Socio-Economic Review 2:87-108 (2004)
© 2004 Society for the Advancement of Socio-Economics
The varieties of capitalism paradigm: not enough variety?
Institute for German Studies, European Research Institute, Birmingham University, Birmingham B15 2TT, UK
Correspondence: m.m.allen{at}bham.co.uk
This paper attempts to shed light on some of the unstated assumptions of the varieties of capitalism framework by comparing it with its ‘close relative’—that is, transaction cost economics—as well as neoclassical economics. These comparisons show that, within the varieties of capitalism approach, actors' strategic preferences are assumed to be endogenous to the institutional environment in which they operate. Moreover, important institutions are assumed to be uniformly spread across firms within a national economy. This latter presupposition ultimately makes the varieties of capitalism framework a structuralist approach. Despite its claims to the contrary that it is an actor-centred approach, the varieties of firms paradigm treats the varieties of firms as irrelevant. It is this variety that is lacking in the approach, and that needs to be addressed in any empirical assessments of it.
Key Words: varieties of capitalism • transaction cost economics • institutions: collective agreements • works councils • Germany • JEL classification: B25 institutional economic thought, B13 neoclassical economic thought, D23 organizational behaviour; transaction costs; property rights