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Introduction: Switzerland‐ key institutions andbehavioural outcomesJan‐Erik Lane a

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Introduction:Switzerland - Key Institutions and

Behavioural Outcomes

JAN-ERIK LANE

Switzerland, a labyrinth of political institutions, is an interesting laboratoryfor institutional research. There are so many political institutions in usethat each one is enough for a book. Thus, the referendum, Swiss federalismand the grand coalition have been much discussed. Equally interesting areSwiss corporatism, the Central Bank and the Federal Supreme Court aswell as the electoral system, which has both proportional and majoritariantechniques.

'What does it all add up to?' we have to ask when interpreting Swisspolitics from a macro perspective. We are all familiar with the key conceptsthat scholars have suggested: 'plebiscitary democracy' (Hastad), 'amicableagreement' (Steiner), 'Konkordanz' (Lehmbruch), 'consociationalism' or'consensus democracy' (Lijphart), 'liberal corporatism' (Katzenstein).Today, these extremely general characterisations are less helpful whenapproaching Swiss politics in a process of transition from splendid isolationtowards a post-modern society. One leading Swiss political scientist,Hanspeter Kriesi, has even described the Swiss political system as an'anachronism'.

The time has come to analyse Swiss politics in terms of the newinstitutional paradigm in the social sciences. One should no longer treatSwitzerland as a peculiar country in Central Europe pursuing its ownmodel as if it were an ideal-type in itself. Instead, one must analyse itsinstitutions in terms of general social science models, assessing theoutcomes of the operation of these institutions. What is especiallyimportant in order to understand Switzerland is how its institutionsinteract, each conditioning the operation of the others - institutionalbending. Examining how Swiss institutions really operate with the help ofnew research over the last decade we can replace general and superficiallabels with an assessment of the pros and cons of these world-famousinstitutions. This opens the way to discuss the possibilities of institutional

Jan-Erik Lane, University of Geneva

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2 THE SWISS LABYRINTH

reform, as practice moves further away from the ideal-type than thatrecognised in comparative research.

In this volume we examine how the characteristic Swiss politicalinstitutions operated during the 1980s and 1990s. We examine institutionalchange as well as institutional outcomes. The key question in institutionalanalysis: 'Do Institutions Matter?' should be raised in relation to the countrywith the most special set of political institutions among Europeandemocracies. This will both improve new institutional theory and broadencomparative institutional enquiry from an empirical perspective. Analysingthe Swiss case in detail helps to improve our understanding of institutionalintegration and institutional contradictions, especially as one much-discussed theme in relation to the Swiss political institutions is thecompatibility of the various institutions that make up the political system.Probing more deeply into how Switzerland operates politically will allowentry into the difficult and often neglected question in institutional theory ofhow the operation of one institution conditions the operation of anotherinstitution.

THE SWISS INSTITUTIONS

Switzerland has long had a set of stable and special political institutions.There are at least six very important institutions when examining politicsduring the post-war period:

(1) decentralised real federalism;

(2) active referendum democracy at the federal and cantonal levels;

(3) a seven headed presidency (directorial system);

(4) laformule magique (permanent grand coalition);

(5) hidden corporatism (or quasi-corporatism);

(6) a highly independent central bank; as well as a seventh feature -

(7) neutrality in international politics.

Each one of these institutions would be worth an examination, but whatcreates the exceptionalism of Swiss politics is the combination of the sixinstitutions during the post-war period. This exceptional mix of politicalinstitutions has been claimed to contain the secret of the country's successin terms of economic prosperity and political stability despite its highdegree of social heterogeneity, ethnically and religiously speaking.

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INTRODUCTION 3

Thus, Switzerland is special because it is the most decentralised of allfederal systems, the country with the most use of referendum democracy,the country which mixes presidentialism and parliamentarism in its so-called directorate model of government, and the country that consistentlyemploys oversized coalitions. In addition, it practises a form of corporatismthat is more implicit but still strong. There is nothing mysterious at workhere. One can evaluate the impact of this institutional set-up and discussinstitutional redesign.

Actually, what is unique about Switzerland is not each one of theinstitutions listed above. They can be found in other countries too. Whatcreates Swiss exceptionalism is the constellation of all of them at the sametime. This no other country in the world displays. However, they must beanalysed by means of ordinary institutional research, targeting not only howone institution operates and what outcomes it promotes but also how a setof institutions functions.

The special set of Swiss political institutions is the outcome of thehistorical evolution of the country - path dependency no doubt. Itsdecentralised structures reflect the evolution from a loose confederation toa modern state. We may go as far back as feudal times, when variousprovinces were part of the Holy Roman-German Empire up until 1648. Yet,historical legacy explains only so much. It is the present constellation offorces that decide how institutions function. The operation of each one ofthese institutions depends upon how the others function. And the way theseoperate is in a process of change at the turn of the century, as Switzerlandcopes with the requirements of a post-modern society in the period ofglobalisation.

The purpose of this volume on Swiss politics today is twofold. First, wewish to present an analysis of institutional change and institutionaloutcomes employing the peculiar Swiss political institutions as ourreference point. Second, we wish to make available an up-to-date text forscholars and students in Switzerland as well as to an international readershipthat may not be informed about the country, but are interested in the presentprocess of institutional change. Thus, this account provides a newperspective on the most recent trends towards change in Switzerland, andcomplements single-authored books such as Schweizerische Demokratie,Institutional, Prozesse, Perspektiven, Wolf Linder (1999); Le SystemePolitique Suisse, Hanspeter Kriesi (1998), as well as the multi-authoredvolume Handbuch der Schweizer Politik, ed. Ulrich Kloti et al. (1999). Thisvolume presents a concise and up-to-date English presentation of Swisspolitics to an international audience by scholars researching in the area.

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4 THE SWISS LABYRINTH

When assessing institutional performance one may look at either how aninstitution affects another institution or how institutions conditionbehaviour. The analyses of the Swiss political institutions in this volumecontain both perspectives on institutional outcomes. Thus, there is muchdiscussion about the coherence of the six institutions in relation to eachother, but the outcome analysis also comprises the effects of theseinstitutions upon political behaviour such as participation, the party systemand public policy. One can identify systematically the four followingpossible relations between institutions when one is confronted by a set ofinstitutions comprising no fewer than six elements:

(1) consistency

(2) compatibility

(3) independence

(4) contradiction

This volume shows that all these relationships occur among the Swisspolitical institutions. It is not tenable to regard Swiss democracy as a closeapproximation to a logically consistent ideal-type called 'consociational' or'consensus democracy'. The situation is rather one of tension among theSwiss political institutions, and that becomes apparent when one examinesinstitutional contradictions and outcomes.

OUTCOMES

Switzerland is first and foremost recognised as the referendum democracypar preference. Most political scientists are well informed about thefrequent employment of the referendum on a national level, where therehave been some 250 such referenda since 1945. However, the frequent useof the referendum in politics at the cantonal level is far less well known. AsPapadopoulos emphasises, the Swiss referendum includes two elements,one 'von oben' and one 'von unteri". Obligatory referenda on constitutionalmatters belong to the former category, whereas the latter refers to the abilityof citizen groups to demand a referendum on any issue - the optionalreferendum.

Mandatory referenda have occurred often because the expansion of thefederal government tasks in relation to the welfare state, for instance, hasoften necessitated a minor constitutional revision. One would be inclinedto conclude that frequent mandatory referenda increase democratic controlover policy-making. But one must remember that the level of participation

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INTRODUCTION

TABLE 1

PARTICIPATION IN ELECTIONS AND REFERENDA 1919-99 i

Year

1919192219251928193119351939194319471951195519591963196719711975197919831987199119951999

Elections

80.476.476.878.878.878.374.370.072.471.270.168.566.165.756.952.448.048.946.546.042.243.5

Referenda

56.666.165.761.963.573.558.754.358.852.250.450.244.138.642.941.641.637.742.147.540.541.8

Note: This is an average for the referenda and elections that took place 1.5 years before or afterthe time point.

Source: Statistisches Jahrbuch der Schweiz, 2000, p.446.

in referenda has been low, often below 50 per cent of those eligible to vote.The figures presented in Table 1 should be enough to shatter any naiveview of Swiss politics as a populist democracy according to Rousseau'sideas.

Looking at the secular trend in Figure 1 concerning participation inreferenda, one observes that less than half of those eligible now participate.Perhaps one would dare to suggest a drastic institutional outcomehypothesis: namely that too many referenda kill democracy. In any case,Switzerland is far from a populist democracy because of the heavyinstitutionalisation of its politics.

Another much-discussed institutional outcome of the Swiss referendumdemocracy is the hypothesis of a fundamental impact of the referendumupon the other institutions, especially the grand coalition. The threat ofpopular action by means of the referendum institutions has led to a strong

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6 THE SWISS LABYRINTH

reinforcement of consensus-making by the political elite in the country, asargued Leonhard Neidhart in Plebiszitdt und pluralitare Demokratie,published in 1970. This is a most interesting institutional-outcomeinterpretation of Swiss politics that recurs in several of the contributionshere.

The Neidhart argument focuses upon a contradiction between thereferendum being a majoritarian mechanism and the grand coalition, whichis a unanimity mechanism. It goes against any image of Switzerland ashaving reached full institutional integration, meaning that all the sixinstitutions pull in the same direction. This would make the country comeclose to an ideal-type of consociational democracy with harmony betweenthe various institutional parts. Yet the Neidhart argument points in thedirection of institutional contradiction.

This conclusion takes us to another interpretation of the Swissreferendum, which states that the general spirit of the Swiss politicalinstitutions - the emphasis upon the capacity to veto decisions - bends thereferendum to serve exactly this function. Thus, the Swiss referendum isless a set of rules for majorities to get things done but rather a blockingmechanism for minorities to undo decisions by majorities. This is theinstitutional hypothesis suggested by Heidrun Abromeit inInteressenvermittlung zwischen Konkurrenz und Konkordanz (1993). Itemphasises less institutional contradiction, but more how one institution ismade to operate in accordance with the other institutions - institutionalbending.

Papadopoulos himself offers yet another hypothesis, namely that theway the referendum is employed today is conducive to a legitimationcrisis in Swiss politics. Although he underlines the inefficiencies thatthe frequent employment of the referendum results in, one could alsolink the legitimation crisis argument with the two other hypotheses. Toomuch blocking incapacitates democracy, which is true of manycontradictions.

What could limit the disruptive consequences of the referenduminstitution? One possibility is that judicial review expands in Switzerland,which entails that judges take over some of the powers of the people todecide in politics. The institutions for a future judicialisation of Swisspolitics can easily be created, as the Federal Supreme Court in Lausannehas long experience with handling constitutional disputes between thefederal government and the cantons. But what is missing is the permissionfor the court to test generally the constitutionality of referendumdecisions.

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INTRODUCTION 7

Here we have a most interesting case of institutional compatibility, oftennot recognised in the comparative literature. The lack of strong judicialreview in Switzerland is clearly compatible with the nature of itsreferendum institutions, as judges could not be allowed to test thecorrectness of the will of the people - at least not comprehensively. Theabsence of legal review in Switzerland has not been fully taken into accountin general models of political institutions and decision-making.

Yet, as Rothmayr shows, the process of institutional change inSwitzerland is in accordance with world trends, meaning increasedjudicialisation of politics. However, she also maintains that Switzerland isin no way prepared to move to a full acceptance of judicial review. TheFederal Supreme Court has moved to emphasise more and more theprotection of individual liberties, linking up with general developments inEurope in relation to the Council of Europe of which Switzerland is amember. Its European Convention of Human Rights of 1950 as well as itsapplication in numerous cases at the European Court on Human Rights hasserved as somewhat of a model for the Lausanne court. When the newconstitution came into force in April 1999, then this up-dating of the 1874constitution did not involve any change of the restriction upon using judicialreview as a political instrument. At the same time, the new constitutionreinforces individual rights by making the list of basic rights more compactthan earlier. It includes both negative and positive rights in the language ofjurisprudence.

Here one may argue that we have a case of institutional consistency, thatis, the strong referendum negates the full utilisation of judicial review. Itseems much more difficult to argue that the referendum, logically speaking,requires federalism. But federalism is, of course, compatible with thereferendum, especially as the latter is based upon both federal and cantonalreferenda.

Linder and Vatter extensively cover the recent changes in Swissfederalism in their contribution. If direct democracy is the primary politicalinstitution in Switzerland, then surely federalism is the second majorinstitution in the country. One can have direct democracy and unitarism aswell as federalism and only representative democracy. Thus, these twoinstitutions are in principle independent of each other, but how do theyinteract in the Swiss case? Swiss federalism is one of the few examples ofreal federalism in the world, as many countries operate federalism merelyon paper.

The federal government in Bern has increased considerably in powerand resources over the years. Thus, it operates a number of policies in

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8 THE SWISS LABYRINTH

relation to both service provision and social security. However, the slowprocess of centralisation has not been a continuous movement, as thecantons have formidable blocking powers. Swiss centralisation requiresconstitutional changes, which in turn must be backed by both Chambersof Parliament and a majority of the population as well as of the cantons.It is the Swiss federal dualism which creates this inertia. The basicallydualistic nature of Swiss federalism dates back to the establishment of thefederation in 1848 when a very limited list of competences were providedto central government by the provinces. As more competences have beengiven to the federal government over time, Swiss federalism hasdeveloped more towards German federalism, that is, co-operativefederalism. Given the size of the Swiss public sector, it is not surprisingthat all three players - the federal government, the cantons and thecommunes - are involved and interlocked in policy-making and policyimplementation. In terms of resources allocated these three players are ofabout equal size.

Yet Swiss federalism does not breathe smoothly. The fundamentalproblem is the population imbalance between the cantons, which are of verydifferent sizes (see Table 2). Although there is a complex policy of fiscalfederalism in Switzerland involving transfers of money from the federalgovernment to the cantons as well as from one canton to another, theseimbalances have become such a burden for the system that Under andVatter call for a major revision of the cantonal division. What is taking placein Switzerland is not that the very large cantons dominate the small ones,but rather the opposite problem, namely free-riding by the small ones on thelarge ones. The small rural cantons are overrepresented in the Senatewhereas the large urban cantons carry the major burden of the Swiss welfarestate, especially in relation to higher education and advanced health care.However, the small cantons are sometimes too small to be able take on tasksthat the bigger cantons can handle. This is the paradoxical situation today,as the small cantons guard their power but fail sometimes to deliver on theirobligations.

It is true that Swiss federalism has experienced changes that move it awayfrom strict dualism between the centre and the provinces. Several programmesare jointly financed or executed. The cantons have put up a variety ofintercantonal collaboration mechanisms, seeking even to influence the EUdirectly and not via Bern. Yet Swiss federalism, however unbalanced it maybe today, still involves a strong dose of decentralisation typical of classicaldualist federalism. The various cantons display numerous differences in publiclaw, including education, health care and income maintenance.

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TABLE 2

POPULATION IN THE CANTONS, 1998

KantonCanton

Zurich ZHBern BELuzern LUUriURSchwyz SZObwaldenNidwalden, NWGlarus GLZug, ZGFribourg FRSolothurn SOBasel-Stadt BSBasel-LandschafT BLSchaffhausen SHAppenzell A.Rh. ARAppenzell I.Rh. AISt. Gallen SGGraubunden GRAargau AGThurgau TGTicino TIVaud VDValais VSNeuchatel NEGeneve GEJura JUSwitzerland

Total

1,187,609941,144343,254

35,612126,47931,98937,32038,69896,517

232,086243,450190,505256,76173,72553,81614,873

444,891186,118536,462226,479306,179611,613274,458165,594398,910

68,9957,123,537

Men

578,481457,061169,10917,81863,56115,98418,84719,09148,028

115,516119,81389,714

125,90235,65726,661

7,570219,40591,879

266,272112,346146,298294,909134,89479,933

189,99233,948

3,478,689

Women

609,128484,083174,145

17,79462,91816,00518,47319,60748,489

116,570123,637100,791130,85938,06827,155

7,303225,48694,239

270,190114,133159,881316,704139,56485,661

208,91835,047

3,644,848

SWISSTotal

936,093832,936292,925

32,609107,23928,60833,86231,02978,442

199,953204,461140,242214,97259,42446,24013,350

359,936161,142437,705183,484225,780452,159228,847128,753248,98760,714

5,739,892

Men

442,231398,578142,074

16,23653,36714,20116,98014,96438,35398,24098,95162,844

103,42028,02122,6636,794

173,88278,065

213,28589,192

103,479210,457110,89559,906

112,62929,390

2,739,097

Women

493,862434,358150,85116,37353,87214,40716,88216,06540,089

101,713105,51077,398

111,55231,40323,577

6,556186,05483,077

224,42094,292

122,301241,702117,95268,847

136,35831,324

3,000,795

FOREIGNERSTotal

251,516108,20850,329

3,00319,2403,3813,4587,669

18,07532,13338,98950,26341,78914,3017,5761,523

84,95524,97698,75742,99580,399

159,45445,61136,841

149,9238,281

1,383,645

Men

136,25058,48327,035

1,58210,1941,7831,8674,1279,675

17,27620,86226,87022,4827,6363,998

77645,52313,81452,98723,15442,81984,45223,99920,02777,3634,558

739,592

Women

115,26649,72523,294

1,4219,0461,5981,5913,5428,400

14,85718,12723,39319,3076,6653,578

74739,43211,16245,77019,84137,58075,00221,61216,81472,5603,723

644,053

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10 THE SWISS LABYRINTH

The three players in Swiss federalism - the federal government, thecantons and the communes - are interwoven in the full line supply of awelfare state. Armingeon analyses how the Swiss welfare state has step-by-step become increasingly comprehensive, but also more costly. Itcould be argued that the Swiss welfare state is the most interesting onein the whole OECD world today. It is large, as in Scandinavia, but it alsocontains clear status distinctions, as in the German model. When -itcomes to measuring the size of the welfare state and the public sector ingeneral, then it is vital to employ Swiss data, taken from the data basesthat are employed for the excellent and well-informed statisticalyearbook of the country. This is also the information that is transmittedto, for instance, the OECD statistics, but there have been problems ofcomparability between these data and those of other countries at theOECD level.

Today Switzerland has a mixed economy where the Tax State takes halfthe GDP in the form of taxes and social security charges, not counting theuser fees for the many public enterprises. This places Switzerland, asArmingeon underlines, well within the continental European welfare-stateapproach, which is far higher than the so-called liberal welfare regimes inthe US, Japan and Australia. More research is needed in order to understandfully the mechanisms that have pushed up public expenditures inSwitzerland in the post-war period.

Now, one could be tempted to play the corporatist card whenaccounting for the growth of government. Somewhat surprisingly, muchresearch has been undertaken on organised interests in Switzerlandwithout arriving at a definitive conclusion whether the country iscorporatist or not, or more precisely to measure exactly how muchcorporatism there actually is. There is a full carpet of economicorganisations dating back to the beginning of the century and they receivemoderate support from members, but do they really engage in corporatistpractices? Trade union density is not as high in Switzerland as in trulycorporatist countries such as Scandinavia and Austria. And socialpartnership interaction is much less frequent. Wages tend increasingly tobe set in decentralised forms at the enterprise level. But organisedinterests within agriculture have been influential in obtaining considerablebenefits in the form of public policies of various kinds. When examiningthe Swiss political economy it is not a Keynsian regime, typical ofcorporatism, one should look for.

The key player has been the Swiss National Bank, conductingmonetarist policies and underlining price stability ahead of full

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INTRODUCTION 11

employment. It employs its independence from the federal government toattempt a rule-based monetary policy that is displayed and made crediblethrough consistent actions over time. There is a very close connection in theSwiss data between the expansion of Ml and the growth in total output.Switzerland may have had a low rate of economic growth since the oilcrises, but the country has not experienced stagflation or high inflation.Perhaps the Swiss political economy is an example of successfulmonetarism.

According to the 1999 constitution, the federal government rules thecountry. This is no normal government, as it rests upon an institutiontransplanted into Switzerland by no less than Napoleon, when he took thecountry and created 'La Republique Helvetique' in 1798. Kloti examinesthe meaning of directorate government in Switzerland today, the modelinstitution itself dating back to Le Directoire between 1794 and 1799 inFrance. The Swiss federal government is an example of successfulcollegiado, or executive government. This seven-headed presidency shouldin theory concentrate upon administration, effectuating the decisions ofParliament and the people. In reality, we have institutional bending as thethreat of the optional referendum forces the government to engage in verylengthy procedures for arriving at a unanimous decision that groups cannotthen veto or change in a referendum.

However, what has made the directorate model of an executive serve thegeneral Swiss spirit of amicable agreement is one special institution thatvery much guides the federal government, namely laformule magique. Thisis an implicit institution and not a constitutional one. It operates as followstoday: two seats for the Radicals, Christian Democrats and SocialDemocrats each and one seat for the Swiss People's Party. The Swiss grandcoalition has been considered the most typical expression of the system'sorientation towards Konkordanz and not competition. Why has thispermanent grand coalition made Switzerland the country with the moststable government in the world?

Two interpretations come to one mind. Either one points at the socialfragmentation of the country in the form of ethnic and religious cleavages asin traditional consociational theory. But are they really manifest today as theywere in the past? Or one resorts to the Neidhart argument again. In the formerapproach the grand coalition is an institutional response to the structure ofsociety. From the latter perspective it is an offsetting institution against thereferendum, especially the optional part and the peoples' initiative.

It should be pointed that the legitimacy of the grand coalition should notbe taken for granted. It is far from considered a sacred institution. The rising

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power of Blocher's Swiss Populist Party, SVP, may result in the terminationof the grand coalition, as the other parties may not wish to render the SVPtwo government seats. What maintains the grand coalition is more the weakparty system, where no clear government alternatives can been seen in theform of natural coalition partners.

In Swiss public debate a third explanation has frequently occurred,namely that the grand coalitions prevent minorities from engaging in so-called rent-seeking against the public purse. Thus, bringing almost all onboard makes it impossible for minorities to form temporary coalitions inorder to benefit themselves and their electorates. Unanimity promotesefficiency, economists state. However, Kloti emphasises that the federalgovernment is 'big government', spending 50 billion CHF on its 30,000employees, not including social security. This is about 13 per cent ofGDP. The Swiss political institutions may promote concord, if notoverthrown by the referendum, but they have not contained the strongforces of modernity and post-modernity that result in the growth ofgovernment.

Much effort has been devoted to making the central government operatemore efficiently and transparently. Thus, the structure of the federalbureaucracy has been changed and a number of public enterprises have beenpartially privatised or incorporated. The ambition to arrive at agreementbordering on unanimity still hampers the federal government, as it calls forextremely long processes of decision-making where all players are involvedsomehow. Perhaps the time is right for Switzerland to sample competitivedemocracy, for instance by abandoning the magic formula which enchantsfewer and fewer.

Kriesi draws the full implications of the main Swiss institutions for theparliament in Bern. Here we have an example of institutional deficit, as theSwiss Parliament is seriously weakened especially by the referendum butalso by the grand coalition. The parliament in Bern is made up of semi-professional politicians without access to the resources that would makethem comparable to the federal government and its bureaucracy.Organisations may be the outcome of their rule. They would then constitutean institutional reflex of their rules. The Swiss Parliament operates in a waythat is 50 per cent decided by its rules. Thus, its federal chamber has acentre-to-right majority because of the majoritarian elections to the Senate.It gets its work done through a system of some 230 committees in bothchambers. When the two chambers deliver different opinions, then anarbitration committee including the relevant chamber committees is set up.This method of negotiation in successive rounds works well, as a common

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standpoint is often arrived at. The Swiss parliament creates laws when it isinstructed to do so, but it is the federal government that runs the show,although not quite completely.

Organisations may behave in such a way that they avoid their rules.They would then establish an institutional lacuna. The Swiss Parliamentelects the seven-headed Swiss president, and it cannot fire this hydraduring the normal four-year term in office. But it does not have to supportall the proposals of the federal government, even when they come from aParteigenosse. When there is little scope for manoeuvre for anorganisation according to its formal institution, then it may decide tocreate space by its own fiat. Politics is not only institutions but also thewill to hold power.

Furthermore, the centre players in Swiss politics, the Radicals (or FreeDemocrats) and the Christian Democrats, seek to control parliament. Andthey certainly succeed most of the time, because the left flank of the SocialDemocrats and the right wing of the Swiss People's Party have nothing incommon except being Swiss. Thus, they cannot combine to challenge thecentre parties. In addition, the small remaining parties do not succeed inbecoming pivot parties. The median player in both chambers is locatedsomewhere among the Radicals and the Christian Democrats - the oldestablished parties of Switzerland with which one may now also count theSocial Democrats. Despite its low degree of professionalisation, the SwissParliament has asserted its independence vis-a-vis the government in recentyears, perhaps because of the strong links between parliamentarians andorganised interests in Switzerland. It could do even better if its resourceswere reinforced or should a parliamentary regime be introduced at the sametime as the magic formula is given up.

We need to say something about the players in the Swiss game, and notsimply examine rules and their consequences. The political parties handlemuch of Swiss politics despite the optional referendum, although they arenot as strong as parties in other West European democracies. Ladner herepresents an insightful analysis of the Swiss party system with its peculiarbifurcation between the national and the provincial levels. One would beinclined to believe that Swiss political institutions shape the party systemcompletely. They do exert influence, but there is more happening, changingthe party system.

The federalist system, the referendum and the grand coalition are allinstitutions that weaken the party system. The magic formula concentratesnational political power in the four parties, which receive about 80 per centof the votes. The remaining parties are hardly players at the national level

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to be taken into account from one election to another, with the possibleexception of the Green Party. However, the four parties in the grandcoalition do not rule the country, because national politics is one thing andcantonal politics another. There are many more parties active on thecantonal scene, and the four parties have different election results in thevarious cantons. In addition, the referendum on the national and thecantonal scenes puts real brakes upon any ambition to create partygovernment.

Swiss political parties have been looked upon as belonging to a typecalled 'milizsystem', meaning that politicians tend to be non-professionalpoliticians. Evidently, Swiss politicians are not American entrepreneurpoliticians, and Swiss political parties are not European down-to-earthdisciplined parties. Yet they are not merely amateurs. The expansion of thepublic sector has one outcome that benefits the parties, namely anabundance of positions in committees and on boards. The parties manage topay for their activities without any substantial state allocation - no meanachievement.

Much of what affects the Swiss political parties apparently derives fromchanges in their relationships with the electorate - changes which areoccurring in any post-modern advanced society. Thus, the link betweenparty and social group is slowly but surely weakening. Social heterogeneityis no longer the only or main reason for party choice. Thus, volatility isincreasing and the populist SVP can achieve gains among both the right andleft wings of the electorate. Vatter shows that despite all variation betweenthe cantons themselves as well as between the cantons and the national partysystem convergence is taking place. Thus, the politics of the regional andthe national levels are becoming similar.

FROM DECENTRALISATION, DIRECT DEMOCRACY AND GRANDCOALITION TO WHAT?

It is obvious that Switzerland today is very much reflecting upon itsspecial institutions in order to make institutional changes in the future.The analysis of the Swiss institutions and their consequences is interestingnot only for those who have a special liking for this small buteconomically very important country in the centre of Europe. But anunderstanding of Swiss politics and its strong institutional structures isalso vital for comparative institutional analysis in political science. Thepolitical institutions of Switzerland constitute a mix seen nowhere else.What is unique about them is not each and every element, because those

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INTRODUCTION 15

can be found elsewhere. It is the institutional constellation that matters.And the key problem is interpreting which institutions prevail and, so tospeak, 'bend' the others. It seems, in fact, to be the direct referendum andits many facets that has the upper hand, and, at least in principle, it is nota consensus institution.

Some regard Swiss political institutions as a peculiar atavism mirroringthe splendid isolation of the country, being neither a member of the UN northe EU. Others have attempted to distil just one and only one institutionallogic out of them. Thus, the consociational scholars have regardedSwitzerland as the most consensual of all the democracies despite the factthat its most characteristic institution is the referendum - a majoritarianmechanism of decision-making - and despite the fact it lacks strong judicialreview - the Lijphart position. Another very influential interpretation statesthat the referendum in reality has the effect of reinforcing bargaining andcompromise among the elites to avoid an optional referendum - theNeidhart position. Finally, the referendum is only one additional vetomechanism in a system of decision-making that is heavily orientatedtowards unanimity - the Abromeit position.

Perhaps a more promising theory of Swiss politics is that we should giveup the idea of one uniformity or of a common core among the institutions.There is more in the nature of contradictions in the way these institutionsinteract and work themselves out in practice. They do not constitute acoherent ideal-type. Thus, institutional reform is possible.

Swiss political institutions have at least three basic features in dealingwith the basic forces: (1) strong political decentralisation as an historicallegacy; (2) the most vital direct democracy in the world; (3) grand coalitiongovernments at both the federal and cantonal levels. How these forces -decentralisation, direct democracy and Konkordanz - function in practicedepends upon how Swiss institutions interact: by mutual reinforcement,contradictions or independence:

The originality of Swiss political institutions reflects, on the one hand,their origins. There is strong institutional path-dependency in Swisspolitics. The extreme petrification of power is mainly a feudal legacy. Herewe have a classical example of the theory of Max Weber that one tends toforget about, namely the constitutional implications of West Europeanfeudalism. The constitutional state is historically linked with the distributionof power in the feudal system. Switzerland was merely a set of feudalitiesin the Holy Roman-German Empire, but these fiefs protected their feudalrights with such success that they made themselves independent 1648. Thedevice used was the interfeudal federation. However, the originality of the

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political institutions is not just strong historical legacy. The referendummechanism derives its power from the extremely consequential manner inwhich it is applied. Not only does it span all the possible variations of areferendum, but it is also applied consistently at both the federal andcantonal level in a driven, if not to say in an absurd manner. The rules thatwere devised to offer a check upon politics have fallen prey to the use ofopportunism, hoping that a low turnout will make it possible for a minorityto defeat any majority.

Thus, Switzerland combines real decentralisation (RD) - its feudallegacy - and direct democracy (DD) - its modern feature, as well asKonkordanz or the grand coalition (K). The combination of these - RD,DD and K - goes a long way to explain the logic of the institutions. Onemay wish to draw also upon a political culture of amicable agreements.The mix - RD, DD and K - is highly appropriate in recognising thedifferences among the cantons - the old fiefs. Remember that referendumdemocracy is most frequently used at the cantonal level. The culture ofmutual understanding and ambition towards unanimity could beinterpreted as the cement of society, which holds all the parts together,despite the social heterogeneity of society. When social cleavages losemuch of their relevance, then has perhaps Konkordanz played out itsunifying function?

Analysing how these institutions operate in the 1990s, this volumefocuses on the political and social outcomes as well as discussing thepossibility of institutional reform. This is the common element, but eachauthor tackles these questions about institutional performance in the mannerto which his or her own research has led. The key questions include: Whathave been the results of these institutions? Is political behaviour of elitesand ordinary citizens - at the federal, cantonal and communal levels - anoutcome of these institutions? Is the operation of these six institutions in theprocess of undergoing major change?

The institutional outcomes include a mixture of both blessings anddrawbacks. Thus, we have the fragmented party system as well as the lowparticipation in elections and referenda. Moreover, there are too many vetoplayers, but still a rather low level of judicialisation of politics. The federalgovernment is still more like an autonomous executive committee, seekingto achieve unanimity, rather than a cabinet of political parties responding tothe competitive logic of representative democracy.

Discussing the possibility of institutional reform, one wonders whetherthese political institutions work well today. Do the institutions need to bechanged: institutional sclerosis versus institutional adaptation! Which

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INTRODUCTION 17

institutional reforms would be the most urgent? Less direct democracy andmore judicial intervention or legal review - such as an Ombudsman? Arethe cantons optimal units for service provision or do cantons have to bemerged? Should there be a stronger and more political role for the federalgovernment in Bern? A parliamentary system of government instead of thespecial form of Swiss presidentialism? No more grand coalitions, butinstead more competitive democracy?

All the contributions in this volume focus upon how these politicalinstitutions have worked and how the impact they have had upon thepolitical system and society. And each assesses the present trends towardschange. Thus, the centrality of the referendum could wane in the future asjudicial review increases and as Switzerland accepts more EU regulations.Federalism has already been caught in a process of centralisation, which islikely to continue. The federal government looks more like a cabinet than atrust, and the corporatist framework faces difficulties when Switzerland iscoping more actively with globalisation, which entails a reconsideration ofits 'splendid isolation' policy. The formule magique appears to be in needof change because of its negative consequences upon the level of politicalcontestation and competition in the country.

Yet Switzerland remains essentially a real decentralised federation, afeature which the independent Central Bank reinforces with its successfulmonetarist policy. The frequent use of referenda is the second characteristicof the political system, which bends the operation of the other institutions.And it counterbalances the institutions like the grand coalition and quasi-corporatism, which are conducive to Konkordanz. A referendum is basicallynot a consensual mechanism, because it introduces democratic struggle intothe amicable agreement: The referendum implies contestation, transparencyand simple majority outcomes. However, it may be transformed into yetanother veto mechanism by the institutional logic of the entire set-up ofinstitutions. It cannot be emphasised enough that Swiss politics lacks onepowerful veto player in democratic politics today, namely judges orpowerful ombudsmen.

Together with direct democracy and federalism, the rule of neutralitybelongs to the core of the institutional design. While only a traditionalmeans of Swiss foreign policy, the neutrality rule has strongly contributedto the 'uniqueness' of the political system. It has no doubt been strictlyimplemented, as Switzerland remains outside not only Nato but also theUnited Nations. But this institution has not helped the country position itselfin relation to West European integration. It remains here only to refer to theelegant analysis by Dupont and Sciarini which, using a rational choice

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framework, draws the implications of domestic politics for foreign policy-making. They analyse the entire process of interaction between the federalgovernment and the EEC, EFTA and the EU, focusing on the preferences ofthe government as constrained by the domestic institutions. And theyventure to suggest that any full-scale integration - economically andpolitically - of Switzerland into Western Europe may first have to awaitinstitutional change within the country.

Switzerland remains puzzling with respect to neo-corporatism. Thus,one may focus on the organisation (structure) of labour rather than business,or one may deal with the type of institutional arrangements between thestate, the unions and business. This makes for a balanced view ofcorporatism in Switzerland, as business is strongly structured andcentralised, whereas the union structure is fragmented. Corporatist interestorganisation seems strongest in agriculture. The major organisation is stillthe Union suisse des paysans (USP, Schweizerischer Bauernverband). Itwas stronger up to the late 1980s, but there are now two dissidentorganisations: the VKMB (in the German-speaking cantons) and the Uniondes producteurs suisses (UPS, mostly in the French-speaking regions). Bothdefend small and medium-sized farms, including organic production, andboth are still much weaker than the main organisation. At the end of the1980s, Swiss agricultural policy was still much influenced by theexperience of the Second World War, but the situation has changeddramatically since then. Under internal pressure (popular initiatives) and -especially - external pressure (Uruguay-Round, European integration) areform was launched, which is still ongoing, mixing ecology and market.

The political economy of the Swiss National Bank is successfulmonetarism. Yet economists have argued that the tight monetary policyconducted by the Swiss National Bank has had negative side-effects. Thus,the priority granted to price stability is often said to be the cause of the loweconomic growth rate since the 1970s. The main reason why unemploymentdid not increase in the late 1970s and 1980s was that Swiss firms sentthousands of foreign workers home. Had Switzerland not had the option to'export' unemployment, the negative consequences of tight monetary policywould have been much greater. In the early 1990s, the Swiss National Bankagain acted myopically, this argument continues, focusing too strongly onprice stability - but this time it was no longer possible to send foreign workershome. Hence the sharp increase in unemployment. However, the existence ofa generous system of unemployment benefits also played a role in the increasein unemployment. Monetarist policy is only credible when it is adheredto strictly.

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