New Directions in Comparative Capitalisms Research

Critical and Global Perspectives

M. Ebenau, I. Bruff, C. May, M. Ebenau, I. Bruff, C. May

• Publisher: Palgrave Macmillan
• Year: 2015
• ISBN:
  9781137444615
• Topic: Politics & International Relations
• Subtopic: Trade & Tariffs
• Index: Politics & International Relations

Now that the 'Varieties of Capitalism' hype has passed, students of capitalist diversity are searching for new directions. This book presents the first sustained dialogue between institutionalist 'post-VoC' and more critical, global approaches, thus contributing to the development of a new generation of Comparative Capitalisms scholarship.

Part I

Comparing Capitalisms in the Global Political Economy

1

Varieties of Capitalism and ‘the Great Moderation’

David Coates

When Peter Hall and David Soskice wrote their introduction to the now widely cited collection of essays they published in 2001 under the title Varieties of Capitalism: The Institutional Foundation of Comparative Advantage, they could hardly have known how important in the history of comparative political economy that introduction was going to be. True, they saw their own work as an important attempt to shift the goal posts – as ‘a new approach to the comparison of national economies’ – one that was capable in their mind of going beyond the ‘three perspectives on institutional variation that [had] dominated the study of comparative capitalisms [CC] in the preceding thirty years’ (Hall and Soskice, 2001, pp. v, 2). They saw themselves, that is, as challengers to the dominant approaches of the day in comparative political economy – challengers to the modernization paradigm, the neo-corporatism framework and the social systems of production approach. What they presumably did not see, as they drafted that introductory chapter, was the speed with which their approach would replace those three in dominance. This chapter, which draws heavily on correspondence with many of the key players involved, has been written to explain this unexpected rise to dominance and to evaluate the significance of its subsequent erosion (see also Bruff et al., in this volume).

Charting the rise

So what was it that Hall and Soskice said in that opening essay that turned out to be so incredibly influential? Essentially it came down to just five broad things.

(1) They saw themselves as introducing to the field of comparative political economy a new sense of how behaviour is shaped by institutions, doing so by focusing on the strategic interactions central to the behaviour of economic actors. In ways in which the other three approaches had not, they put the firm at the centre of their analysis. They examined the behavior of firms in game-theoretic terms – establishing what they termed ‘a relational view of the firm’ by focusing on five spheres in which a successful profit-seeking company was necessarily obliged to coordinate its activity with other key players. The five spheres on which they chose to concentrate were industrial relations, vocational training and education, corporate governance and access to finance, inter-firm relations, and relations with their own employees.

(2) Hall and Soskice then argued that national economies could be compared with one another by how firms within them handled these coordination problems: a comparison that was possible and fruitful only because ‘the incidence of different types of firm relationships varies systematically across nations’ (ibid., p. 9). For them, ‘the core resulting distinction’ was one ‘between two types of political economies, liberal market economies and coordinated market economies . . . ideal types at the poles of a spectrum along which many nations can be arrayed’ (ibid., p. 8). ‘Broadly speaking’, they argued, ‘liberal market economies are distinguished from coordinated market economies by the extent to which firms rely on market mechanisms to coordinate their endeavors as opposed to forms of strategic interaction supported by non-market institutions’ (ibid., p. 33).

(3) Hall and Soskice then listed six liberal market economies ([LMEs] Australia, Canada, Ireland, New Zealand, the United Kingdom, the United States), detailing the United States as the exemplar; and they listed eleven coordinated market economies ([CMEs] Austria, Belgium, Denmark, Finland, Iceland, Germany, Japan, the Netherlands, Norway, Sweden, Switzerland), with Germany as the detailed case. They were adamant that they were ‘not arguing here that one’ model was necessarily ‘superior to another’ (ibid., p. 21), though they did recognize different capacities for innovation in each. LMEs, they said, were better at radical innovation, CMEs at incremental innovation, and they implied that other differential patterns of performance were likely.

(4) Hall and Soskice reinforced this core difference between polar types of national economy by emphasizing the consolidation within each of ‘institutional complementarities’, and the resulting ‘comparative institutional advantage’ enjoyed by economies in which such complementarity was high. The existence of institutional complementarities then determined which set of public policies was likely to be effective in each: market-oriented policies that increased the autonomy of capital relative to labour in the case of LMEs, policies favoring a stronger element of social partnership in CMEs, and so on. As they put it, ‘it follows that economic policies will be effective only if they are incentive compatible, namely complementary to the coordinating capacities embedded in the existing political economy’ (ibid., p. 46; italics in original).

(5) Likewise, although Hall and Soskice recognized pressures common to both models from intensifying global competition – pressures pushing both towards more market-based forms of coordination – they nonetheless insisted that the depth of institutional complementarities within CMEs would blunt those pressures to a significant and persistent degree. Indeed it was their view that, contrary to the TINA (‘there is no alternative’) argument of many globalization advocates, their ‘concept of comparative institutional advantage also suggests that many firms may exploit new opportunities for movement to engage in a form of institutional arbitrage’ (ibid., p. 57; italics in original).

The argument presented in this essay was therefore relatively simple and brief, but the result was not. It was catalytic to an unprecedented outpouring of high-quality research and debate. The essay was initially published in the company of others by Kathleen Thelen, Torben Iversen, Margarita Estévez-Abe, Isabella Mares, Pepper Culpepper, Bob Hancké, Sigurd Vitols, Steven Casper, Stewart Wood and Orfeo Fioretos, on issues as different as varieties of labour politics, patterns of skill formation and attitudes to the European Union. It then quickly gave rise to: (i) a series of linked research initiatives; (ii) a flow of articles and monographs; and (iii) an eventually extensive body of reaction and critique. In the first category, think of the later work by many in that original volume (Thelen, 2004; Estévez-Abe, 2009; Iversen, 2005, 2010; Fioretos, 2011) and of the many subsequent collections of research data, including those edited by Hancké et al. (2007) and by Mahoney and Thelen (2009). In the second, think of the writings of, among many others, Colin Crouch (2005), Wolfgang Streeck (2006, 2009) and Bob Jessop (2011). In the third, think of the debates that regularly filled the pages of Socio-Economic Review; the steady drumbeat of critical doctoral theses, including, recently, that by Travis Fast (2012); and the critical collections edited by Coates (2005), Elsner and Hanappi (2008), Wood and Lane (2011) and now this collection (see also Bruff et al., in this volume). No other essay published in comparative political economy in 2001 had anything like the impact of that first one. No other academic product published that year ended up triggering an industry of its own, as the Varieties of Capitalism (VoC) introductory essay certainly did.

Explaining the dominance

In modern social science, the dominance of a particular approach – however fleeting – is always ultimately a product of the approach’s strength, where strength is understood as a potent mixture of intellectual coherence, conceptual clarity, explanatory force and contemporary relevance. The VoC approach had those strengths in abundance.

The academic and intellectual context

Peter Hall and David Soskice were both well-known and well-positioned scholars as they wrote the introduction to VoC: Peter Hall at the Center for European Studies at Harvard and David Soskice at the Wissenschaftszentrum Berlin (WZB). Years later, Bob Hancké remembered it all starting

sometime between 1991, when David was giving talks at Harvard outlining for the first time the LME–CME distinction, and 1993, when a series of workshops were organized under the auspices of the programme for the study of Germany and Europe at Harvard, located in the Center for European Studies. In 1993 the programme had funding for joint workshops and for sending graduate students over to the WZB for anything between three and six months, to work with David. The reputation of the group grew quickly and others (especially graduate students from other top schools in the US) asked if they could join for a term or two, and the basic group was born.¹

Vivien Schmidt’s recollection is similar:

VoC came together as a research project led by David Soskice and Peter Hall that drew in many talented young . . . doctoral students . . . . and in which participants presented their papers in many different venues. So call it a ‘thought collective’ that was creating an epistemic community around a project that was pretty exciting to scholars, in particular younger ones, for normative, methodological and empirical reasons.²

What is now clear is that by 2001 the main arguments in the opening chapter had already been well-trailed over the near-decade that the project had taken to come to fruition, so that by the time the essay was published, the VoC approach had an audience waiting for its crystallization in published form. And then, because (as Ben Rosamond put it in private correspondence on the impact of that first volume) ‘this was a big book by two of the big players’,³ it created substantial academic waves almost as soon as it appeared.

The intellectual context surrounding the publication of VoC was also critical. The essays in the original collection, and so many of the studies that followed, were able to draw on, and benefit from, the prior existence of a coherent body of literature, arguing that a full understanding of modern economies required the careful and extensive examination of institutions and their consequences. The big claim was that institutions mattered. Against this background, the original VoC collection, and particularly its opening essay, quickly became the flagship enterprise of an increasingly self-confident new institutionalist literature (see also Bruff et al. in this volume). Institutionalism was an approach to the study of modern economies and society that had already spawned its own – rational choice, historical and sociological – sub-divisions, whose relative strengths and weaknesses were being discussed in major academic journals from the mid-1990s onwards (Zysman, 1994; Hall and Taylor, 1996; Hodgson, 1996; Immergut, 1998; Thelen, 1999). The new institutionalists saw themselves as offering a superior approach to the understanding of modern capitalism to those currently available either from neo-classical economics or from conventional Marxism. They saw their analyses as inherently superior to conventional Marxism in their understanding of the role that institutions, and not just classes, play in the coordination of economic activity, an understanding that enabled new institutionalists to capture the fine grain of economic life in ways that academics deploying Marxist categories of analysis for the most part did not even choose to capture (for contrasting assessments, see Jessop and McDonough, in this volume). And they saw their approach superior to ‘economics and its rational choice bridgeheads in social science’, through its capacity to ‘treat the preferences of actors as endogenous to the institutional settings in which they are acted out’ (Streeck, 2006, p. 34).

To scholars persuaded of the intellectual superiority of the new institutionalism, the analysis of contemporary economies needed to be grounded neither in the methodological individualism beloved of modern economists nor in the historical materialism of mainstream Marxism. The first (the abstract modelling of individual rationalities) was too small a step to take in the pursuit of a full understanding of how modern economies functioned, and the second (the mapping of broadclass interests and the incompatibilities between them) was a step too far. The focal point of analysis, they argued, needed instead to remain at the level of dominant institutions, because it was the complementarity or otherwise of institutional patterns that gave broad comparative advantage to successful economies. Though epistemologically squeezed in between these two powerful paradigms, the new institutionalist scholarship was nonetheless from the outset internally divided. The initial approach had been predominantly historical in focus – Peter Hall’s own work in the 1980s had certainly been that (Hall, 1986) – and stressed the importance of critical junctures, which were conceptualized as key moments in time that established patterns of institutional formation and interaction and then left those societies locked onto particular paths. But through the 1990s, Peter Hall appears to have moved towards a more rational choice-based form of institutionalism, one in which David Soskice’s early work was already an important point of reference (Soskice, 1990).

In contrast to historical and sociological institutionalism, Peter Hall and Rosemary Taylor wrote in 1996, rational-choice institutionalism ‘offer[ed] the greatest analytical leverage in settings where consensus among actors accustomed to strategic action and of roughly equal standing is necessary to secure institutional change’ (i.e. CMEs) and in ‘settings where intense competition among organizational forms selects for those with some kind of efficiency that is clearly specifiable ex ante, as in some settings of market competition’ (i.e. LMEs) (Hall and Taylor, 1996, pp. 950–3). It was not that Peter Hall was here suggesting a break with historical institutionalism. He was not, and historical institutionalism continued to have strong support from colleagues with whom he carried on working, most notably from Kathleen Thelen (Thelen, 1999). It was rather that, by the late 1990s and cooperating closely with David Soskice, Peter Hall had become a powerful advocate of a creative dialogue between these various schools of institutionalism – not a blind synthesis, but the building of an understanding of the character and trajectory of modern economies that drew on them all (see also Hall, 2009). The opening essay in the VoC collection can in part be understood as an opening shot at that new and creative synthesis.

VoC and the earlier CC literatures

Peter Hall, David Soskice and their colleagues were not the first intellectuals to explore issues of institutional variation across national capitalisms. Nor were they the first to explore those issues from what they and we would now recognize as a broadly neo-Weberian background (cf. Bruff and Hartmann, 2014). That exploration goes back at the very least to the writings of Andrew Shonfield in the 1960s (Shonfield, 1965) and had already generated a number of bodies of relevant research material. This included not only the strands of new institutionalism surveyed by Hall and Taylor but also what Wolfgang Streeck later called ‘the corporatist growth industry of the 1970s’ (Streeck, 2006, p. 12), the extensive literatures on models of capitalism triggered by Michel Albert’s distinction between Anglo-Saxon and Rhenish capitalism (Albert, 1993; Crouch and Streeck, 1997; Hollingsworth and Boyer, 1997), and even the developments on the edge of conventional Marxism through the work of French and US-American regulation theorists (Aglietta, 1979; Boyer, 1990; Kotz et al., 1994; see also McDonough in this volume). But, at least during the 1990s, what characterized much of that research was its existence in separate and largely uncoordinated debates. It was against that background that the Hall and Soskice essay then serendipitously provided the emerging sub-field of comparative political economy with a new and tighter unity, by generating an overarching conceptual framework that contained within it the seeds of a fertile and accessible research agenda.

By suggesting that comparative political economists should deploy a basic distinction between two po...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Tables and Figures
• Notes on Contributors
• List of Abbreviations and Acronyms
• Introduction: Comparative Capitalisms Research and the Emergence of Critical, Global Perspectives
• Part I: Comparing Capitalisms in the Global Political Economy
• Part II: Critical Perspectives and Debates
• Part III: Global Perspectives and Debates
• Conclusion: Towards a Critical, Global Comparative Political Economy
• Index