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The relevance of socioeconomic class and of class-related parties for policymaking is a recurring issue in the social sciences. The “new politics” perspective holds that in the present era of austerity, class-based parties once driving welfare state expansion have been superseded by powerful new interest groups of welfare-state clients capable of largely resisting retrenchment pressures emanating from postindustrial forces. We argue that retrenchment can fruitfully be analyzed as distributive conflict involving a remaking of the early postwar social contract based on the full employment welfare state, a conflict in which partisan politics and welfare-state institutions are likely to matter. Pointing to problems of conceptualization and measurement of the dependent variable in previous research, we bring in new data on the extent of retrenchment in social citizenship rights and show that the long increase in social rights has been turned into a decline and that significant retrenchment has taken place in several countries. Our analyses demonstrate that partisan politics remains significant for retrenchment also when we take account of contextual indictors, such as constitutional veto points, economic factors, and globalization.Author names are in alphabetical order and they share equal responsibility for the manuscript. Early versions of this paper were presented at annual meetings of the Nordic Political Science Association in Aalborg, 2002, and the American Political Science Association in San Francisco, 2001, the International Sociological Association RC 28 meeting in Mannheim, 2001, the International Sociological Association RC 19 meeting in Tilburg 2000, and the American Sociological Association in Washington, DC, 2000, as well as at various seminars. For constructive comments on different versions of the manuscript we thank Rainer Lepsius, Anders Lindbom, Ingalill Montanari, John Myles, Michael Shalev, Sheila Shaver, and Robin Stryker, as well as other participants in these meetings. We want to thank Olof Bäckman, Stefan Englund, Ingrid Esser, Helena Höög, and Annita Näsström for very valuable help and Dennis Quinn for providing us his data on international financial deregulation. Our thanks are also due to three anonymous referees for careful reading. This research has been supported by grants from the Bank of Sweden Tercentennial Foundation and the Swedish Council for Social Research.