Rethinking Varieties of Capitalism and growth theory in the ICT era*

Abstract

Going beyond the Varieties of Capitalism comparative analysis, a theory of advanced capitalism is developed to explain what has been driving advanced capitalism through the massive creative destruction of the information and communication technologies (ICT) revolution of recent decades. Second, it is argued – reconfiguring Varieties of Capitalism – that the advanced capitalist economies should be seen not just in terms of comparative capitalisms, but as an advanced world innovation system of interacting advanced economies. Critically, the dominant position in that system is the (hegemonic but also fragile, problematic and handicapped) United States as the world driver of radical innovation: this reflects the key role of its top research universities, their diasporas and associated deregulated high-risk-taking venture capitalist and investment banking ecosystems; its decentralised and business-porous political and legal systems; and its dominance ab initio of digitalisation. Problematic has been the major reduction since the early 1990s in Federal R&D, itself a consequence of the anti-public-expenditure Republican gridlock in Congress, and in turn the result of the political, geographical and socioeconomic polarisation associated with technological creative destruction more dramatically in the US than elsewhere. Third, it addresses the paradox – in the contemporary technologically revolutionary age – of productivity growth falling below that of the Fordist era. It is argued that Schumpeterian growth expectations play a much larger role in R&D investment in the high-sunk-cost and high-risk US-centred ICT era than in the relative stability of Fordism and Chandlerian corporations; the author sets out a simple Keynesian–Kaldorian expectations-based multiple equilibrium productivity growth model, where major crashes shift economies down to lower growth equilibria. The conclusion raises six areas of future work which stem from the approaches outlined above.