Rethinking the Diversity and Varieties of Capitalism: on Variegated Capitalism in the World Market

This on-line version is the pre-copyedited, preprint version. The published version can be found here:

’Rethinking the diversity of capitalism: varieties of capitalism, variegated capitalism, and the world market’, in G. Wood and C. Lane, eds, Capitalist Diversity and Diversity within Capitalism, London: Routledge, 209-237, 2011.

What’s in a name? There are many approaches, some explicit, some implicit, to the diversity or variability of economies dominated by profit-oriented, market-mediated relations. A few authors address this broad topic in terms of diversity, many more refer to variation, and some switch between categories. Does this mean that, apart from an accidental but lop-sided[1] adoption of one label rather than another, scholarship on the diversity of capitalism (DoC) differs little from that on varieties of capitalism (VoC)? The heterogeneity and partial overlap of the several approaches linked to each rubric might suggest this. Another explanation could be the desire of ‘academic tribes’ to distinguish themselves from significant others in terms of theoretical, methodological, thematic, normative, or political preferences (for a review of some differences, see Streeck 2010). Given the possibly misleading synonymity of ‘diversity’ and ‘variation’, however, it may be more fruitful to focus on real differences among paradigms than risk fetishizing terminology. My contribution begins here. It starts with a critique of the arguments of the first wave ‘varieties of capitalism’ paradigm and then expands the critique to studies concerned more generally with the capitalist variation or diversity. It identifies some important commonalities in this respect among DoC and VoC approaches that, regardless of label, obstruct a more integrated and dynamic analysis of accumulation on a world scale.

On Diversity and Variation

One non-trivial difference between DoC and VoC approaches may lie in their respective epistemological and methodological preferences.[2] For, while the former approach is readier to accept difference, heterogeneity, and even messiness of actually existing capitalism(s), the latter prefers parsimonious typologies and interprets difference in terms of the hybridization of pure types. This contrast is associated with methodological differences. On the one hand, DoC work inclines toward historical institutionalist accounts and/or employs cluster or factorial analysis to identify species of capitalism based on more or less rich empirical data from many economies. On the other hand, the VoC perspective tends to be more axiomatic and/or focuses on a limited set of allegedly representative cases. It follows that scholars interested in diversity worry less about the balance between ‘within-type’ and ‘between-type’ variation than do those who study varieties. Immergut and Anderson (2005: 356) expressed this contrast well in terms of the Aristotelian approach of DoC and the Platonic approach of VoC.[3] More generally, scholars interested in capitalist diversity seem to worry less about the balance between ‘within-type’ and ‘between-type’ variation than those who deal with varieties of capitalism (on the relevance of this issue, see Lane and Wood 2009). This explains why ‘hybridity’ posed a serious challenge for early VoC studies and why the DoC approach could live more easily with the ‘messiness’ of capitalist reality. This tension still pervades scholarship on diversity and variation in historical and comparative inquiry. The issue of ‘within-type’ and ‘between-type’ variation nonetheless generates continuing tensions in historical and comparative analyses of diversity and variation. Thus it is unsurprising that later VoC research sometimes succumbs to the temptation (or recognizes the need) to add further types as the theoretical, geographical, and historical horizons of the analysis are extended (e.g., Schneider and Soskice 2009). This has brought it closer to work on diversity, whether of ‘capitalism’ itself, business models, national business systems, social innovation systems, systems of economic organization, or welfare regimes. In turn, the diversity literature has highlighted the evidence of spatial, sectoral, and institutional diversity within national models as well as the differential articulation of national models and global value chains.

This said, my contribution is less concerned to detail conceptual differences and comparative advantages between DoC and VoC approaches than to identify shared weaknesses and suggest how to overcome them. In particular, it advances four concepts that they lack or marginalize and that would enhance work on diversity and variation. These are variegation, compossibility, ecological dominance, and the world market. Separately and together, they enable us to identify some shared theoretical limitations that, however revealing they might be about individual varieties of capitalism, within-type diversity, or the overall heterogeneity of capitalism, make it hard for them to grasp and explain the dynamics of differential accumulation. This is reflected in a fundamental contrast between the broad institutionalist perspective on capital accumulation common to these approaches and the form-analytical starting point of my approach. For DoC and VoC analyses, accumulation is likely to continue where the institutional conditions for effective strategic coordination and adaptation among relevant stakeholders have developed. They nonetheless differ on their explanation for the emergence and survival of these conditions.[4] In contrast, my analysis regards continuing accumulation as improbable because of inherent contradictions that are incompressible even when a given capitalist configuration appears to be stable and to perform well thanks to specific institutional and spatio-temporal fixes that, among other moderating effects, displace or defer crisis-tendencies. This difference in approach produces important differences in the spatio-temporal horizons of analysis as well as different accounts of crisis dynamics and resulting transformations. On this basis, after critiquing mainstream approaches to variation and diversity, I argue that variegated capitalism in the world market organized in the shadow of one dominant variety should be the ultimate horizon of analysis.

Analyses of the diversity or varieties of capitalism, or, as I prefer to conceptualize the stakes in both cases, variegated capitalism, presuppose certain generic features of capitalism as benchmarks for distinguishing diversity or variation.[5] Yet it is rare for either approach to define capitalism even though this concept is theoretically controversial and politically contested. My contribution therefore begins with an attempt to address the ‘commonalities of capitalism’ (Streeck 2009, 2010) or ‘capitalism tout court’ (Bohle and Greskowits 2009). It identifies the historical specificity of capitalism as a mode of production, its key social forms, its core contradictions, and, in this light, the basic regulatory and steering problems entailed in the accumulation process and its wider societal influence. It argues that these specificities imply that market forces alone cannot reproduce the contradictory, conflictual, and crisis-prone dynamic of capitalism, especially given the qualities of the capital-labour relation and capitalist competition. Supplementary modes of reproduction, regulation and governance are essential, including those provided directly or indirectly through states, without this ensuring a smooth, crisis-free course for capital accumulation. This is why analyses of the diversity and/or varieties of capitalism must address the extra-economic as well as economic conditions of capitalist reproduction. My claim here is that they miss what is at stake in problems of regulation or governance. In this context, I propose the concepts of institutional and spatio-temporal fixes to address the complex socio-spatial divisions of labour that shape the world market as the ultimate horizon of differential accumulation. This approach informs my initial critique of the ‘VoC’ literature and my case for ‘variegated capitalism’ regarded as an ensemble of diverse patterns of capital accumulation that are more or less embedded within a given spatio-temporal matrix. While this matrix may comprise (or, more precisely, be construed in terms of) a specific configuration of territory, place, scale, and network that exists for a significant period, its ultimate scope is, at least tendentially, the world market (or world economy) in all its complexity. The notion of variegated capitalism is equally relevant, I suggest, to the ‘diversity of capitalism’ within and across different spatio-temporal contexts. Indeed, there are some important similarities between the approach proposed here and recent developments in the study of capitalist diversity.

Finally, I argue that, ‘if all varieties of capitalism are equal, some are more equal than others’. This is not because hybrid forms are somehow less efficient but because variegated capitalism is typically subject to the ecological dominance of one variety of capitalism. This involves the capacity of one variety to shape the development of others in a given spatio-temporal framework more than they can shape it. The neo-liberal market economy variant, in which finance and speculation gain influence through financialization, has occupied this position increasingly from the early 1970s. Yet, on a world scale, this variety exhibits a pathological co-dependence on other, compossible varieties of capitalism. This ecological dominance is a key factor behind crisis and instability in capitalism tout court over the last two decades.

Capital as a Social Relation

There are many forms of capitalism and many ways to explore their variation-cum-diversity and their interaction within a variegated capitalist order. Max Weber usefully distinguished six modes of capitalist orientation to profit (Weber 2009; cf. Swedberg 1998). They are traditional commercial capitalism, based on traditional types of trade or money deals; three modes of political capitalism, based respectively on predatory political profits, profit on the market from force and domination, and profit from unusual deals with political authority; and two modes of modern rational capitalism. The first of these involves rational calculation of opportunities for profit in the market from trade in free markets and capitalist production; and the second rests on capitalist speculationandfinance. Not all modes display the virtues of bourgeois capitalism noted by its proponents but they must still be included in an analysis of differential accumulation, i.e., the drive by individual capitals to grow by securing above-average returns on their investment (cf. Nitzan 2001). They interact in various ways in different political territories, specific localities, scalar divisions, and networks of economic and political power with different effects. This matters for understanding how varieties of capitalism co-evolve to form the unevenly developing world market.

F-2011 Variegated Capitalism final Figure 1

Figure 1: The Main Types of Capitalism and the Principal Modes of Capitalist Orientation to Profit-Making, according to Weber (§31 in Chapter 2 of Economy and Society) (source: Swedberg 1998: 47)

I return to Weber’s overall classification later but focus initially on the first mode of rational capitalism because it is closest to the definition implicit in the VoC approach. For, wittingly or not, this mainly examines the organization of capitalist production and the associated trade in capitalistically produced goods and services. Indeed, its initial variant was especially concerned with the institutional conditions favouring innovation by the ‘business community’ in these regards (Hall and Soskice 2001b). In focusing on variation within this mode of rational capitalism, however, VoC research misses other features of ‘capitalism tout court’, their significance for the ‘varieties’ that it does examine, and the impact of other modes of capitalism on the overall prospects and performance of rational capitalism. The DoC literature also takes capitalist production and trade as its primary object and therefore shows the same neglect of other modes of orientation to profit and their implications for differential accumulation.

We can deepen Weber’s analysis of rational capitalism by integrating Marx’s account of the historical specificity of the capitalist mode of production (hereafter CMP), which involves far more than rational calculation of opportunities for market profit based on the production and exchange of commodities. For, while Marx commented in advance on aspects of all six Weberian modes, his theoretical work focused mainly on what Weber would call rational capitalism.[6] He argued that what most distinguishes capitalism from other forms of commodity production is the treatment of labour-power as if it were a commodity such that workers offer their labour-power for sale to capitalists on the labour market in a formally free and equal commercial transaction. In this regard, the wage serves as a cost of production (for all capitals), a means of self-reproduction (for the labour force) and a source of demand (in the first instance, for capitals that produce consumer goods and, indirectly, for those that produce capital goods). Further, once labour-power becomes a fictitious commodity, surplus labour is appropriated through market forces (Lebowitz 2003, Marx 1967; Polanyi 1957). Ignoring the generalization of the commodity form to labour-power and its effects in the capital-labour relation makes it hard to distinguish the CMP from the profit-oriented calculations and market-mediated operations of merchant and loan capital that existed before the era of rational capitalism and thrive within it.

The most important general law of the CMP is the law of value. This describes the tendency of capitalist enterprises (for VoC studies, individual firms) to allocate resources to different fields of production according to their expectations of profit. Although this law is mediated in the first instance through market forces and the price mechanism, the operation of which socially validates – or invalidates – these private decisions, it is ultimately grounded in the sphere of production. It is only here that value gets created and thereby becomes available for subsequent validation, redistribution, or destruction. Money and credit relations are decisive in this regard. There are also other tendencies of capitalist economies (Duménil 1975). All such laws are doubly tendential, i.e., they exist only to the extent that their associated social forms are also reproduced (Jessop 2002, 2007). Failure to reproduce these forms will weaken, suspend, or terminate the relevant laws: they are not ‘iron necessities’. Their always tendential reproduction is mediated through competition and class and class-relevant struggles based on market and non-market factors and forces. Indeed, the capacity of particular capitals to make and book profits (differential accumulation) also depends on other forms of power that affect such capitals and their place in capitalist social formations (see below).

Like other forms of production, its capitalist variant appropriates and transforms natural resources and utilizes the productive powers of nature. These resources and powers thereby contribute to the production of use-values and any resulting increase in wealth (or, indeed, its destruction). However, within rational capitalism, only the expenditure of socially necessary labour power in commodity production generates value (and hence the potential for profit) for capital as a whole. This holds regardless of how the resulting surplus value is divided among particular capitals and regardless of how far this involves power differentials that are not rooted in pure market relations. As well as the search for ways to reduce the socially necessary labour time – manual and/or mental – involved in producing commodities (real or fictitious), there are two other major axes of capitalist competition. One is competition to reduce the socially necessary turnover time of capital through cost-cutting and other innovations within and beyond the production sphere. Such reductions produce temporary advantages and, hence super-profits, that may be eroded through competition. This affects commercial and financial capitals as well as productive capitals insofar as these are distinguishable within the circuit of capital.[7] The other axis is competition to cut naturally necessary reproduction time by accelerating the rhythms of nature as a source of wealth (e.g., through biotech and the life sciences).

Commodification turns both the labour market and labour process into sites of conflict between capital and workers to the extent that capital seeks to minimize wage costs and maximize the vendible output produced through the application of labour-power.[8] This is reinforced by complex processes of capitalist cooperation-competition to secure the most effective valorization of labour-power and to appropriate the resulting surplus-value in different forms of revenue. This economic class struggle is shaped by the wage form, the technical and social division of labour, the organization of capitalist production as an economy of time, and, of course, the specific material properties (or ‘asset specificity’) of the ‘raw materials’, the means of production, and the resulting products and by-products. Its dynamic also has many other economic and extra-economic determinants and, in addition, class (or class-relevant) struggles extend beyond production and market relations to other social fields. The nature of labour-power as a fictitious commodity also shapes capitalist competition to valorize labour-power and boost surplus-value. Profit-oriented, market-mediated competition and class struggle are major sources (but by no means the sole sources) of rational capitalism’s open-ended dynamic as a distinctive mode of production. Introducing other modes of capitalism, such as those identified by Weber, would require further modifications. Lastly, insofar as capital accumulation is the dominant organizing principle in the economy in its narrow sense, it also acquires a key role in shaping societies more (see below).

 F-2011 Variegated Capitalism final Box 1

Capital as a Contradictory, Dilemmatic, and Conflictual Object of Regulation

Profit-oriented production and market-mediated exchange in rational capitalism cannot be steered solely through free market forces. They also depend on various non-market mechanisms within, beyond, and transversal to the market economy. But these cannot prevent ‘market failures’ or correct them automatically and without repercussions. Indeed, the mixes of economic and extra-economic conditions favourable to sustained accumulation are opaque, indeterminate, and variable. This entails important cognitive and institutional limits to solving coordination problems in rational capitalism and helps to explain the trial-and-error nature of attempts to regularize and govern differential accumulation through the development of the institutional complementarities that interest VoC scholars and the institutional diversity that concerns DoC researchers.

Moreover, to the extent that economic stability does occur, this may depend on zones of instability elsewhere and/or on postponing problems into the future. The notion of spatio-temporal fixes is an important complement to (or, better, dimension of) institutional fixes in this regard. Finally, other factors pose even more problems for the regulation and/or governance of rational capitalism. These are the structural contradictions, micro-macro paradoxes, and strategic dilemmas linked to the rational organization of capitalist production and trade. I now present these and outline their significance for capital accumulation, varieties of capitalism, and capitalist diversity.

Marx (1967) identified an essential contradiction in the commodity form between its exchange- and use-value aspects. Exchange-value refers to a commodity’s market-mediated monetary value for the seller; use-value refers to its material and/or symbolic usefulness to the purchaser. Without exchange-value, no enterprise would produce commodities for sale; without use-value, they would find no purchaser.[9] Starting from this essential contradiction, Marx unfolded the complex dynamic of the CMP, including their mediation through money and credit relations, analyzed the potential for, and mechanisms of, periodic crises, and noted their role in reintegrating the circuit of capital to allow renewed expansion.

I suggest that all forms of the capital relation in rationally-organized capitalism embody different but interconnected versions of this basic contradiction and that they impact in different ways on (different fractions of) capital and on (different categories and strata of) labour at different times and places. Thus, productive capital is both abstract value in motion (notably in the form of realized profits available for reinvestment) and a concrete stock of already invested time- and place-specific assets in the course of being valorized; the worker is both an abstract unit of labour-power substitutable by other such units (or, indeed, other factors of production) and a concrete individual (or, indeed, a member of a particular collective workforce) with more or less specific skills, knowledge and creativity able to produce particular goods and services; the wage is both a cost of production and a source of demand; money circulates both as potentially world money (ideally in stateless space) and as national currencies subject to some measure of state control (with the currency of the dominant economy tending to become the reference point for world money); land functions both as a form of property (based on the private appropriation of nature) allocated in terms of expected revenues in the form of rent and as a natural resource (modified by past actions) that is more or less renewable and recyclable; knowledge underpins intellectual property rights and is a collective resource (the intellectual commons). Likewise, the state is not only tasked with securing key conditions for valorization and the reproduction of labour-power but also with maintaining cohesion in a divided, pluralistic society. In turn, taxation is both an unproductive deduction from private revenues (profits of enterprise, wages, interest, and rents) and a means to finance collective investment and consumption to compensate for ‘market failures’. And so on (see Jessop 2002).

The contradictions and dilemmas of a rational capitalism premised on the generalization of the commodity form to labour-power are incompressible and insoluble in the real world. However, while they cannot be reconciled permanently and in all respects in abstracto, they can be moderated provisionally and partially through specific mechanisms and projects. This can be achieved through spatio-temporal and institutional fixes that selectively reconcile some particular interests rather than others and that link the former to an always partial interpretation of the general interest. This is a contested process, involving different economic, political, and social forces and diverse strategies and projects. In this context, contradictions and their associated dilemmas are typically handled through:

  • hierarchization (treating some contradictions as more important than others),
  • prioritization (giving priority to one aspect of a contradiction or dilemma over the other aspect),
  • spatialization (relying on different scales and sites of action to address one or another contradiction or aspect or displacing the problems associated with the neglected aspect to a marginal or liminal space, place, or scale), and
  • temporalization (alternating regularly between treatment of different aspects or focusing one-sidedly on a subset of contradictions, dilemmas, or aspects until it becomes urgent to address what had hitherto been neglected).

A useful adjunct in distinguishing stages and/or varieties of rational capitalism is their respective patterns of handling different contradictions and dilemmas using the four above-mentioned strategies. Thus a given stage or variety would differ in terms of the weights attributed to different contradictions and dilemmas (hierarchization), the importance accorded to their different aspects (prioritization), the role of different spaces, places, and scales in these regards (spatialization), and the temporal patterns of their treatment (temporalization). Moreover, because the capital relation is reproduced – to the extent that it is – in and through social agency and also entails specific forms, stakes, and sites of conflict and struggle, these institutional and spatio-temporal fixes are never purely technical but are typically linked to different patterns of institutionalized conflict and compromise. Indeed, given that these contradictions and dilemmas are insoluble in abstracto, their moderation depends on specific visions, projects, and strategies that focus on some particular interests rather than others and link them to a selective definition of the general interest. This is where the historical and ideational institutionalism found in the diversity of capitalism approach trumps the rational choice and/or efficient market assumptions of the first wave varieties approach (cf. Amable 2003; Schmidt 2004).

Major aspects of such configurations are their patterns of time-space distantiation and compression, dominant spatio-temporal horizons, and central places and spaces of accumulation. These can be explored in terms of specific spatio-temporal fixes. A spatio-temporal fix emerges when a given regime of production and trade (an accumulation regime) and its mode of regulation-governance co-evolve to produce a certain structural coherence among the elements of that political-economic order in a given spatio-temporal framework. It involves specific patterns of hierarchization, prioritization, spatialization, and temporalization and their associated institutional and organizational forms. It externalizes thereby some of the costs of securing this coherence by displacing and/or deferring them. And, together with specific economic imaginaries and institutional fixes, STFs facilitate the institutionalized compromises on which a given accumulation regime, mode of regulation, and governance pattern depend.Consolidating an STF requires support in and across many conflictual and contested fields for specific accumulation strategies, their associated state projects and, if relevant, hegemonic visions. Moreover, even within a given STF, some classes, class fractions, social categories or other social forces are marginalized, excluded, or oppressed. Last, but not least, because the basic contradictions and dilemmas are incompressible, even if modified in specific stages and/or varieties of capitalism, all fixes will prove partial, provisional and unstable. When the circuit of capital breaks, for whatever set of causes, space opens for different trajectories, vitiating unilinear accounts of capitalist development.

Varieties of Capitalism versus the World Market

Although these arguments are relevant to periodization, this chapter elaborates their implications for varieties of capitalism. In contrast to the critical political economy approach outlined above, which starts from distinctive features of capital as a social relation, including its contradictions, antagonisms, and crisis-tendencies, first wave VoC scholars adopt a firm-centred institutionalist perspective that focuses on individual capitals (economic entities oriented to opportunities for profit on the market, such as firms and banks) and ignores the central role of labour-power as a fictitious commodity in the valorization of capital in general prior to issues of differential accumulation across individual capitals.[10] Accordingly, it tends to neglect the contradictions and crisis-tendencies of capitalism, regarding their effects on economic performance as so many accidental, exogenous shocks or, at best, as the path-dependent effect of institutional problems and/or irrational conduct. Thus, it studies VoC in terms of comparative institutional advantage in rationally organized (and, in most cases, industrial) capitalism, identifies them in terms of their specific institutional arrangements, and assesses their impact on economic performance (e.g., growth rates) and ‘social wellbeing’. This prompts me to develop five lines of criticism of mainstream VoC studies.

Substantive rather than value-theoretical analysis

First, this literature tends to focus one-sidedly and, one assumes, largely unwittingly on the substantive (use-value) dimensions of the capital relation. Thus it explores coordination problems around the allocation of money capital to capitalist production, the substantive organization of labour markets and capitalist production, and trade in free markets. Specifically, VoC work investigates the mobilization and allocation of money capital to different sectors and activities; the training and skill profile of the labour force, the organization of production as the deployment of concrete labour in a particular labour process using more or less specific assets to produce particular types of goods and/or services for sale, and employees’ ability and motivation to cooperate to advance a firm’s objectives; the logistics of circulation and distribution; the organization of trade in the markets for such commodities; and questions of corporate governance (see table 1). Even in these regards it tends to focus on the most representative or competitive clusters or sectors of a national economy rather than the full spectrum of firms, clusters, and sectors that co-exist within its borders. The DoC literature, as one might anticipate, covers more of this spectrum. Interestingly, reflecting the conjuncture in which the VoC approach developed, it focuses on industrial capitalism rather than capitalist speculation and finance, which soon became central to the finance-dominated regime of accumulation and have since hit the ‘real economy’ in coordinated as well as liberal market economies. Finally, VoC work tends to ignore the influence of Weber’s three modes of political capitalism, neglecting their significance in advanced capitalism and noting at best the role of ‘crony capitalism’ in emerging market or dependent market economies (on the role of these modes in the representative liberal market economy explored in the VoC literature, the US case, see, for example, Galbraith 2008; Gowan 1999; Nitzan and Bichler 2009; Woodiwiss 2005).

Given its selective focus and actor-centred institutional approach, the VoC literature explains institutional arrangements as trial-and-error, co-selected, efficient solutions to substantive coordination problems that promote macro-economic performance as well as corporate competitiveness and profitability. Thus firms seek to develop mutually beneficial solutions to build on and/or modify their comparative institutional advantages[11], which are reflected in their economic specialization (Hall and Soskice 2001a: 37; cf. Porter 1990; Kang 2006: 11f; Hall and Gingerich 2004).

This argument depends implicitly on a Pareto-optimal view of institutional equilibrium that explains complementarities through the strategic interaction of actors (especially firms) in specific institutional contexts and is linked with the idea that, once achieved, whether through institutional design or blind co-evolution, actors will try to maintain the resulting institutional advantages in the face of shocks (cf. Amable 2003; Thelen 2000). This is most likely when the variety of capitalism is linked to institutionalized compromise among key social forces. This reinforces the view that path-changing disturbances are exogenous rather than generated by internal contradictions and dilemmas. For example, globalization is typically seen as an exogenous process induced by technological change and liberalization that reinforces pressures to retain or adopt the most efficient institutional solutions to profit-oriented economic and extra-economic coordination. Given that patterns of institutional advantage differ, this does not ensure convergence on one model but may lead to the relocation or outsourcing of some economic activities to areas where institutional conditions are more attractive (i.e., institutional arbitrage). In short, this analysis points towards a path-dependent institutional inertia, making incremental adaptation far more likely than radical change (contrast Becker, 2007, on the more open logic of varieties of capitalism in a complex world).

Table 1: One-Sidedness of Varieties of Capitalism Research

Social Form

Focus of VoC Studies

Neglected in VoC Studies


Asset specificity of use-values and price formation of particular commodities Exchange value, price formation in relation to composition of capital and average rate of profit

Wage relation

Individual and social wage; pay design; industrial relations; role of supervisors and managers in techno-economic efficiency; fit between managerial incentives and corporate performance Determinants of real pay; labour-power as a fictitious commodity; absolute surplus- value; relative surplus-value; management as the exercise of the functions and powers of capital

Labour power

Skill and skill formation, vocational training, education, human capital, asset specificity Abstract labour; value theory of labour; socially necessary labour time


Core competences and assets; nexus of contracts; firm size and market power; clusters and networks; global value chains; forms of competition; corporate governance Firm as capitalist enterprise and node in circuit of capital; market dominance and monopoly profit; place in world market; monopoly capital; state monopoly capital


Human capital; R&D; technology transfer; radical or incremental innovation Abstract labour; general intellect; intellectual property rights


Assets to be valorized in given time and place; realized profits available for re-investment Capital in general available for allocation to any productive (or unproductive) purpose


Efficient solution to some coordination problems; focus of pressures from stakeholders to enhance comparative institutional advantage Institutional separation of market and state as problematic for capital accumulation; ditto, the disjunction between single world market and plurality of states

Where successful, this provides the basis for distinctive forms of comparative institutional advantage across different varieties of capitalism. Thus the original Hall-Soskice approach combines rational choice accounts of action with historical institutionalism to explain the origins and consolidation of the two main varieties of capitalism as different ways to develop comparative institutional advantages. Reflecting the usual distinctions of mainstream institutional economics, they contrast two viable forms of capitalism: liberal market economies (or LMEs), based on arms-length, competitive relations, competition and formal contracting among firms reinforced by supply and demand fluctuations in response to price signals; andcoordinated market economies (or CMEs), where governance is based on non-market relations, strategic collaboration, credible commitments and reflexive negotiation among networks of firms and other relevant stakeholders (Hall and Soskice 2001a). These forms are presented in ideal-typical terms and rendered plausible with illustrations from the USA and Germany respectively. Amable, in line with the regulation approach, does allow that ‘efficiency’ depends on politics as well as economics, such that institutional solutions reflect and embody ‘a compromise resulting from the social conflict originating in the heterogeneity of interests among [diverse] agents’ (2004: 10; cf. Morgan and Kubo 2005 on the contrast between the narrowly economic meaning of institutional advantage inside an enterprise and its broader, socio-political significance in the wider economy). This already questions the meaning of efficiency insofar as it no longer refers to a quantifiable economic criterion but to the capacity to maintain an unstable equilibrium of compromise compatible not only with economic performance but also political cohesion and social inclusion in liberal democracies (see also Yamamura and Streeck 2003 on Modell Deutschland). Despite this recognition, however, first-wave VoC analysis abstracts from more fundamental, incompressible contradictions. Interests are not simply heterogeneous, they can also be antagonistic. Where compromises and cross-class coalitions exist, they marginalize some particular interests and selectively define the general interest. They are notoriously hard to manage in periods of systemic crisis, when temporarily and partially resolved contradictions and dilemmas re-emerge.

Substantive and/or Methodological Nationalism

Second, whether focusing on firms or nations, the mainstream VoC literature defines and measures economic performance mainly in national terms. Thus the institutional complementarities and/or isomorphism typical of a given variety of capitalism are related to national economies and states. This reflects both the customary national framework of comparative political economy and the common assumption that institutions and other conditions that influence the economic performance of firms, sectors, and clusters are heavily shaped by the development of national states and national cultures (Hall and Soskice 2001a: 4). National boundaries therefore delimit economic performance and demarcate zones of stability or instability, with ‘pure’ or self-consistent varieties of capitalism (liberal market or coordinated market economies) being considered more efficient and stable than ‘hybrid’ varieties (Hall and Soskice 2001a, 2003; contrast Crouch 2005a, 2005b). National varieties may be embedded in international regimes with novel institutional features (e.g., the Bretton Woods institutions) but these regimes are nonetheless regarded as governing or regulating relations among national economies or states. Methodological nationalism leads in turn to neglect of the ‘constitutive outside’ that enables such performance, whether through unstated and perhaps unacknowledged historical and current conditions and/or the externalization, displacement, or deferral of negativities. I relate some aspects of these issues to spatio-temporal and institutional fixes below.

Substantive and/or methodological nationalism are particularly problematic for small open economies. Their competitiveness and macro-economic performance typically depend not only on national conditions but also on how their economies are embedded into other national or macro-regional contexts and/or global value chains. Thus institutional comparative advantage cannot be assessed purely in national terms but depends on modes of insertion or adhesion to the world market not merely in terms of trade and investment flows but also in terms of institutional complementarities. This feature has prompted some authors to extend Porter’s analysis of the competitiveness of nations to include ‘double diamonds’ or even ‘multiple diamonds’ (e.g., Cartwright 1993; Cho, Moon, and Kim 2009; Moon and Verbeke 2001). The closest that the VoC literature gets to this phenomenon is in hints about how some firms may relocate some activities to take advantage of new opportunities opened by liberalization or internationalization. It is not seen as a constitutive feature of whole economies.

Internal Variation

Third, in focusing on national comparative institutional advantage in terms of representative clusters of firms, the VoC literature ignores internal variation. Few large national economies are dominated by their ‘representative’ competitive sectors or clusters. There is a wide spectrum of other economic activities that reflects historical legacies, emergent fields, non-tradable services, public and third sector activities. Some of these may support or complement the competitive sectors and clusters, others may co-exist more or less harmoniously with them, and yet others may be subsidized by, antagonistic to, or parasitic upon, them. Successive long waves of economic growth, uneven regional development, and the changing roles of the state at home and abroad are all important here. A related criticism is neglect of how unusual deals with political authority, predatory capitalism, and profits secured through force and domination contribute to the overall variegation of national economies (cf. Hedlund 1999; Mann 2003; Woodiwiss 2005). This is partly linked to neglect of the state’s central role as an economic force in its own right, whether through state-owned enterprises, public procurement, or the role of ‘hard’ as well as ‘soft’ power in promoting comparative institutional advantage. This is a key criticism of Vivien Schmidt, who has long argued for a third variety of capitalism: the dirigiste model with France as its representative type (Schmidt 2000). More generally, given the industrial bias of the VoC literature, it has said less about commerce-led and post-industrial economies, especially those that are finance-dominated. Weber’s mode of speculation and finance matters here, especially when it becomes decoupled from productive enterprises of most concern to VoC research and influences all varieties of capitalism on a world scale.


Fourth, in highlighting the relative stability of interlocking and mutually reinforcing institutional arrangements, VoC work ignores the exchange-value moments of the capital relation. Yet it is hard to make sense of institutional complementarity, institutional fixes, spatio-temporal fixes, and patterns of institutionalized compromise (and their breakdown) without regard to these dimensions.

For example, VoC research focuses on the organization of labour markets, vocational training, and the role of trade unions (as one set of producer groups among others) in economic coordination. It views labour as a passive factor of production or as human capital and treats the organization of production as a potentially positive-sum game in which both sides could (and should) gain from building comparative advantages. It thereby overlooks the exploitation and appropriation of labour-power in the labour process, the multi-layered complexity of competition, cooperation, and conflict within and between capital and labour as economic forces, and the potential antagonisms of the capital-labour relation in the sphere of production (see Gough 1992; Marsden 1999). This marginalizes, if not implicitly denies, class antagonism; and overlooks how these contribute to the fragility of institutionalized compromises as part of the institutional fix in any given variety of capitalism. This marginalization occurs in various ways: (a) viewing labour as just one more factor of production and/or as a passive agent that can be readily managed; (b) focusing on the need for cooperation in a technical and social division of labour that requires ex ante concertation or coordination rather than ex post validation through the market, especially where production is regarded as a positive-sum game to be played jointly against competing firms, networks of firms, regions, or nations; (c) focusing on revenue categories in the sphere of distribution such that the owners of different factors of production have common interests in increasing the ‘size of the cake’ and competing interests in how to allocate revenues among profits of enterprise, wages, interest, and rent; and (d) highlighting the need for producer interests to cooperate to provide ‘public goods’ through social compacts and/or partnership with the state for economic performance and social cohesion.

These questions matter most when systemic crises develop and crisis-management costs have to be allocated. Such crises undermine the conditions for ‘successful’ economic performance and social cohesion and, as contradictions and dilemmas re-emerge after their temporary and partial resolution in the good times, they reveal the systemic interconnections among different actors and institutions. The current crisis of capitalism on a global scale illustrates this well; it cannot be explained simply in terms of weak coordination or poor global governance. It might well be that the VoC literature ignored this problem because it emerged in a period of relative stability in the advanced capitalist economies compared with the 1930s and 1970s and could therefore assume away contradictions and crisis-tendencies in the mistaken belief that stability was now normal (for illuminating comments on the mid-1980s and early 1990s historical and theoretical conjuncture in which the VoC approach developed, see Hall and Soskice 2001a: 2-4).

Neglect of the Scope for Autonomization of Financial Capital

The firm-centred approach in VoC literature views private and public banks chiefly as intermediaries in allocating capital to (potentially) profitable non-financial activities. This shapes its view of financial innovation. In other words, depending on the variety of capitalism, those financial innovations will be selected that enhance the efficiency of capital allocation to non-financial firms or sectors and/or that enable such firms to compete more effectively for capital and markets. This is reflected in the positive evaluation of venture capital in the liberal market economy (Hall and Soskice 2001a; but see also Casper 2007), research on the limited impact of the neuer Markt in Germany’s coordinated market economy (Vitols 2002), and, more recently, the potentially disruptive effect of derivatives (Nölke 2009) and hedge funds (Fichtner 2009). The roles of state-owned or state-directed banks in dirigiste capitalism (e.g., France) are discussed in like manner; so are developmental states in East Asian export-oriented economies. This is consistent with the emergence of the VoC approach during the period of the ‘Great Moderation’, when stagflation and boom-bust cycles seem to have been overcome, and the two main varieties of capitalism seemed to be producing good economic performance at home and abroad. From a medium-term macro-economic perspective, however, the great moderation can be seen as the first stage in a Minsky super-cycle (comprising financial tranquillity, then fragility, and, finally, vulnerability) that would culminate in the ‘Minsky moment’ in the leading (and representative) liberal market economy and, via contagion, produce the ‘global financial crisis’ (see Minsky 1986; on the supercycle, see Palley 2011; for Minskyan crisis analyses, see Nesvetailova 2010; Palley 2009; and Rasmus 2010). Even more significantly, the initial VoC approach ignored changes in the role of banks, finance and credit that were occurring in the period of the Great Moderation and that have been discussed under the rubric of financialization.

This focus on financial intermediation made the VoC approach ill-equipped conceptually to study the autonomization of financial capital, the growing importance of fee-producing activities relative to traditional intermediation, the increased role of leverage and shadow banking, and changes in firms’ strategic orientations and performance as finance-dominated accumulation developed and speculation became more significant in differential accumulation (cf. Nölke 2009). Soskice, for one, has belatedly acknowledged this:

Liberal market economies’ primary concern should be reforming the financial sector. Deregulation of this sector was a significant cause of the financial crisis and, even before the crisis, did not provide aggregate benefits to society. The high-risk-taking activities that liberal market economies developed led to astounding growth and high tax revenues, yet the financial sector sucked the best and the brightest labour away from the public sector. Previously, many of the best-educated workers would opt for careers in the government or in education, whereas now, in the US, the smartest students find work on Wall Street, and in the UK, they solicit employment in the City (Soskice 2009: 137).

Financialization matters because it modifies the functioning of capitalist economies at the micro- and macro-levels of interest to the VoC literature. Specifically, it increases the significance of the financial sector relative to the non-financial sector; it creates the conditions for differential accumulation in favour of the financial sector based on financial innovation and speculation; and increases inequalities of income and wealth, limiting the impact of the wage as a source of demand (cf. Dore 2008; Krippner 2005). It is also a powerful mechanism of world market integration, for good or ill, making a focus on national varieties of capitalism even less appropriate. It nonetheless affects different varieties of capitalism in different ways and transmits crisis-tendencies through a range of mechanisms within and across them. Especially relevant in relation to the global financial crisis and its repercussions is how financialization makes the economy more prone to recession and the debt-deflation-default trap that produces an epic recession (Rasmus 2010).

Diversity and Variation More Generally

While Hall and Soskice started with the institutional conditions that sustain the competitive advantages of the dominant form of enterprise in a given variety of capitalism, other accounts adopt more macro-level approaches that draw on other kinds of institutionalist economic sociology, political science, and comparative political economy and/or that examine institutional complementarities that sustain good economic performance and competitiveness outside a methodologically nationalist framework. Having criticized the first-wave, firm-centred approach, I will now develop four broader criticisms of mainstream VoC work. This involves some repetition and rough justice that should be moderated and qualified in a longer study.

(1)   This literature is overly concerned with distinct (families of) national models of capitalism, treating them as rivals competing on the same terrain for the same stakes, and ignoring potential complementarities within a wider international or global division of labour. Whether in the form of methodological nationalism in which national states and their boundaries serve to define the scope of different models or a weaker form of the same problem (which allows for other more or less self-contained scales on which varieties of capitalism are constructed), this implies that each model (or family of models) has its own distinct properties that are tied to its particular ‘space economy’. In both cases, a focus on territorial logics clearly conflicts with the logic of the space of flows entailed in the organization of the world market (cf. Arrighi 1994; Harvey 2003; for a critique of Harvey, see Jessop 2006). A focus on national economies ignores alternative socio-spatial configurations such as emerging supranational blocs, global city networks, or global commodity chains. Interestingly, such cross- and intra-national variations are reflected in the socio-spatial configurations associated with forms of capitalism as well as to the changing dynamic of the world market.

(2)   Supposed varieties of capitalism are often studied in terms of their respective forms of internal coherence on the false assumption that they can and do exist in relative isolation from each other. This suggests that, inter alia, the temporal rhythms and horizons of a given variety of capitalism are internal, specific, short- or medium-term, and unrelated to the long-term global dynamic of capital. This problem is insoluble simply by invoking the key role of national states in shaping institutional and regulatory frameworks for all economic players in a national economy – especially as state formations on other scales and networked international regimes have increasingly important roles too.

(3)   The VoC literature tends to engage in static comparisons rather than exploring dynamic complementarities among different institutional forms and the inter-temporal articulation among various institutional orders that bear on differential accumulation. Such inquiries would have major implications for the periodization of capitalism, uneven and combined development, the succession of leading sectors and leading national or regional spaces, and likely crisis-tendencies.

(4)   The VoC approach tends to assume that all varieties are equal and, if one is more ‘productive’ or ‘progressive’, it could and should be copied, exported, or even imposed elsewhere. But neo-liberalism should not be regarded as merely one variety of capitalism among others that has proved more or less productive and progressive (or more or less inefficient and exploitative) than other varieties and that could be adopted elsewhere with the same positive (or negative) results, as if the whole world economy could be organized along neo-liberal lines. Instead, we learn more by locating neo-liberalism within a global ecology of economic regimes (and their economic and extra-economic supports) and asking which, if any, of these regimes has the greatest impact through its distinctive logic on the overall dynamic of accumulation on a world scale.

In contrast, I suggest that, rather than considering varieties of capitalism in isolation, attention should turn to their structural coupling, co-evolution, complementarities, rivalries, and antagonisms within the world market. In contrast to the world systems approach, however, which initially posited a distinctive logic to the world economy that allocates different varieties of capitalism a specific role within the overall world system (Wallerstein 1975), I interpret the world market as having an emergent logic that derives from the interaction among different varieties of capitalism and other forms of social and private labour. In this regard, my approach is closer to Arrighi’s emphasis on the conflict between (a) the territorial logics associated with state formation and the politico-military rivalry among states and (b) the space of flows linked to the international circulation of goods, services, direct and portfolio investment, and trade in currencies, derivatives, etc (Arrighi 1994).

My alternative draws on two basic principles: compossibility and ecological dominance. The first means that ‘not everything that is possible is compossible’ (Rescher 1975). Compossibility involves more than fleeting co-existence due to chance variation: it depends on the actual scope for co-selection, then co-retention, and, later, co-institutionalization of institutional features and their social supports. VoC literature considered compossibility, if at all, within a given variety of capitalism (with its mutually reinforcing institutional complementarities or isomorphism) – reflected in the argument that hybrid varieties perform less well than pure forms. It matters even more for the world market. More interesting and more important in the context of the diversity or variegation of capitalism is the question of compossibility between different varieties of capitalism. To what extent can different varieties co-exist in the same economic space and, if they are compossible rather than incompossible, does their co-existence have benign, neutral, or negative effects on their individual and collective economic performance (or other relevant criterion, such as democratic legitimacy, social welfare, or environmental degradation)? Recent experience would suggest, for example, that the co-existence of the US and Chinese economies is like a pathological relation of co-dependency, from which neither party is willing or able to escape; and that the Eurozone has developed on the basis of compossible relations evolving in the shadow of the German model with strong negative externalities that threaten its survival of the Eurozone without significant economic, financial, fiscal, and political reform (for an initial analysis in these terms, see Jones and Jessop 2010).

The second principle concerns the relative primacy of different ‘varieties of capitalism’ in the world market. This involves more than their relative economic efficiency as modes of rational capitalism: it also depends on their articulation to different forms of political capitalism. Ecological dominance is especially clear in the positive and negative externalities that each variety generates for the others, in ‘good’ as well as ‘hard’ times. My initial remarks deploy the first principle to develop the notion of variegated capitalism. This requires attention to the contradictions and mutual exclusivities among varieties and stages of capitalism within the world market. I then draw on the second principle to advance the claim that variegated capitalism currently exists in the shadow of neo-liberalism.

(1)   The methodological nationalism that seems to inform much VoC work encounters two problems. On the one hand, there is often wide variation within any individual national economy across its different sectors and/or regions, casting doubt on the national economy as an analytical unit and raising questions about divisions of labour defined in terms of place and/or scale, both within national frontiers and transnational networks. This problem is highlighted in the alternative and, in this regard, superior DoC work. Methodological nationalism is misleading even when the significance of the national territorial state is invoked because economic performance also depends on government and governance above, below, and transversal to the national scale and on solving problems of inter-scalar articulation. This is especially important given that the national scale has lost its taken-for-granted primacy in post-war economic and political organization and that no other scale has gained comparable primacy. On the other hand, a focus on national economies also ignores alternative socio-spatial configurations such as emerging supranational blocs, global city networks, or global commodity chains. Interestingly, such cross- and intra-national variations are connected to the socio-spatial configurations associated with forms of capitalism as well as to the changing dynamic of the world market. These patterns preceded, co-existed with, and/or have emerged following the relatively short period (in world-historical terms) of the primacy of the national scale.

(2)   A focus on internal coherence ignores the extent to which comparatively successful performance in certain economic spaces depends not only on external as well as internal conditions but also – and crucially – on a given model’s ability to externalize costs onto other spaces and/or future generations (see above). Rather than describing and interpreting them as if each variety occupied a separate silo, it would be better to explore the scope for rivalry, competition, antagonism, complementarity, or co-evolution across different models of capitalism (cf. Crouch 2005b) and their STFs in a wider international or global division of labour. The emphasis on ‘horizontal’ comparisons and/or competition among national or regional varieties of capitalism diverts attention from the ‘vertical’ relations between core and periphery (Radice 2000) and ignores important asymmetries in the competition and co-evolution among varieties of capitalism due to their unequal capacities to shape the world market.

(3)   Mainstream work often gives the misleading impression that competition among different varieties of capitalism is essentially pacific because it is market-mediated as well as profit-oriented. But competition can also occur through predation, structural domination, and resort to military means (Weber’s analysis of political capitalism is pertinent here, as are studies of varieties of imperialism). Spatio-temporal fixes are rarely purely pacific solutions to structural contradictions and strategic dilemmas but also extend to conflictual and/or coercive geo-economic and geo-political institutions and practices. More generally, a concern with such fixes involves identifying and explaining zones of relative stability in terms of changing complementarities, contradictions, and crisis-tendencies in a complex ‘ecology’ of accumulation regimes, modes of regulation, and spatio-temporal fixes. These depend on capacities to displace and defer contradictions and crisis-tendencies into the future and/or into zones of relative incoherence, instability and even catastrophe. Thus superior economic performance in certain spaces depends not only on favourable external as well as internal conditions of existence but also – and crucially – on the ability to impose costs on other spaces and future generations.

(4)   The distinctive temporalities of different varieties of capitalism must be explored to assess their potential for complementarity or conflict. The most obvious site of conflict is between the short-term calculation of the money concept of capital and emphasis on exchange-value and the longer term time horizons of productive capital with its emphasis on the appropriation and transformation of nature. This is reflected in the VoC literature to the extent that it examines bank-industry relations but there is limited, if any, recognition of the scope for finance-dominated regimes to become dissociated from productive capital. A related issue concerns long waves of technological innovation, which may be more or less suited to one or another variety of capitalism (on the intersection between long waves, the Japanese variety of capitalism, and potential crisis-tendencies, see Kitschelt 1991).


Table 2: Varieties of Capitalism vs Variegated Capitalism

Varieties of Capitalism

Variegated Capitalism

Distinct (families of) local, regional, national models, seen as rivals on the same scale or terrain for the same stakes Complementarities and tensions in a wider division of labour located in a tendentially singular, global but variegated capitalism.
Describe forms of internal coherence of distinct VoC on false assumption that they can and do exist in relative isolation from each other and, hence, that stability is also endogenous Zones of relative stability linked to instability in or beyond given national spaces in a complex ecology of accumulation regimes, modes of regulation, spatio-temporal fixes
Study temporal rhythms and horizons of VoC as internal, specific, short- or medium-term, unrelated to long term global dynamic of capital Analyze costs associated with uneven capacities to displace or defer contradictions, conflicts, and crisis-tendencies
All varieties are equal and, if one is more ‘productive’, ‘efficient’, or ‘progressive’, it could and should be copied, exported, or even imposed elsewhere Some varieties are more equal than others, with neo-liberalism tending to ecological dominance. Not all economic formations can adopt the dominant model

The Uneven Development of Variegated Capitalism

The liberal market economy (LME) is not just one VoC among others that has proved more or less productive and progressive (or more or less inefficient and exploitative) and could be adopted elsewhere with the same positive (or negative) results. It would be impossible to organize the world economy exclusively along these lines. We must reject, as Radice (2000) also notes, claims about the suprahistorical superiority of one or another model of capitalism (abstracted from its embedding in specific contexts and its articulation to other varieties) that could (or should) be adopted elsewhere. For example, not all economies can establish their national money as the world currency and run massive and growing trade deficits, not all national states can be military masters in a unipolar world, and so on. The dominant model cannot become universal. This is not just a matter of logical compossibility. It also concerns discursive-material, spatio-temporal compossibility, i.e., the substantive fit (or otherwise) among varieties of capitalism. This involves not only the economic competitiveness of a given form of capitalist organization but also the capacity of its political regime(s) to promote this form in and beyond its frontiers in relations among places, interscalar relations, and networks. Thus, behind the formal equality of national states in the inter-state system, we find an informal hierarchy of states closely related to the hierarchical structure of accumulation of social surplus among states and their constituent classes. This hierarchy is closely associated not only with economic competitiveness as this might be measured in terms of capitalist production and free trade in ‘rational capitalism’ but also with Weber’s other modes of capitalism. These include predatory capitalism, the use of force and domination, unusual deals with political authority, and finance and speculation. It would take a bold or naive scholar to argue, for example, that the economic performance of the American economy does not depend on the hard and soft power of the US state.

Examining variegated capitalism in terms of centre-periphery relations as well as in terms of simple national differentiation raises important socio-spatial questions about state capacities. Geo-economic and geo-political studies have highlighted different forms of structural coupling and co-evolution among political economic spaces. This invites consideration of ‘varieties of imperialism’ as well as ‘varieties of capitalism’, their structural coupling and, indeed, their strategic coordination. Taking the US and German cases as representative of liberal market and coordinated market economies respectively, for example, there are important contrasts between the structuring power of the US economy and American state in the world market and of Modell Deutschland in relation to the European Union and beyond. In neither case, as the global financial crisis and the Eurozone crisis demonstrate, does what is good for the US or Germany necessarily benefit the world economy or European economic space respectively.

Examining variegated capitalism can only be a preliminary step in analyzing the uneven and combined development of a world market that integrates a wide range of pre- or non-capitalist forms of production. The totality of production includes subsistence production, petty commodity production, household production, informal productive and reproductive labour and, a fortiori, their dynamic interrelations with capitalist production in all its variety. These modes of production and forms of labour are unified, to the extent that they are, through the increasing ‘ecological dominance’ of capital accumulation in the world order. This concept denotes the relative dominance of one variety of capitalism within the self-organizing ecology of different varieties of capitalism or, more broadly, the world market. This is never a question of unilateral domination but of asymmetrical relations of ecological dominance. These relations are differential, relational, contingent, and reversible. Thus, one might ask about the uneven development and structural coupling of the Rhenish, Scandinavian, and liberal market models in European economic space or about the dominance of the liberal market model within the global economy. Likewise, one might ask about the relative dominance of commercial, industrial, or financial capital within the circuits of capital on different scales. These aspects are typically inter-related. For example, the ecological dominance of neo-liberal market coordination is a function of the relative predominance of finance-led accumulation in neo-liberal economies within the world market and of the relative ecological dominance of financial capital within the global circuits of capital within an emerging world society. This includes the impact of both positive and negative externalities, i.e., beneficial and harmful effects, on the course of accumulation.

Indeed, the more strongly integrated is the world economy, the stronger do we find the contradictions of capital accumulation operating on a world scale. This has positive and negative effects. How this logic works itself out depends on the relative strength of different circuits of capital and varieties of capitalism.

Overall Implications for the Diversity of Capitalism

This contribution has emphasized five points. First, any analysis of varieties of capitalism and/or of the diversity of capitalism presupposes a definition of capitalism. It is surprising how rarely either approach provides a robust definition that highlights the differentia specifica of capitalism as a historically specific mode of production: on the contrary, its meaning is usually presupposed and tends to be equated with a profit-oriented, market-mediated system with competing economic agents. This account marginalizes the capital-labour relation, tending to reduce it to a relation of exchange in the labour market and/or to a technical issue of how the process of production (broadly conceived) is organized within a given production regime or in global commodity chains. This neglects the dual nature of production as a process of material appropriation and transformation of nature and a process of valorization. More generally, both approaches ignore incompressible basic contradictions and their implications for the temporary, partial, and unstable nature of institutional and spatio-temporal fixes associated with any given variety of capitalism or pattern of capitalist diversity. Thus institutionalized compromises, where recognized, are treated as relations among market agents or producer groups engaged in a positive-sum game against nature and/or against external competitors.

Second, whereas the VoC literature focuses on institutional complementarities that promote efficient economic performance from the viewpoint of representative firms and/or national economies, the DoC literature focuses on the institutional diversity that comes – but may also sustain – the co-existence of several production regimes or forms of labour and their embedding in a wider set of social relations. Third, financialization, as a relatively new phenomenon in terms of its magnitude and impact within variegated capitalism, poses questions for both approaches. It cannot be dismissed as an exogenous crisis-inducing process (although political struggles and unusual deals with political authority have certainly contributed to its advancement) nor can its development be explained simply in terms of an endogenous tendency within the liberal market economy or capitalism tout court. Financialization and its repercussions must be related to the exchange-value aspects of the capital relation and the dynamic of accumulation on a world scale.

Fourth, it is useful for some purposes (and sooner or later it becomes essential) to employ the general notion of the world market and the more middle-range notion of variegated capitalism to put varieties of capitalism in their place alongside and in their articulation with all those marginal, interstitial, residual, irrelevant, recalcitrant and plain contradictory forms of economic activity that are not so easily classifiable in terms of accumulation regimes, modes of regulation, varieties of capitalism, business models, and so on.

Finally, in doing so, it is important to study the hierarchical orderings, centre-periphery relations, and patterns of adhesion and exclusion that emerge from the contingencies of world market integration. If ‘variegated capitalism’ is useful for the first exercise, the second can benefit from a critical deployment of ‘ecological dominance’. They can be combined to show that the contemporary world market involves a variegated capitalism organized under the ecological dominance of neo-liberalism. This dominance has survived the crisis of a finance-led, neo-liberal world market and is reflected in the continuing path-dependent negative externalities of the global financial crisis. In other words, the crisis of global neo-liberalism triggered by the financial crisis that originated in the USA is now causing more problems for other forms of economic organization at scales from the urban and regional through the national to supra-regional economies than their dynamics (and crisis-tendencies) can cause for neo-liberalism. This is reflected at another scale in the repercussions of the global financial crisis within European economic space and its interaction with the uneven development and crisis-tendencies generated by the organization of the Eurozone economies in the shadow of Modell Deutschland. These dynamics reveal the importance of studying both liberal market economies and coordinated market economies in terms of variegated capitalism within the world market.


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[1]Searches using the Google Ngram viewer and Google advanced scholar confirm the preponderance of ‘varieties of capitalism’ over the term ‘diversity of capitalism’ (and their French equivalents) in books and in scholarly works respectively.

[2] This distinction refers to analytical strategies and may not correspond to the self-descriptions preferred by one or another author or school.

[3] They invoke this distinction to contrast Streeck and Thelen (2005) with Hall and Soskice (2001): the Aristotelian approach takes existing historical formations as the starting point for institutional analysis, the Platonic prefers theoretical models of institutions (Immergut and Anderson 2005: 356).

[4] DoC is more likely to invoke the dialectic of path-dependency and path-shaping, VoC to identify selection mechanisms that produce efficient institutional solutions

[5]  Page distinguishes in general terms between differences within a type (diversity) from differences across types (variation) (2010: 20). Applying this to the diversity and variety of capitalism, one might argue that, whereas DoC scholarship focuses on differences within a single type (capitalism), VoC research focuses on distinct types of capitalism, being less interested in its commonalities or capitalism tout court.  He adds a third set of differences: compositional. This refers to different patterns or configurations among the diverse, interacting, and adaptive elements of a complex adaptive system – one that can produce emergent phenomena as well as complexity (2010: 25). This compositional effect describes well what I refer to as variegation.

[6] In focusing on rational capitalism, Marx could show that formally free and equal exchange in the labour market disguises capitalist exploitation and that treating labour power as if it were a commodity gives capitalism a specific dynamic.

[7] Individual capitals may specialize in roles such as banking, industry and commerce but they also perform other roles and, while they may compete in particular markets to sell particular use-values, they also compete with every other capital for their own share in total surplus value. To reduce the analysis of capital in general to reified moments in the circuit of capital or, worse, to the interaction of individual capitals (or firms) limits the analysis of capitalism’s dynamic (Bryan 1985).

[8] Class relations are not purely economic but depend on juridico-political and ideological structures and their links to other social categories. Such complexities are reflected in segmented labour markets, forms of competition and cooperation among workers and other forces, and the scope for institutionalized compromise.

[9] As a fictitious commodity, labour power is not produced as an exchange-value; further, its use-value in capitalism is its capacity to produce exchange-value.

[10] This does not involve accepting the discredited “labour theory of value” (which assumes labour-power is a commodity like any other) but does commit the analyst to a “value theory of labour”, i.e., an interest in the consequences of treating labour-power as if it were a commodity (see Elson 1970; Jessop 2002; Lebowitz 2003). A similar conclusion follows from arguments that propose a “monetary theory of value” (e.g., Rubin 1972; Hein 2002).

[11] This argument rests on analogy with comparative advantage in trade.

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