether the OECD activities have had an influence on the developments reported. Secondly, even when the idea is to test the impact of the OECD by analyzing whether national policies converge, the results are far from conclusive. In many cases, the indicators used show that hardly any convergence has taken place, or that the countries show greater divergence. In addition, the mechanisms that would explain either convergence or divergence have not been studied. A recent ambitious, well-theorized and well-researched study about the OECD and European welfare states (Armingeon and Beyeler 2004) is a good example of the problems social researchers face when trying to assess the impact of an IGO like the OECD. The aim was to assess the impact of OECD ideas concerning national social policies on national welfare reforms. That was done by contrasting the OECD recommendations with the reforms realised in 14 Western European welfare states. Although the researchers found remarkable concordance between OECD recommendations and national policies, they rejected the hypothesis of a strong and direct impact. That is because, first, if there is concordance it could be due to other international organisations, such as the EU, pursuing similar ideas. Second, in many cases the reforms are caused by domestic challenges. Third, some policy changes may result from new constellations of domestic political power. Finally, there has been a change in economic paradigms, not only at the level of the OECD but also on a national level. Critical assessments of policy convergence studies and of theories and empirical studies of international institutions point out the challenges for future research and theorizing. According to Bennett (1991), studies of policy convergence among advanced industrial states are often based on an overly deterministic logic, a static conception of convergence and an unclear specification of the aspects of policy that are supposed to be converging. In a similar vein, Martin and Simmons (1998) criticize previous research for focusing on proving that institutions matter, without sufficient attention to constructing well-delineated causal mechanisms or explaining variation in institutional effects. The critics recommend that more attention is paid to domestic politics rather than treating the state as a unit (Bennett 1991; Botcheva and Martin 2001; Cortell and Davis 1996; Martin and Simmons 1998; Kastner and Chad 2003; Garrett and Lange 1995). That is because, if IGOs affect global social change, they do it by influencing social and political developments and decisionmaking in national states, and there need to be mechanisms for such influence. On the other hand, the policies which the IGOs expect or recommend the national states to implement do not come from out of the blue; the issues on the agenda are brought there by representatives of nation states. The totality is a dense network of social relations and material conditions, coupled with conflicting and converging definitions of the situation. 2

See for instance Curtis and Murthy 1999; Huber 1999; Alfranca and Galindo 2003; O’Connor and Brym 1988. E.g. Armingeon & Beyeler 2004; Gouyette and Perelman 1997; Huber 1999; Maudos et al. 2000; Montanari 2001; Strazicich et al. 2004; Arcelus and Arocena 2000; Koski and Majumdar 2000; Epstein et al. 2003; Freeman and Yerger 2003; Carree et al. 2000. 3

3 To capture the complex nature of IGOs in global governance, we approach the case of the OECD using a perspective developed by Michel Foucault. Power, in this sense refers to a network of dominance entangled with knowledge and with the subject positions and identities of the actors involved (Foucault 1972; 1979; 1980; Alasuutari 1996, 18-22; 2004a, 34-35; 69-70). It means that power is not conceived of narrowly as “the probability that one actor within a social relationship will be in a position to carry out his own will despite resistance” (Weber 1978, 53). Instead, power is seen in a broader sense as productive, not only as repressive (cf., Heiskala 2001); Secondly, to capture the complex dynamics involved we study the interplay between the OECD and a member country, which in this case is Finland. We not only study the OECD knowledge production and publications, but also the ways in which different actors in a member country are active in defining the OECD special projects agenda, and the way they use or make references to the OECD reports in justifying or criticizing political decisions both in official documents and in the media. This research project continues a line of inquiries (Alasuutari 1996; Alasuutari and Ruuska 1999; Alasuutari 2004b) which have dealt with the different socio-economic and geo-political regimes that can be identified in Finland from the end of World War II to the present. In these studies we analyzed how macro-level changes can be seen in changing public discourses and in the mentalities and identity projects of different groups of actors, such as different occupational groups. While previous studies have deepened our understanding about the all-embracing dynamics, effects and counter-effects that structural changes trigger within a nation state, this project looks into the dynamics of socio-economic change from a more global perspective to see how global trends are formed and worked on at the international level and then infiltrated into the national scene. The relevance of Foucault’s governmentality framework (Foucault 1991; Dean 1999; Rose and Miller 1992) was apparent in our previous studies. In those we were able to show how three socio-cultural periods in post-war Finnish society, the ‘moral economy’ from the end of the war until the mid 1960s, the ‘planning economy’ from the mid-60s until mid-80s, and the ‘competition economy’ after that have been so pervasive particularly because the dominant discourses of each period have been incorporated with practices that have produced mentality changes within the population (Alasuutari 1996; Alasuutari and Ruuska 1999). A more recent study (Alasuutari 2004b) pointed toward the role of the OECD in these changes: in justifying the new legislation passed as part of the move from resource governance to market governance, the preambles of the relevant bills used other OECD countries as the self-evident reference group. In the new project, the governmentality framework will be useful in analyzing whether the role of the OECD is due to its ability to affect the frameworks and discourses within which national economies and economic and social policies are perceived and assessed, including the criteria by which the OECD countries are compared with each other. In this continuously ongoing process, including different subject positions from OECD civil servants all the way to voters, political parties and non-governmental organizations, dominant discourses are materialized in organizational forms, which in turn give rise to new discourses and forms of knowledge. Foucault’s theory, which emphasizes the productive role of power relations, has particularly inspired research that analyzes the way in which individuals are constructed as subjects and how their mentalities are formed in various institutions of territorialized polities. Foucault himself studied the birth of the clinic (Foucault 1975), the prison (Foucault 1979, the asylum (1973) and the formation of the discourses of sexuality (Foucault 1980; 1985; 1988). Scholars inspired by his approach have studied, for instance, alcoholism (Alasuutari 1992), the museum (Bennett 1999) and the “psy” disciplines (Rose 1996). There is relatively little research that applies Foucault’s governmentality framework to the study of international politics, but previous research shows that it is well-suited to analyzing global governance (Bryant 2002; Dillon and Reid 2000; Elyachar 2003; Lipschutz and Rowe 2005; Walters and Haahr 2005). Keeley (1990) argues that Foucault’s work gives us analytic devices to better understand the formation and change of international regimes. In a similar vein, Merlingen (2003) argues that the governmentality framework is particularly suitable

4 for studying IGOs because it brings into focus the micro-domain of power relations, thereby highlighting what mainline IGO studies fail to thematize. According to him, they exercise a molecular form of power that evades and undermines the material, juridical and diplomatic limitations on their influence: “Our understanding of IGOs remains incomplete if we do not pay attention to the effects of domination generated by their everyday governance tasks and projects of improvement.” (Merlingen 2003, 377) The research team’s five key publications relevant to the topic are: Alasuutari, Pertti: Social Theory and Human Reality. London: Sage 2004. Alasuutari, Pertti: Suunnittelutaloudesta kilpailutalouteen: miten muutos oli ideologisesti mahdollinen? [From planned economy to competition economy: How was the change ideologically possible?]. Yhteiskuntapolitiikka 69, 2004, 3-16. Alasuutari, Pertti: Art, Entertainment, Culture, and Nation. Cultural Studies – Critical Methodologies 1 No 2, 2001, 157-184. Alasuutari, Pertti and Petri Ruuska: Post-patria? Globalisaation kulttuuri Suomessa [Post Patria? The Culture of Globalization in Finland]. Tampere: Vastapaino 1999. Alasuutari, Pertti: Toinen tasavalta. Suomi 1946-94 [The Second Republic. Finland 1946-1994]. Tampere: Vastapaino 1996. There will be two Ph.D. dissertations completed as part of this research. The postgraduate students are Marjaana Lampinen and Antti Tietäväinen. In addition, Heikki Taimio’s work within the project will be part of his Ph.D. dissertation. The topics and plans of these researchers will be introduced in the next section.

Objectives and methods The objective of this research project is to increase our knowledge about the role of the OECD in affecting global social change. We study the OECD as one of the IGOs, whose role as actors in the global networks of power directing socio-economic development is seldom based on clearly defined rules or undisputed hierarchies. Rather, their impact is based on an ability to produce forms of knowledge that frame social reality and are used in various ways at the national level to justify or criticize local politics and policies, thus also establishing new policies and practices. In other words, we study the OECD as an intersection between multilateral relations and nation states. To narrow down the vast scope and ambitious objectives of the research, at this point we concentrate on the bearing of the OECD on only one member country, Finland. Furthermore, because of the broad range of policy areas in which the OECD operates and gives feedback and recommendations to member countries, we only concentrate on a few OECD special projects. These cases are selected in such a way that they cover different aspects of the functions of the OECD and highlight different ways in which the OECD has appeared in the Finnish public sphere. The OECD programmes analyzed are (1) the Public Management (PUMA), more recently known as the Public Governance and Management Programme, (2) the Regulatory Reform Programme, (3) the Programme for International Student Assessment (PISA), (4) the Jobs Study, (5) Taxation Policy, and (6) the Multilateral Agreement on Investment (MAI). On the basis of these case studies highlighting different ways in which the OECD figures at the national and international levels, we can form a more general model of the types of influence that international organizations have on global social change. On the basis of previous research and literature on the topic, it can be expected that IGOs affect global social change in several intertwined ways. Firstly, they form a community among civil servants and politicians from different countries and in that way put peer pressure on the people who prepare and decide about reforms in nation states. They may also provide ready-made models

5 for new, tested practices. Often they also provide comparative information which shows that a country is doing worse than others by certain criteria and they may suggest or imply how to improve the situation. Related to that, they create the criteria and indicators by which countries and their performance are described, compared and assessed as societies, thus forming an epistemic community. As one aspect of such a community building process, IGOs may affect the dominant, popular philosophy of history – that is, notions about inevitable global trends and about the direction that development has. IGOs may also make multilateral agreements and thus harmonize legislation in the countries involved. The extent to which IGOs succeed in affecting social change in national states by the means mentioned above depends on the image and respect that they have internationally and in a particular country. For instance, whether the OECD’s recommendation is useful or useless as a justification or, even detrimental to the attempt to implement a policy, depends on the country, policy area, and the political situation. Finally, the harmonized standards, rules and practices in member countries give rise to similar unintended consequences, for instance changes in forms of subjectivity and identity formation, which make the same reform policies relevant and thus contribute to convergence. The idea of the case studies is to identify each case as a particular configuration of these and possible other forms of influence. That is why there are three groups of questions that we pose in each case. First, we want to find out how the topic was brought to the agenda of OECD activities. For instance, who were the initiators, how were the preliminary stages handled, how were the objectives defined, and how were the decisions justified? Second, we ask how the OECD programme was organized. How were researchers and other actors assigned, how were the specific tasks and objectives defined, and how was the publicity of the programme managed? The third group of questions concerns Finland’s role: how was the programme used in Finland? We study the different references to the programme both in official documents and in the media to make interpretations about its impact on Finland. In each case there will also be specific questions asked of the data. To address these general questions, in addition to utilizing both published and unpublished OECD documents about the programmes in question, we interview key people both in the OECD and in the Finnish state administration. Pertti Alasuutari has already made 6 interviews, some of them in Finland and some in Paris. We expect to conduct some 50 qualitative interviews. The methodological approach of the project could be described as ethnographic in the sense that our attempt to form more generic models is grounded on case analyses, and in each case we have a holistic tactic: in addition to making use of all related documents we also interview informants, which may lead us to new insights and questions about the cases (see Atkinson et al. 2001). On the other hand, in analyzing the materials we approach them from the methodological perspective of discourse analysis, which emphasizes the point that language not only reflects but also constructs reality (Alasuutari 1995; 2004) – or, as Michel Foucault puts it, the concepts we use are part of discourses that “systematically form the objects of which they speak” (Foucault 1972, 49). In analysing the discourses evident in the documents and interviews, we will apply a similar method to that used in our previous studies (Alasuutari 1996; 2004b; Alasuutari and Ruuska 1999), which paid particular attention to the premises of the arguments used in justifying or criticizing the policies in question.

The Public Management Programme The Public Management Programme has been quite influential in affecting public sector reform efforts in some English-speaking and Scandinavian countries in the late 1980s and 1990s. The main objectives of this programme were to make public services more efficient and more responsive to clients. Secondly, started at the time when the Soviet centralized system proved feeble, the reforms were directed at “managerialising” the public sector. The well-established term “public

6 administration” started to sound unappealing and it became fashionable to talk about public management. Many countries reduced their reliance on centralised regulation, giving managers autonomy in exchange for better accountability. A number of countries significantly reduced the cost of the public service by divesting activities and by using non-government service providers. Governmental processes moved away from the external control of cost, input, and process to internal control and management by performance (OECD 2002). These changes have had an extensive impact on the discourses in terms of which public employees, or outsourced service providers and the citizens as clients have begun to deal with their interaction and with the public sector, thus also modifying their identities and mentalities. Therefore in this case study we analyze how the changes came about in the OECD and how public sector reforms were carried out in Finland.

The Regulatory Reform Programme The OECD recommendations on member countries’ competition policy have been quite closely related to the Public Management Programme. This is particularly the case when we think about OECD's Regulatory Reform Progamme, which is aimed at helping governments improve regulatory quality – that is, reforming regulations that raise unnecessary obstacles to competition, innovation and growth, while ensuring that regulations efficiently serve important social objectives. The Regulatory Reform Programme has also been crucial in changing Finnish society from the late 1980s onward. Finland debated the shape of its competition policy for more than 30 years, before making it a centrepiece of wide-ranging economic reforms in the late 1980s. Price controls, which had been the principal means of dealing with marketplace abuses, remained in place until 1988. Since the late 1980s, Finland has followed an economics-based competition policy as part of a general shift from collective corporatism to a more individualist market order. Closely related to changes in competition policy, the provision of public services at the national level have been significantly commercialised in Finland over the past decade through the formation of state enterprises, most of which have now been transformed into companies and some have been privatised. The change was dramatic and extensive. From 1989 to 2001, 14 state enterprises were created out of former budget-funded government agencies. Of the 14 state enterprises, 9 have been subsequently incorporated into a company form, and 4 of these have been wholly or partially privatised (The OECD … 2003, 95). These changes – a new competition policy, regulatory reforms and the commercialization of public services – are a highly interesting case to study because they affected directly or indirectly most of the Finnish population. For instance, of the five million inhabitants, in 1990 more than 700 000 were employed in the public sector and the figure is still over 600 000. This means that the new practices and institutional arrangements affected directly or indirectly a major share of the population. For instance, civil servants had to adapt to new leadership principles and competition regulations, others became employees in a privatised company, and still others were made redundant. There are no reliable statistics about the municipality sector, but the number of state administration employees dropped from 213 000 in 1985 to 122 000 in 1996 (Tiihonen 2004). An interesting question to be asked in this case study is why these extensive changes took place so smoothly, without any major resistance. An earlier study (Alasuutari 2004b) shows that references to the OECD recommendations were utilized in justifying the reforms in national legislation. The competition policy and regulatory reform case is particularly interesting also because Dr. Matti Purasjoki, Director General of the Finnish Competition Authority, was also a long-time chair of the OECD Competition committee, thus influencing the policy recommendations that OECD has given to its member countries. This case study will analyze how this could be seen in the process that took place in Finland.

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The PISA Survey The Programme for International Student Assessment (PISA), with over 40 participating countries, has been considered one of the core projects launched by the Directorate for Education, created in 2002, and the OECD Education Committee. This internationally standardised assessment, the PISA Study, seeks to measure the learning skills in mathematics, science, mother tongue and problemsolving among 15-year-old students nearing the end of their compulsory education. The PISA survey collects information on student performance and also on the background of individual students, such as the characteristics of individual students, of schools and, of school systems. According to the OECD, the survey is about measuring those basic competences which are required in modern societies to lead a satisfying life economically and personally, and also to participate actively in social and political life (OECD 2001; OECD 2004). The PISA survey is an interesting case study both internationally and from the viewpoint of the Finnish nation state. The PISA surveys have gained a lot of attention in the participating countries, especially because relatively affluent economies, such as Germany or the United States, have scored surprisingly low in international comparison. That is why the survey has helped domestic-decision makers to pin down the main deficiencies in the school systems, even if there have been doubts whether the study is extensive enough to pin out the real deficiencies and reasons behind the results (e.g., Allmendiger and Liebfried 2003, Oberhuemer 2004; Neumann 2003). The top performance of the Finnish teenagers in the PISA survey, on the other hand, has gained a lot of attention both in national and international forums (e.g., Opetushallitus 2004).4 That is why, in the case of PISA, the OECD has appeared in a role that differs from the expected. Typically, the OECD country reports point out problems and give reform recommendations, but in this case the Finnish school system has mainly gained praise and admiration. According to Finland’s Minister for Education, Tuula Haatainen (OPM 2004), the PISA Study in general has revealed the high level of compulsory education in Finland. Finnish representatives see the national educational system and teacher training as the main reasons behind the country’s high standing (e.g., OPM 2004; JYU 2004). Due to the PISA Study, Finland has become almost a place of pilgrimage for hundreds of international delegations. Due to Finland’s high scores in the survey, it is interesting to study how the PISA Study is used in Finland – that is, how it affects Finland. For instance, do the politicians, state officials, teachers or the media see the PISA Study as useful, and if so, in what ways? Or do the results weaken the strength and credibility of teachers’ complaints about insufficient economic resources in the Finnish school system? Furthermore, what are the dominant explanations for Finland’s good performance, and what will contribute to maintaining those features in the Finnish school system in the future? Finally, since Finland and its educational policy serves as a model example for the OECD and other surveyed countries, how do Finnish representatives utilize this special attention and position within the OECD?

The Jobs Study Over the last 10 years, the OECD has been very influential in shaping the labour market policies of its member countries. Its Jobs Study (1994) was important in arguing that the high unemployment experienced in the OECD countries was largely a structural phenomenon, and stemmed from socie4

The PISA Study will be conducted in three parts and more than 250 000 students in 41 countries will be surveyed in each phase. In the first study in 2000, the focus was on literacy. The second, the most recent one in 2003, focused on mathematics. The forthcoming study will focus on science, and it will be conducted in 2006. Finland already led in the PISA 2000 reading assessment, and in PISA 2003 it maintained its high level of reading literacy while further improving its performance in mathematics and science. Each phase will be reported accordingly in OECD’s own reports as well as in reports prepared by the surveyed countries.

8 ties' difficulties in adapting to the changes brought about by technological progress and the globalisation of the economy. Higher economic growth rates would not, therefore, suffice to reduce unemployment. The jobs strategy recommended by the OECD included measures to encourage noninflationary growth, technological progress and an entrepreneurial climate. However, most of the proposals were aimed to increase the flexibility of the labour markets. While the OECD promoted its jobs strategy and monitored its implementation in member countries over the subsequent years, employment in Finland recovered from the deep depression of the early 1990s. Several proposals were made to reform the Finnish labour markets, and measures were taken to bring down the Finnish unemployment rate and to increase employment. Thus, the implementation of the OECD jobs strategy largely coincided with a period of increasing employment in Finland – as well as with the stagnating employment of the early 2000s. The 2004 OECD Employment Outlook launched a re-evaluation of the jobs strategy, with the goal of presenting a revised set of recommendations for the 2006 ministerial meeting. This case study will analyse the nature of Finnish labour market reforms that were suggested and implemented from 1994-2005 and, in particular, to what extent they were based on the OECD jobs strategy. In addition, the discussion of Finnish labour market reforms will be compared with the ongoing re-evaluation and eventual revision of the OECD jobs strategy.

Taxation Policy Since the 1980s, the world economy has undergone profound changes identified as globalization, deregulation and privatisation. The consequences from aggravated competition for firms include reduced opportunities to shift the costs of taxes, wages and regulations on to the consumers (Scharpf 1999, 85). This means incentives for firms to start searching after countries and polities with less burdensome regimes. Increased transnational mobility has reduced “the capacity of national governments to tax mobile factors of production and other mobile tax bases” (p. 102). The OECD plays a contradictory role in this development. On the one hand, the OECD is one of the actors and agents who have pursued the new post-1980s economic policy, and thus contributed to global tax competition and to reducing of nation states’ regulatory capacities. On the other hand, as an IGO it represents the interests of governments, and one of its special programmes, the Working Party on Tax Avoidance and Evasion is to prevent harmful tax competition and to fight tax havens. The purpose of this case study is to examine how the contradictory elements of OECD’s activities are articulated. How is tax policy formulated so that the contradiction is avoided or contained? The policy contains different dimensions, from promoting international trade and investment to counteracting tax evasion and avoidance. Which of the various dimensions are adopted in which ways for national decision making in Finland?

Multilateral Agreement on Investment The Multilateral Agreement on Investment (MAI) is an interesting subject for a case study because it represents the OECD’s role as a forum in which member countries may make multilateral agreements. In fact, MAI was to be the OECD's first international and judicially binding treaty. By creating the MAI, the OECD's 29 member countries of the time tried to create a consensus that would provide a broad multilateral framework for international investment with high standards for the liberalization of investment regimes, investment protection and effective dispute settlement procedures. The MAI negotiations were held in secret from May 1995 till February 1997, when a copy of the agreement leaked to a Non-Govermental Organisation (NGO) called the Public Citizen. News about the MAI spread rapidly through the Internet. Soon a large number of NGOs interested in environmental, human rights, development work and global issues, as well as various labour and

9 consumer organisations, raised strong criticism toward the agreement. At the end of 1998, France finally torpedoed the agreement, which caused a severe legitimacy crisis for the OECD. After that, most of the international investment negotiations formerly hosted by the OECD were taken under the control of the World Trade Organisation control. Under the WTO, negotiations continue, using the name MIA (Multilateral Investment Agreement). The MAI events made the OECD change its strategy as an IGO. For instance, it adopted a more open communications strategy, and a director of public affairs and communications was appointed. The OECD has also established links to, and started an on-going dialogue with, several NGOs. That is why one of the key questions asked in this case study is how it was done. Secondly, what is the new strategic role that the OECD plays and how is it perceived by different actors (the OECD officials, national politicians and state officials, NGOs and the media)? For instance, does the change mean that the OECD is now closer to private management consultancy companies or to think tanks producing benchmarks? Or rather, do the changes in its strategy mean that the OECD is now a major player in a new kind of global governance in which IGOs and NGOs reach agreements about global affairs? What are the subject positions that these emerging networks of power provide for politicians, state officials and citizens of national states? To answer these questions, key actors within the OECD and in Finland, will be interviewed, representatives of NGOs will be interviewed and a sample of international media coverage of MAI will be collected.

Schedule for the research 6/2005 – 12/2005 Conduct of interviews e.g. in Finland and France (Paris), gathering other research data, analysis of the interviews, reporting on the initial phase of the research to the Ministry of Foreign Affairs (Lampinen and Alasuutari) 1/2006-12/2006 Preparing the manuscripts on case studies∗: Regulatory Reform Programme, The Programme for International Student Assessment (PISA), The Multilateral Agreement on Investments (MAI), Taxation Policy, and the OECD Job Study (Alasuutari, Lampinen, Tietäväinen, Pietilä and Taimio) 1/2007-12/2007 Preparing the manuscripts on case studies*: Regulatory Reform Programme, PISA, MAI, Taxation Policy, and the Public Management (PUMA) (Alasuutari, Lampinen, Tietäväinen, Pietilä and Ruuska) 1/2008-12/2008 Preparing the manuscripts on case studies*: Regulatory Reform Programme, PISA, MAI, Taxation Policy, and PUMA (Alasuutari, Lampinen, Tietäväinen, Pietilä and Ruuska) 1/2009-12/2009 Preparing the manuscripts on case studies*: Regulatory Reform Programme, PISA, MAI, Taxation Policy, and PUMA (Alasuutari, Lampinen, Tietäväinen, Pietilä and Ruuska) 1/2010-6/2010 Final report of the research project to the Academy of Finland



Phases marked with asterisk will include gathering and handling research material and data, analysis of data, reporting and drafting the manuscripts, revisions of the manuscripts after corrections suggested and final submission to the various publication forums.

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Researchers and resources The researchers will work as a team in collecting data and conducting interviews, but each researcher also has his or her own topic. They are as follows: Pertti Alasuutari: The Regulatory Reform Programme (and project director) Kauko Pietilä: Taxation Policy Marjaana Lampinen: The PISA Study Petri Ruuska: The Public Management Programme Heikki Taimio: The Jobs Study (Labour Institute for Economic Research, Helsinki) Antti Tietäväinen: Multilateral Agreement of Investment As to researcher training, the doctoral students Marjaana Lampinen and Antti Tietäväinen, will become students of the Finnish Post-Graduate School in Social Sciences (Sovako). In addition to the courses they attend in Sovako and the project’s own weekly seminar, there will be an annual get-together with professor Risto Heiskala's project (Doctoral Seminar), and an international conference on the current relevance of Michel Foucault's work on power in 2008. Keynote speakers in the conference will include Mitchell Dean (Macquarie University), Michael Mann (UCLA) and Peter Miller (London School of Economics). During the research project the team will arrange sessions in international sociology and political science conferences on the role of the OECD and other IGOs with the objective to organize a larger international research project studying the interplay between IGOs and nation states. Professor Peter Miller (London School of Economics) and professor Klaus Armingeon (University of Berne) have already expressed their interest. In addition to the funding applied for from the Academy of Finland, we have applied for and have been provisionally promised funding for the year 2005 from the Ministry of Foreign Affairs. That funding is directed for the salary of Ms. Marjaana Lampinen and for one trip to Paris to conduct more interviews. Doctor Kauko Pietilä is part of the research team, but he will conduct his case study as part of his regular work as special researcher at the Research Institute for Social Sciences. Therefore we do not apply for funding for him with this application.

Results The project will contribute to developing the theory of power. It will also deepen our understanding of the contemporary global architecture of governance, in which the IGOs and NGOs play an ever bigger role alongside territorially defined polities, where power structures mentalities and is, in turn, structured by them. The results will be useful for all who want to understand the dynamics of social change and particularly for people who play a part in global and national governance. The project will produce some 23 articles, published primarily in international scientific journals. In addition, Alasuutari and Heiskala will co-edit an international collection of articles based on the 2008 conference on the current relevance of Michel Foucault's work on power. By the end of 2009 when the project ends, the planned international research project about the interplay between IGOs and nation states will also be underway.

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12 Heiskala, Risto (2001) Theorizing Power: Weber, Parsons, Foucault and Neostructuralism. Social Science Information 40 (2), 241-264. Huber, Manfred (1999) Health Expenditure Trends in OECD Countries, 1970-1997. Health Care Financing Review 21, 99-117. JYU (2004) Jyväskylän yliopiston Koulutuksen tutkimuslaitoksen tiedotuksia OECD:n PISA-tutkimuksesta: OECD:n PISA Tutkimus – Suomalaisnuorten osaaminen maailman huippua [Newsletters of Institute for Educational Research, University of Jyväskylä, Finland on OECD PISA Study: Finland received high average scores in OECD PISA 2003 Study]. http://www.jyu.fi/ktl/pisa/PISA-tiedote5_2003.pdf Kastner, Scott L. and Rector, Chad (2003) International Regimes, Domestic Veto-Players, and Capital Controls Policy Stability. International Studies Quarterly 47, 1-22. Keeley, James F. (1990) Toward a Foucauldian Analysis of International Regimes. International Organization 44, 83105. Koski, Heli A. and Majumdar, Sumit K. (2000) Convergence in Telecommunications Infrastructure Development in OECD Countries. Information Economics and Policy 12, 111-131. Lipschutz, Ronnie D. and Rowe, James K. (2005) Globalization, Governmentality and Global Politics: Regulation for the Rest of Us? New York, NY: Routledge. Martin, Lisa L. and Simmons, Beth A. (1998) Theories and Empirical Studies of International Institutions. International Organization 52, 729-757. Merlingen, Michael (2003) Governmentality: Towards a Foucauldian Framework for the Study of IGOs. Cooperation and Conflict: Journal of the Nordic International Studies Association 38, 361-384. Montanari, Ingalill (2001) Modernization, Globalization and the Welfare State: A Comparative Analysis of Old and New Convergence of Social Insurance since 1930. British Journal of Sociology 52, 469-494. Moudos, Joaquin, Pastor, Jose Manuel and Serrano, Lorenzo (2000) Convergence in OECD Countries: Technical Change, Efficiency and Productivity. Applied Economics 32, 757-765. Neumann, Manfred (2003) Die Mangel waren langst bekannt. PISA 2000 eine bildungspolitische Nachlese. The deficiences were long known – reflection on educational policy. Buch und Bibliothek 55 (2003), 239-243. Oberhuemer, Pamela (2004) Controversies, Changes and Challenges: Reflections on the Quality Debate in Germany. Early Years 24, 9-21. O’Connor, Julia S. and Brym, Robert J. (1988) Public Welfare Expenditure in OECD Countries: Towards a Reconciliation of Inconsistent Findings. The British Journal of Sociology 39, 47-68. OECD (2002) Public Sector Modernisation: A New Agenda. GOV/PUMA 2002 (2). OECD (2004) Learning for Tomorrow’s World, First Results from PISA 2003. OECD (2001) Messages from PISA 2000. Opetushallitus (2004) Opetushallituksen tiedotteita: Kaikki tiet vievät Suomeen – Selvitys Suomen PISA-menestyksen aiheuttamasta mielenkiinnosta saksankielisissä maissa [Newsletter of Finnish National Board of Education: Each Way Will Guide You to Finland – A Study of the Publicity of Finland’s Top Records in German Speaking Countries], 7/2004 http://www.edu.fi/info/PISA2000.pdf OPM (2004) Opetusministeriön tiedotuksia OECD:n PISA-tutkimuksesta: Opetusministeri Tuula Haataisen kannanotto 7.12.2004 [Newsletters of Ministry of Education of Finland on OECD PISA Study: A Comment by the Minister of Education Tuula Haatainen 7.12.2004] http://www.minedu.fi/opm/uutiset/archive/2004/12/07_1.html Pagani, Fabrizio (2002) Peer Review: A Tool for Co-operation and Change. An Analysis of an OECD Working Method. Organisation for Economic Co-operation and Development. SG/LEG(2002)1, 11-Sep-2002. http://www.oecd.org/dataoecd/33/16/1955285.pdf Parsons, Talcott (1951) The Social System. Glencoe (Ill.): Free Press. Parsons, Talcott (1966) Societies: Evolutionary and Comparative Perspectives. Engwood Cliffs, N.J.: Prentice-Hall. Rose, Nikolas (1996) Inventing Our Selves: Psychology, Power, and Personhood. Cambridge: Cambridge University Press. Rose, Nikolas and Miller, Peter (1992) Political Power beyond the State: Problematics of Government. British Journal of Sociology 43 (1992), 172-205. Scharpf, Fritz W. (1999). Governing in Europe: effective and democratic? Oxford, Oxford University Press. Shils, Edward (1970) The Contemplation of Society in America. In: Morton White and Arthur Schlesinger, Jr.: Paths of American Thought. Boston: Houghton Mifflin. Strazicich, Mark C., Lee, Junsoo and Day, Edward (2004) Are Incomes Converging among OECD Countries? Time Series Evidence with two Structural Breaks. Journal of Macroeconomics, 26, 131-145. The OECD Review of Regulatory Reform in Finland – a New Consensus for Change. OECD Publications: Paris 2003. Tiihonen, Seppo (2004) Poliittisen hallitsemisen ja julkisen hallinnon kehitys 1980-2003 [The Development of Political Governance and public administration 1980-2003]. In: Helkama, K. et al.:Artikkelikokoelma tutkimushankkeesta sosiaaliset innovaatiot, yhteiskunnan uudistumiskyky ja taloudellinen menestys [Article collection on the

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