A Modern Governance Approach to Macroeconomic Policy
Edited By Arne Heise
11 Introduction Comparing economic models – i.e. different sets of institutions embedding economic behaviour of individual or collective agents – appears to be a rather modern activity of economists. Whereas comparing political institutions and electoral systems has been a prominent task of political scientists right from the beginning of scientific inquiry into political issues, economists were preoccupied with searching for ‘economic laws’ and started to systematically compare national economies only after reality had produced an alternative to market-based capitalism: centrally-planned socialism. For a long time, the distinction between private property and market coordination on the one hand and collective property and bureaucratic command on the other was at the centre of the investigation of ‘economic models’ and their systematic impact on income and productivity growth, employment and income equality. Only after the collapse of the socialist system in the late 1980s did economists begin to realise what the political scientist Andrew Shonfield had pointed out decades before: market-based capitalism shows marked internal differentiations with respect to its formal and informal institutional set-up which is capable of explaining different economic performances. Since then, the literature on ‘varieties of capitalism’ has boomed with a two-fold objective: to distinguish between different models (country clusters of similar institutional set-ups) and their relative economic performance and to explore different paths and potentials for adaptation to similar challenges (‘globalisation’) – does the ‘war of the models’ require a convergence of institutional set-ups towards a blue-print of best practice or is a divergence still possible or even necessary? 1. Key...
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