From comparing capitalisms to the politics of institutional change

ABSTRACT

The notion of distinct national varieties or systems of capitalism gained considerable currency in the last two decades. This review essay highlights three theoretical premises which define what we call the comparative capitalisms (CC) approach to political economy: First, national economies are characterized by distinct institutional configurations; second, these configurations are a source of comparative institutional advantage; and third, the configurations are stabilized by institutional path dependence. Within these common premises, the CC literature contains a number of competing theories and we highlight the fundamental distinctions among them and draw out their respective limitations. We specifically examine the role of politics within the CC literature and how emerging conceptions of politics may contribute to understanding institutional change in capitalist systems.

KEYWORDS:

• Comparative capitalism
• business and society
• institutional change
• path dependence
• comparative advantage
• policy coalitions

6. ACKNOWLEDGEMENTS

The authors would like to thank Mark Blyth, Sarah O'Byrne, Leonard Seabrooke, and three anonymous reviewers for their helpful comments and suggestions. All errors remain our own.

Notes

1. ‘Logic’ means the typical strategies, routine approaches to problems and shared decision rules that produce predictable patterns of behavior by actors within the system.

2. The wage–labor nexus encompasses the organization of work, stratification of skills, mobility of workers within and between firms, principles of wage formation and disposal of wage income.

3. Complementarity may be defined as situations where the difference in utility between two alternative institutions U(x′)-U(x”) increases for all actors in the domain X, when z′ rather than z” prevails in domain Z, and vice versa. If conditions known as ‘super-modularity’ exist, then x′ and z′ (as well as x” and z”) complement each other and constitute alternative equilibrium combinations (Aoki, 2001).

4. The authors only briefly further differentiate between two sub-types of CMEs: in industry-coordinated economies, such as Germany, coordination takes place within the industrial sector or branch, whereas in group-coordinated economies, such as Japan or South Korea, coordination takes place across groups of companies.

5. Alliance capitalism, such as in Germany and Japan, involves elaborate horizontal linkages between institutional domains, and cooperation across the boundaries of firms. Dirigiste capitalism, as in France and South Korea, has institutional domains connected by the subordination of the private economy to centralized political influence. Finally, family capitalism such as in Italy or Taiwan is typified by smaller firms that are strongly segmented across the lines of personalistic family networks.

6. Each of his domain typologies is fairly complicated, producing four to six types or clusters of countries within each domain; this produces a relatively large and complex matrix of theoretically possible combinations of institutions.

7. This categorization nonetheless overlooks important differences between Britain and the US, such differences in the relative importance of codes vs. law in market regulation or even substantively different policies such as in the area of takeover markets or welfare states. Moreover, the term ‘market-based’ fails to describe important elements of the US economy, such as the important legacies of state and military intervention for the development of its innovation system.

8. Relatively little attention is paid to econometric comparison of company performance using accounting data.

9. Or as Peter Hall (1989: 383–4) describes, policy discourse and related political coalitions are ‘based on the networks of associations that relate common political ideas, familiar concepts, key issues, and collective historical experiences’.