- Because it places such a heavy stress on consultation, negotiation and consensus, it tends to encourage inflexibility and make it difficult for businesses to adapt to changing market conditions. - High levels of social expenditure required to maintain a high-quality welfare provision. --> pushes up taxes. - Critics say its nothing more than a contradiction in terms. The price of financing ever-expanding social programmes is a decline in international competitiveness and a weakening of the wealth-creating bases of the economy.