Varieties of Capitalism

Capitalism is a profit-oriented, market-mediated system of economic organization that has developed at different times and places. Moreover, although increasingly organized on a global scale, it remains quite variegated in form, dynamics, and overall performance. There is no single best way to organize and govern capitalism, and, notwithstanding claims about long-term convergence, several varieties of capitalism persist due to the heterogeneity of the commodities produced for sale and the inevitable embedding of capitalist production and markets in broader sets of social relations. Such variation is evident in the wide range of capitalist firms, industries and sectors, complexes and clusters, localities, regions, national economies, plurinational systems, transnational networks, and trading blocs. Unsurprisingly, then, prompted by interest in competitiveness, best practice, and the social costs of capitalism, the rich variety of capitalism has long fascinated capitalists, workers, social movements, policymakers, social critics, and social scientists. In the social sciences, interest in varieties of capitalism has been strongest in institutional and evolutionary economics, comparative political economy, and economic sociology. It is weakest in orthodox economics, with its penchant for abstract modeling and its expectations that market forces should eventually lead to a single, maximally efficient model of economic organization.

Thus, observers have distinguished national paths to capitalist development (e.g., Dutch, English, French, Prussian, American, Japanese, East Asian), typical stages in capitalist development (e.g., mercantilism, liberalism, imperialism, state monopoly capitalism, transnational networked capitalism), varieties of consolidated capitalism (e.g., liberal market economies, bank-coordinated economies, state-guided market economies), regional patterns (e.g., Rhenish, Scandinavian, Mediterranean, East Asian), and forms of transnational economic domination (e.g., military conquest, free trade, integrated economic blocs). Most of the literature on varieties of capitalism focuses on national systems or “families” of capitalism differentiated in terms of technological, organizational, institutional, or sociocultural factors. Thus, we find typologies based on criteria such as social innovation systems, relations between industry and finance, industrial relations, education and training, the nature and role of the state, modes of growth, modes of competition, modes of governance, high or low trust, and alternative “spirits of capitalism.”

The centuries-old interest in varieties of capitalism is linked to questions of economic development, defense of national economic and political interests, social welfare, and global competitiveness. The key role of national states in facilitating or hindering capitalist development has biased work on varieties of capitalism, which are usually identified with different national capitalisms, as if these were not just analytically distinct but also really operated in isolation from [Page 1010]each other, rather than in complex cross-border, plurinational, or global systems. The Cold War prompted interest, often heavily ideological, in communism and capitalism as competing systems, rather than in their specific varieties. The collapse of the Soviet Bloc, the rise of Japan and other East Asian economies as serious competitors to Western economies, and, most recently, intensified globalization have all renewed interest in varieties of capitalism, their persistence, and the scope for their eventual convergence, whether through market competition or explicit global policy initiatives.

Many of the typologies capitalism developed during the postwar boom in North America and Western Europe and its subsequent crisis in the 1980s and 1990s have focused on four key variables: the dominant forms of production, forms of economic specialization, and forms of labor process; the relative primacy of industry, banks, and the state in allocating capital to different uses and in governing the economy; industrial relations patterns; and forms of education, vocational training, and security of employment. Almost all typologies identify a distinctive liberal market (or Anglo-Saxon) model, with a strong market-friendly complementarity among its different components, and a model based on a key coordinating role for the state in promoting a coherent, modernized core in its national economy as a basis for economic development. This variety often includes one or more East Asian models, characterized by a strong developmental state oriented to catch up with the advanced capitalist economies. Disagreement emerges beyond this all-too-predictable market versus state dichotomy. Two varieties often mentioned are: first, a distinctive social democratic or Scandinavian model, with strong roles for highly organized labor and a well-developed universal welfare state in a small, open economy; and, second, a Rhenish model, typical of the Western European heartland along the Rhine, from Austria and Switzerland through Germany to Belgium and the Netherlands, where more balanced or decentralized forms of corporatism and Christian democracy have proved important factors. Less-often noted is a southern European or Mediterranean model, with a weak, fragmented labor force, a weak state incapable of a strong guiding role, and underdeveloped welfare regimes. Interesting work has also examined the distinctive features of rentier economies (income is derived mainly from assets rather than labor; especially those blessed—or cursed—with oil reserves), import substitution in Latin American economies, the distinctive problems and trajectories of postsocialist economies, and the importance of informal economies in failed states.

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