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This chapter examines Polanyi's substantive institutionalist analysis of market economies, market societies, and state intervention in the light of two later schools: the Parisian regulation approach to contemporary capitalism and systems-theoretical accounts of the market economy as an autopoietic system. All three regard the modern economy as an operationally autonomous system that is nonetheless socially embedded and needful of complex forms of social regulation. For each, an adequate account of economic activities should explore how they are related to the wider social environment; how they are embedded in a wider nexus of social institutions; how the latter assist in reproducing the capitalist (or market) economy; and how their development is coupled to these and other environing institutions. The chapter presents their respective accounts of economic institutedness and embeddedness, and then discusses the stability and reproducibility of the capitalist economy, paying particular attention to governance and meta-governance.

This chapter presents a summary of the major ways of comparing the organization and control of economic activities in capitalist societies, and how different business systems vary in their dominance of market economies through their association with particular kinds of societal institutions. The key dimensions that distinguish different ways of organizing and controlling market economies are described, and their combination as eight ideal types of business systems is discussed. The various kinds of strategic actors that exercise authority in these are distinguished, together with the different kinds of connections between dominant institutions and prevalent patterns of economic organization at different levels of analysis.

Gorbachev's two major failures were in economic reform and in resolution of the ‘national question’, although that statement has to be qualified by the observation that the problems involved were so intractable that the idea that a new leader could have come along and ‘solved’ them would be the height of naivety. The tension between two contradictory aims – improving the system and constructing the system on different principles – was especially acute in the economic sphere. It was in the attempted radical reconstruction of the economic system that Gorbachev encountered the most effective resistance on the part of agencies whose co‐operation was necessary both for the everyday running of the economy and the implementation of reform. As in other spheres of policy, Gorbachev's own views became more radical over time, and by 1990, partly under the influence of economist Nikolay Petrakov, he accepted that an essentially market economy (albeit one closer to a West European social democratic variant than to capitalism American‐style) was desirable. When a team of economists jointly appointed by Gorbachev and by Boris Yeltsin produced in 1990 a ‘500 Hundred Days Programme’ that would allegedly have created a market economy in the Soviet Union within that short time period, Gorbachev hesitated, at first supporting the proposals and then, partly under pressure from within the system, retreating from them. During 1991, Gorbachev attempted to keep in play several economic options; indecision and inconsistency in this area left the economy in limbo and weakened Gorbachev's authority.

This chapter analyzes the development of a market economy and welfare system in both America and Europe. America and European nation-states have followed radically different paths of market-building. The institutionalizations of these different paths have constrained the strategies for dealing with the negative effects of the operation of the market. Since the turn of the 19th century, America has built a regulatory state, that is, an institutional apparatus designed to pursue market-correcting strategies. At the same time, even after World War II, the single European nation-states have continued to pursue market-substituting strategies, that is, they created institutional apparatuses for implementing some form of public control of the economy. It was within this different structuring of the relations between the market and the state that different types of welfare systems have developed on the two shores of the Atlantic.

The changes in the prevalent postwar business systems of many OECD economies can be analysed by extending the analysis of the four ideal types of institutional regimes presented in Chapter 2 to incorporate two further features that affect the priorities and strategies of leading firms, and to identify the nature of the dominant coalitions that support these types. This chapter discusses these features of institutional regimes and the key groups associated with them, together with their impact on prevalent growth strategies.

An increasingly shareholder–oriented approach to corporate governance has emerged in the nonliberal market economies of continental Europe over the last ten–fifteen years. However, Left parties have also enjoyed a strong presence in government during the same period. This presents a puzzle, as intuitive expectations regarding the economic policy preferences of political parties – and also Mark Roe's theory (2003) of the political determinants of corporate governance – imply that pro‐shareholder corporate governance reform is more likely to be a feature of conservative than Left government.

The politics of migration in the three established countries of immigration, France, Germany, and the United Kingdom, are scrutinized in this chapter, with particular emphasis being placed on an analysis of employers, trade unions, and humanitarian NGOs in attempting to shape national and indirectly European migration policies. In addition, the effects of top-down Europeanization and national initiatives at shaping bottom-up Europeanization are explored. French migration policy has only recently rediscovered active labor recruitment due to relatively belated employer interest. In Germany, employers are most interested in highly skilled migrants both in the manufacturing and service sector, while in the UK, business calls for entry channels both for highly skilled and low-wage low-skill migration, preferably into the service sector. In all countries, NGOs struggle to make their voices heard, though French groups have been successful with direct action.

Trends over the last half century in particular have shown that Paris has been able to exist as a financial centre only when its financial market has been vigorous, which has clearly been a necessary but not always a sufficient condition. The future of the Paris market can be seen in terms of its ability to play a leading role in continental Europe. But this will only be possible through alliances with other markets.

VoC theory seems to be caught in a trade-off between parsimony and explanatory capacity. It provides high heuristic value-added for analysing countries where performance-enhancing complementarities rely on clearly different patterns of actor interaction and forms of coordination. It appears more difficult to extend to ‘deviant’ cases where there is a mix of logics, a high degree of institutional incoherence and an apparent absence of complementarities. This chapter uses the tools of VoC to explain how mechanisms of market and non-market coordination work and change over time in two ‘mixed market economies’ (MMEs) — Italy and Spain. It focuses on the relationship between production regimes and welfare systems, and specifically the wage-labour nexus and employment protection. In contrast to arguments for a distinctive form of state capitalism alongside ‘market’ and ‘managed’ varieties, this chapter argues that the state's role is distinctive but not unique in the Mediterranean countries, and has also undergone considerable change in recent years. It also argues that two different trends can be perceived in these countries: the growth of ‘autonomous coordination’ in which actors seek to manage the economy via new kinds of non-market governance; and ‘market colonization’, a process whereby market modes of coordination emerge and prevail.

What is the relationship between institutional frameworks, public policy, and the governance of innovative competencies by firms? This chapter extends the varieties of capitalism theory to examine how different types of economy impede the governance of new technology firms. It argues that most new technologies attempt to create radical innovations by developing competencies along a widely diffused “Silicon Valley Model” surrounding the financing, staffing, and creation of employee incentives within firms. Liberal market economies, such as those found in the US and UK, provide strong institutional supports for the Silicon Valley Model, while coordinated market economies, such as Germany or Sweden, provide a series of constraints. A theoretical framework is developed to explore this argument. How public policy might impact competitiveness within new technology industries across the two types of economies is discussed.

This is the second of three chapters on the role of economic interests, and of systems for representing those interests, in the politics of welfare state reform. They explore the linkages between national welfare states and national economies, and examine the processes through which economic actors press their interests on policy makers. Section 1 of Manow's chapter offers a critical account of contributions that predict the formation of new political coalitions along the cleavage line between those firms and workers that are forced to adjust to international market pressures and those that enjoy domestic shelter from globalized markets; a brief discussion is included of the relative importance of the electorate in current welfare reforms as compared with the role played by organized interests of capital and labour. Section 2 presents a transaction cost argument that seeks to identify one central logic linking production and protection in continental welfare states and coordinated market economies, respectively; the central argument is that generous welfare state programmes may enhance and not diminish international competitiveness and can be part of the comparative institutional advantage of an economy rather than solely contributing to its comparative cost disadvantage. Section 3 concludes by briefly discussing the implications of the argument presented in Sect. 2 for the present debate on the compensatory role of the welfare state in a globalized economy.

This chapter explores the politics of migration in three recent countries of immigration. The analysis of employers, trade unions, and humanitarian NGOs in shaping national migration policies again is at the centre of analysis. Top-down Europeanization is particularly pivotal in new immigration countries with embryonic systems of migration regulation, while bottom-up attempts have been limited to Italian proposals for quota systems and their use to induce “cooperation” with third countries in migration flow management. But despite the recent history of immigration, employers, especially in Ireland and Italy, value managed migration of labor migrants, both high and low skill, feeding into the primary, tertiary, and, in the case of Italy, also the secondary sector to alleviate labor and in some instances skill shortages. In Poland, undocumented economic migration from neighboring Ukraine is tolerated, but thus far, there is scant interest in active labor market recruitment on the part of employers. The labor market interest associations are pivotal actors in Ireland and Italy, actively comanaging labor migration flows, while in Poland their influence is less pronounced. NGOs face severe difficulties in constructing access channels to government with the exception of Italy, where links to political parties and demonstrations have often led to more liberal regulatory outcomes.

Examines the external economic influences that have affected democratic consolidation. The analysis concentrates on the role played by external economic actors, taking as a case study the IMF and a comparison of its role with that of the EU. The first section considers the IMF provision of financial and technical assistance to facilitate the political and economic transition process. It also examines the role of the IMF in providing policy advice and acting as a catalyst to obtain financial support from other resources. The second section describes the activities of the IMF in transition countries. The third discusses links between a market‐oriented economy and democratization at a general level, while the fourth indicates how tensions may arise between the two in specific cases of post‐communist transition. The fifth section discusses IMF conditionality as applied to the transition countries with regard to the needs, objectives, and characteristics of the country itself, its ability to bargain with the international organization in question, and the international economic and political environment. The sixth section assesses how appropriate the policy descriptions of the IMF were for the economies in transition and what kind of positive and negative lessons might be drawn from applying conditionality. Lastly, the chapter discusses the implications in this context of proposals for IMF reform.

The dialectical complementarity of liberalism and corporatist governance in provincialized layers has brought forth internationally oriented companies promoting diversified quality production, credit rather than share issue finance, and a stakeholder model of corporate governance rather than shareholder capitalism. Such characteristics have recently been shaken by the impetus of Anglo-American shareholder value orientations in international ‘financialization’. Whereas changes that challenge established practices are indubitable, the pervasive phenomenon of recombination implying reassertion of domestic practices in new forms is also present: credit financing has gone up again; employee representatives have both modified and helped to implement shareholder value orientations; co-determination has, despite shocks, also proved helpful in the fashioning of changes. Financial and strategic-operative internationalization of enterprises are not clearly related to one another. Generally, recombination of opposed tendencies and characteristics again is the rule.

The varieties of capitalism approach focuses on explaining variation in industry specialization at the national level. However, much evidence from the field of economic geography suggests that industries tend to cluster within regional economies, and empirical evidence suggests that there are regions within coordinated market economies that have sustained clusters of radically innovative companies. Focusing on the successful wireless Internet and software cluster in Stockholm, Sweden, this chapter explores mechanisms by which alternative patterns of economic coordination may develop. The analysis focuses on the role of large companies, particularly in industries in which technical interdependencies between firms is strong in creating patterns of economic coordination that run counter to national models.

This chapter draws on comparative political economy to explore the comparative politics of expertise. Comparative political economy in the 1970s and 1980s was largely about variation in the institutional arrangement of political structures, or what we might call policy regimes (e.g., liberal, statist, and corporatist). It argues that what is missing is a comparable discussion of “knowledge regimes”—the institutions through which policy-relevant ideas are generated and percolate into the policy process in ways that affect economic performance. It addresses this omission by introducing and developing the concept of knowledge regimes and comparing knowledge regimes in liberal and coordinated market economies.

This chapter asserts that the economy of the early Roman Empire was primarily a market economy. The parts of this economy located far from each other were not tied together as tightly as markets often are today, but they still functioned as part of a comprehensive Mediterranean market. There are two reasons why this argument is important. First, it brings the description of the Roman economy as a whole into accord with the fragmentary evidence about individual market transactions. Second, this synthetic view provides a platform on which to investigate further questions about the origins and eventual demise of the Roman economy and about conditions for the formation and preservation of markets in general.

This chapter presents comparative analysis of capitalism based on the theory of institutions as political equilibriums and concepts of institutional complementarity and hierarchy discussed in chapter 2. It presents five possible models of capitalism (market-based economies, Social-Democratic economies, Asian capitalism, Continental European capitalism, and South European capitalism), and the set of institutional complementarities between five institutional forms that these models are based on. It argues that no single developed economy is accurately described by any of the five models of capitalism, which are ideal types. They may possess characteristics which make them close to one or the other model, without being fully identifiable with the model itself.