Varieties of capitalism: the importance of political and social choices

Abstract

This paper examines the influential Varieties of Capitalism argument (Hall and Soskice 2001) that economies tend to one of two forms of capitalism - liberal market and coordinated market economies - with different employment policies being conducive to economic success in each. An analysis of the relationship between financial and labour market systems suggests that the links between the two operate in a less deterministic way than is suggested by Hall and Soskice. This suggests that industrial relations actors are not prisoners of coordinated or liberal systems, and that ‘political’ choice retains a significant role in changes to employment systems.