Expert answer:the primary differences between liberal and coordi
Solved by verified expert:This is the reading response. The rubrics for the response are provided in one of the files. The reading is the Hall and Soskice PDF. The reading response is: What are the primary differences between liberal and coordinated market economies? What are some of the consequences of each system (i.e. employment, wages, commodities produced, policies concerning regulation, vocational training etc.) What is system of the Netherlands? Which system would you prefer and why? Is there anything that the author’s are missing-do you have any criticism for their explanations?The Paper should be at least 500 words and single-spaced MLA style. The instructions are in the word document provided. If you have questions just let me know. Cite any sources as well.
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PS 11/Econ 11 –Reading Response Assignments
Instructions: Please answer BOTH questions to the best of your ability. Each answer
should no less than half a page single-spaced, but will probably require more than this.
Your entire reading response should be anywhere from 1-2 pages single-spaced (500-1000
words). You are required to use your textbook but are also welcome to use outside sources
as well. Please be sure to put things into your own words, do not write phrases directly from
the text. Some questions will require you to simply summarize the information. Other
questions will require you to think critically and present your own critique, argument, or
opinion. Be sure to explain your answers and opinion, providing extensive evidence.
Rubric: A good paper will have the following
• A clear and original argument (this means going beyond just summarizing what the
text says, take a stance on the issue and defend your stance)
• A detailed introduction paragraph that provides a roadmap to your paper. I should
be able to read your introduction and know exactly what you will argue/talk about
in the rest of the paper.
• Evidence that supports your argument (quantitative like statistics or data or
qualitative like your own life experiences, work, or historical examples)
• The paper has thoroughly answered ALL of the questions
• The paper uses citations from the text and possibly outside sources
• No grammatical or syntax errors- make sure you read and edit your paper.
Citations: If you cite something directly from the book please put the pg. number in
parentheses at the end of the sentence as such: (pg. # ). You do not need to provide a
bibliography or works cited pg. if you only use the textbook. If you use outside sources
(internet, books, etc.) please use APSA format and include a works cited/bibliography.
You can find APSA format instructions here:
http://citesource.trincoll.edu/apsa/apsaconfpaper_000.pdf or
https://www.tamiu.edu/uc/writingcenter/documents/APSAformatanddocumentation_7-3012_JM.pdf
***MUST SUBMIT TO TURNITIN BEFORE CLASS BEGINS TO RECEIVE FULL
CREDIT
1) Reading Response 1- DUE August 30th
Describe the 3 main perspectives (also called “ideologies”) of International Political
Economy. Which perspective do you find most convincing—that is, which one offers the
most accurate description of politics and economics? Use evidence from the history and
current events to support your argument.
2) Reading Response 2- DUE September 13th
Explain the arguments for free trade. Why do so many people still oppose free trade
policies? Is your country more protectionist or liberal when it comes to trade? Make 3
trade policy recommendations for your country.
3) Reading Response 3- DUE October 2nd
What causes financial crises? What caused the 2008 global financial crisis? Who is to
blame for 2008 and what lessons should be learned? How should U.S. policy reflect those
lessons?
4) Reading Response 4- DUE October 18th
What are the primary differences between liberal and coordinated market economies?
What are some of the consequences of each system (i.e. employment, wages, commodities
produced, policies concerning regulation, vocational training etc.) What is your country?
Which system would you prefer and why? Is there anything that the author’s are missingdo you have any criticism for their explanations?
5) Reading Response 5- DUE October 30th
What are the explanations for Africa’s economic stagnation and extreme poverty? What
are the solutions? Is it foreign aid? More trade? What do you think? Be sure to defend
your argument.
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An Introduction to Varieties of Capitalism
Peter A. Hall and David Soskice
1.1 Introduction
Political economists have always been interested in the differences in
economic and political institutions that occur across countries. Some
regard these differences as deviations from ‘best practice’ that will
dissolve as nations catch up to a technological or organizational leader.
Others see them as the distillation of more durable historical choices for
a specific kind of society, since economic institutions condition levels of
social protection, the distribution of income, and the availability of collective goods—features of the social solidarity of a nation. In each case,
comparative political economy revolves around the conceptual frameworks used to understand institutional variation across nations.
On such frameworks depend the answers to a range of important
questions. Some are policy-related. What kind of economic policies will
improve the performance of the economy? What will governments do in
the face of economic challenges? What defines a state’s capacities to meet
such challenges? Other questions are firm-related. Do companies located
in different nations display systematic differences in their structure and
strategies? If so, what inspires such differences? How can national differences in the pace or character of innovation be explained? Some are
issues about economic performance. Do some sets of institutions provide
lower rates of inflation and unemployment or higher rates of growth
than others? What are the trade-offs in terms of economic performance
to developing one type of political economy rather than another? Finally,
second-order questions about institutional change and stability are of
special significance today. Can we expect technological progress and the
competitive pressures of globalization to inspire institutional convergence? What factors condition the adjustment paths a political economy
takes in the face of such challenges?
The object of this book is to elaborate a new framework for understanding the institutional similarities and differences among the developed economies, one that offers a new and intriguing set of answer to
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Peter A. Hall and David Soskice
such questions.1 We outline the basic approach in this Introduction.
Subsequent chapters extend and apply it to a wide range of issues. In
many respects, this approach is still a work-in-progress. We see it as a set
of contentions that open up new research agendas rather than settled wisdom to be accepted uncritically, but, as the contributions to this volume
indicate, it opens up new perspectives on an unusually broad set of
topics, ranging from issues in innovation, vocational training, and corporate strategy to those associated with legal systems, the development of
social policy, and the stance nations take in international negotiations.
As any work on this topic must be, ours is deeply indebted to prior
scholarship in the field. The ‘varieties of capitalism’ approach developed
here can be seen as an effort to go beyond three perspectives on institutional variation that have dominated the study of comparative capitalism
in the preceding thirty years.2 In important respects, like ours, each of
these perspectives was a response to the economic problems of its time.
The first of these perspectives offers a modernization approach to comparative capitalism nicely elucidated in Shonfield’s magisterial treatise of
1965. Devised in the post-war decades, this approach saw the principal
challenge confronting the developed economies as one of modernizing
industries still dominated by pre-war practices in order to secure high
rates of national growth. Analysts tried to identify a set of actors with
the strategic capacity to devise plans for industry and to impress them
on specific sectors. Occasionally, this capacity was said to reside in the
banks but more often in public officials. Accordingly, those taking this
approach focused on the institutional structures that gave states leverage
over the private sector, such as planning systems and public influence
over the flows of funds in the financial system (Cohen 1977; Estrin and
Holmes 1983; Zysman 1983; Cox 1986). Countries were often categorized,
according to the structure of their state, into those with ‘strong’ and
‘weak’ states (Katzenstein 1978b; Sacks 1980; Nordlinger 1981; Skocpol
and Amenta 1985). France and Japan emerged from this perspective
as models of economic success, while Britain was generally seen as a
laggard (Shonfield 1965; Johnson 1982).
1
We concentrate here on economies at relatively high levels of development because we
know them best and think the framework applies well to many problems there. However,
the basic approach should also have relevance for understanding developing economies as
well (cf. Bates 1997).
2
Of necessity, this summary is brief and slightly stylized. As a result, it does not do full
justice to the variety of analyses found within of these literatures and neglects some discussions that fall outside them. Note that some of our own prior work can be said to fall within
them. For more extensive reviews, see Hall (1999, 2001).
Introduction
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During the 1970s, when inflation became the preeminent problem
facing the developed economies, a number of analysts developed a
second approach to comparative capitalism based on the concept of neocorporatism (Schmitter and Lehmbruch 1979; Berger 1981; Goldthorpe
1984; Alvarez et al. 1991). Although defined in various ways, neocorporatism was generally associated with the capacity of a state to negotiate durable bargains with employers and the trade union movement
regarding wages, working conditions, and social or economic policy.3
Accordingly, a nation’s capacity for neo-corporatism was generally said
to depend on the centralization or concentration of the trade union movement, following an Olsonian logic of collective action which specifies that
more encompassing unions can better internalize the economic effects of
their wage settlements (Olson 1965; Cameron 1984; Calmfors and Driffill
1988; Golden 1993). Those who saw neo-corporatist bargains as a ‘political exchange’ emphasized the ability of states to offer inducements as well
as the capacity of unions to discipline their members (Pizzorno 1978;
Regini 1984; Scharpf 1987, 1991; cf. Przeworski and Wallerstein 1982).
Those working from this perspective categorized countries largely by
reference to the organization of their trade union movement; and the
success stories of this literature were the small, open economies of
northern Europe.
During the 1980s and 1990s, a new approach to comparative capitalism
that we will term a social systems of production approach gained currency.
Under this rubric, we group analyses of sectoral governance, national
innovation systems, and flexible production regimes that are diverse
in some respects but united by several key analytic features. Responding to the reorganization of production in response to technological
change, these works devote more attention to the behavior of firms.
Influenced by the French regulation school, they emphasize the movement of firms away from mass production toward new production
regimes that depend on collective institutions at the regional, sectoral, or
national level (Piore and Sabel 1984; Dore 1986; Streeck and Schmitter
1986; Dosi et al. 1988; Boyer 1990; Lazonick 1991; Campbell et al. 1991;
Nelson 1993; Hollingsworth et al. 1994; Herrigel 1996; Hollingsworth and
Boyer 1997; Edquist 1997; Whitley 1999). These works bring a wider
range of institutions into the analysis and adopt a more sociological
approach to their operation, stressing the ways in which institutions
3
An alternative approach to neo-corporatism, closer to our own, which puts less
emphasis on the trade union movement and more on the organization of business was also
developed by Katzenstein (1985a, 1985b) among others (Offe 1981).
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Peter A. Hall and David Soskice
generate trust or enhance learning within economic communities. As a
result, some of these works resist national categories in favor of an
emphasis on regional success of the sort found in Baden-Württemberg
and the Third Italy.
Each of these bodies of work explains important aspects of the economic world. However, we seek to go beyond them in several respects.
Although those who wrote within it characterized national differences in
the early post-war era well, for instance, some versions of the modernization approach tend to overstate what governments can accomplish,
especially in contexts of economic openness where adjustment is firmled. We will argue that features of states once seen as attributes of
strength actually make the implementation of many economics policies
more difficult; and we seek a basis for comparison more deeply rooted
in the organization of the private sector.
Neo-corporatist analysis directs our attention to the organization of
society, but its emphasis on the trade union movement underplays the
role that firms and employer organizations play in the coordination of
the economy (cf. Soskice 1990a; Swenson 1991). We want to bring
firms back into the center of the analysis of comparative capitalism
and, without neglecting trade unions, highlight the role that business
associations and other types of relationships among firms play in the
political economy.
The literature on social systems of production accords firms a central
role and links the organization of production to the support provided by
external institutions at many levels of the political economy. However,
without denying that regional or sectoral institutions matter to firm
behavior, we focus on variation among national political economies. Our
premiss is that many of the most important institutional structures—
notably systems of labor market regulation, of education and training,
and of corporate governance—depend on the presence of regulatory
regimes that are the preserve of the nation-state. Accordingly, we look for
national-level differences and terms in which to characterize them that are
more general or parsimonious than this literature has generated.4
Where we break most fundamentally from these approaches, however,
is in our conception of how behavior is affected by the institutions of the
political economy. Three frameworks for understanding this relationship
4
One of the pioneering works that some will want to compare is Albert (1993), who
develops a contrast between the models of the Rhine and America that parallels ours
in some respects. Other valuable efforts to identify varieties of capitalism that have influenced us include Hollingsworth and Boyer (1997), Crouch and Streeck (1997b), and Whitley
(1999).
Introduction
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dominate the analysis of comparative capitalism. One sees institutions as
socializing agencies that instill a particular set of norms or attitudes in those
who operate within them. French civil servants, for instance, are said to
acquire a particular concern for the public interest by virtue of their
training or the ethos of their agencies. A second suggests that the effects
of an institution follow from the power it confers on particular actors
through the formal sanctions that hierarchy supplies or the resources an
institution provides for mobilization. Industrial policy-makers and trade
union leaders are often said to have such forms of power. A third framework construes the institutions of the political economy as a matrix of
sanctions and incentives to which the relevant actors respond such that
behavior can be predicted more or less automatically from the presence
of specific institutions, as, for instance, when individuals refuse to provide public goods in the absence of selective incentives. This kind of logic
is often cited to explain the willingness of encompassing trade unions to
moderate wages in order to reduce inflation.
Each of these formulations captures important ways in which the
institutions of the political economy affect economic behavior and we
make use of them. However, we think these approaches tend to miss or
model too incompletely the strategic interactions central to the behavior
of economic actors. The importance of strategic interaction is increasingly
appreciated by economists but still neglected in studies of comparative
capitalism.5 If interaction of this sort is central to economic and political
outcomes, the most important institutions distinguishing one political
economy from another will be those conditioning such interaction, and
it is these that we seek to capture in this analysis. For this purpose, we
construe the key relationships in the political economy in game-theoretic
terms and focus on the kinds of institutions that alter the outcomes of
strategic interaction. This approach generates an analysis that focuses on
some of the same institutions others have identified as important but
construes the impact of those institutions differently as well as one that
highlights other institutions not yet given enough attention in studies of
comparative capitalism.
By locating the firm at the center of the analysis, we hope to build
bridges between business studies and comparative political economy,
two disciplines that are all too often disconnected. By integrating gametheoretical perspectives on the firm of the sort that are now central to
microeconomics into an analysis of the macroeconomy, we attempt to
connect the new microeconomics to important issues in macroeconomics
5
There are a few notable exceptions that influence our analysis, including the work of
Scharpf (1987, 1997a) and Przeworski and Wallerstein (1982).
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Peter A. Hall and David Soskice
Ours is a framework that should be of interest to economists, scholars of
business, and political scientists alike. We turn now to an elucidation of
its basic elements.
1.2 The Basic Elements of the Approach
This varieties of capitalism approach to the political economy is actorcentered, which is to say we see the political economy as a terrain populated by multiple actors, each of whom seeks to advance his interests in
a rational way in strategic interaction with others (Scharpf 1997a). The
relevant actors may be individuals, firms, producer groups, or governments. However, this is a firm-centered political economy that regards
companies as the crucial actors in a capitalist economy. They are the key
agents of adjustment in the face of technological change or international
competition whose activities aggregate into overall levels of economic
performance.
1.2.1 A Relational View of the Firm
Our conception of the firm is relational. Following recent work in economics, we see firms as actors seeking to develop and exploit core competencies or dynamic capabilities understood as capacities for developing,
producing, and distributing goods and services profitably (Teece and
Pisano 1998). We take the view that critical to these is the quality of the
relationships the firm is able to establish, both internally, with its own
employees, and externally, with a range of other actors that include suppliers, clients, collaborators, stakeholders, trade unions, business associations, and governments. As the work on transactions costs and principal–
agent relationships in the economics of organization has underlined, these
are problematic relationships (Milgrom and Roberts 1992). Even where
hierarchies can be used to secure the cooperation of actors, firms
encounter problems of moral hazard, adverse selection, and shirking. In
many cases, effective operation even within a hierarchical environment
may entail the formation of implicit contracts among the actors; and many
of a firm’s relationships with outside actors involve incomplete contracting (cf. Williamson 1985). In short, because its capabilities are ultimately
relational, a firm encounters many coordination problems. Its success
depends substantially on its ability to coordinate effectively with a wide
range of actors.
For the purposes of th …
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