Institutional change in varieties of capitalism

TLDR

Contemporary approaches to varieties of capitalism are often criticized for neglecting issues of institutional change. This paper develops a more extensive approach to institutional change that remains congruent with the varieties‑of‑capitalism perspective. The authors outline institutional stability as dependent on welfare effects, distributive benefits to coalitions, and continuous mobilization, then analyze how defection, reinterpretation, and reform emerge from contestation, evaluating this account against recent European political‑economic developments. The study concludes by outlining how this perspective informs contemporary analyses of liberalization in the political economy.

Abstract

Contemporary approaches to varieties to capitalism are often criticized for neglecting issues of institutional change. This paper develops an approach to institutional change more extended than the one provided in Hall and Soskice (in Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford, Oxford University Press, 2001) but congruent with its varieties-of-capitalism perspective. It begins by outlining an approach to institutional stability, which suggests that the persistence of institutions depends not only on their aggregate welfare effects but also on the distributive benefits that they provide to the underlying social or political coalitions; and not only on the Pareto-optimal quality of such equilibria but also on continuous processes of mobilization through which the actors test the limits of the existing institutions. It then develops an analysis of institutional change that emphasizes the ways in which defection, reinterpretation and reform emerge out of such contestation and assesses the accuracy of this account against recent developments in the political economies of Europe. The paper concludes by outlining the implications of this perspective for contemporary analyses of liberalization in the political economy.