LECTURE 1 - Varieties of Capitalism

Introduction to the Module

  • Applying theory to topics helps explore how theory aids understanding the world.

  • Theories inform debates about management; application to dissertation work.

Why Theory is Needed

  • Theory in social sciences: abstraction, observing rules/laws to generalize.

  • Used in empirical research and abstract concepts like capitalism/management.

  • Theory helps understand reality and is central to understanding management.

Varieties of Capitalism Thesis

  • Hall, P. & Sockice, D. W. (2001), examines economic and social frameworks' influence.

  • Organisations operate within these frameworks, dictating possibilities and desires.

The End of History?

  • Fukuyama (1992): Fall of Soviet Union = end of challenges to capitalism.

  • Challenges Marx: end of Soviet Communism and history as a force for societal change.

  • Marx: Societies evolve through stages when economy changes, causing wealth conflicts.

  • Fukuyama: End of alternatives to capitalism = end of history as a force for change.

The Theory: LME vs CME

  • Pro-market view: capitalism refined by market forces to a 'pure' form.

  • Hall et al.: Economies don't converge; two models exist side-by-side:-

    • Liberal Market Economies (LMEs)

    • Co-ordinated Market Economies (CMEs)

Characteristics of LMEs and CMEs

  • LMEs: free markets, little state regulation, private welfare.

  • CMEs: state regulation, nationalized healthcare, industrial democracy.

The Future for CMEs

  • Corporations in CMEs support state role due to business plans linked to state interaction.

  • Capital, not labor, is the deciding factor between LMEs and CMEs.

Industrial Relations

  • LMEs:-

    • Based on market relations, contracts between actors.

    • Wage negotiation at interview level.

    • Lower union density, collaboration focused.

  • CMEs:-

    • Higher union density.

    • Recognizes capital/labor divide.

    • Collective bargaining, worker representation on boards.

Other Aspects

  • Vocational training:-

    • LME: company-focused; CME: generalized.

  • Finance:-

    • LME: quick returns; CME: long-term investment.

  • Inter-firm relations:-

    • LME: cartels illegal; CMEs: cooperation legal.

Examples: US (LME) and Germany (CME)

  • US (LME):-

    • Little state intervention.

    • Company-led innovation.

    • Limited liability companies; restricted labor organization.

  • Germany (CME):-

    • Worker representation on boards.

    • Legislation mandated representation in larger firms.

    • Managers from 'shop floor' more evident.

Arguments For Varieties of Capitalism

  • Emphasizes historical continuity and gradual development of LMEs/CMEs.

  • Alliances between elites and labor in establishing CME institutions.

  • Provides rules of thumb for businesses expanding overseas.

Critique of Varieties of Capitalism

  • Pull Towards being LME.

  • Business pushed for return to liberalism.

  • Election of Thatcher saw business turn against CME institutions.

Japan Since 1945

  • Resistance to deregulation, some movement in 1980s, discredited in mid-1990s.

  • Significant Inequality:-

    • Seniority rewards, reduced labor power, company-linked welfare.

    • Results in long hours, patriarchy.

Neoliberal Capitalism As Ideology

  • World-view: free market, individualism, small state, private property rights.

  • Political-economic position, not a law; questions why it's seen as without alternative.

Hegemonic Discourses

  • Discourses frame choices if not critically questioned.

Research Ideas

  • Grouping examples (LMEs/CMEs, BRICS, PIIGS), case studies, desk-based research.

Application of Concepts

  • Ideology: creation, shaping economy/society/organizations.

  • Discourse: language use to include/exclude, legitimize actions.

Fulcher, Capitalism

  • Charts capitalist development in Sweden, US, and Japan.

  • Considers forms/varieties; examines if variety exists.

Alternative Forms of Capitalist Economy

  • Anarchic capitalism.

  • Managed Capitalism.

  • Remarketized capitalism.

Anarchic Capitalism

  • Entrepreneurial activities unchecked by labor/state.

  • Liberal ideas underpin neoliberal political economy.

Managed Capitalism

  • Class organization by employers/workers.

  • State responsible for education/health/municipal government.

  • Professional management becomes part of the landscape of capitalism.

Remarketized Capitalism

  • Neoliberal capitalism re-emergence, repeal of Keynesian economics, sale of nationalized industries.

  • Fulcher analyzes stages; Varieties of Capitalism allows back-and-forth.

Key Thinkers and Post-Modernity Scenarios

  • Francis Fukuyama:-

    • Point: Argued the end of the Cold War meant the end of history as ideological struggles ceased, with liberal democracy and capitalism becoming the final form of human government.

    • Real-world Scenario:-

    • Example: The expansion of the European Union, integrating former Soviet-bloc countries into a liberal economic and political framework.

    • Many of these countries adopted market economies and democratic institutions, aligning with Fukuyama’s vision of a universal adoption of liberal capitalism.

  • Karl Marx:-

    • Point: Societies evolve through economic stages, leading to conflicts over wealth and resources. Capitalism contains inherent contradictions leading to its eventual overthrow.

    • Real-world Scenario:-

    • Example: The increasing wealth gap in many nations, accompanied by social unrest and movements advocating for economic equality, reflecting the tensions that Marx predicted within capitalist systems.