In an attempt to extend the perspectives of institutional variations that have dominated the study of comparative capitalism in preceding years, Hall and Soskice have developed a ‘varieties of capitalism’ approach, which presents further perspectives to compare and explain the different forms of capitalism. As part of their approach, they have conceptualized two types of political economies, liberal market economies (LMEs) and coordinated market economies (CMEs), by reference to the way in which firms resolve coordination problems as well as to the spectrum nations can be arrayed. In CMEs non-market relationships allow for inter-firm coordination stressing strategic interaction among firms and other actors, among owners and managers, among employees and firms, and among top managers. Collaborative relationships contribute to building the competencies of the firm through extensive relational contracting and the exchange of private information inside networks. Regarding the corporate governance structure, generally different firm constituencies take part in decision-making processes, characterizing a stakeholder model. In contrast, in LMEs demand and supply conditions of competitive markets set the equilibrium outcomes of firm behavior. Competition, hierarchies and formal contracting, rather than collaborative relationships, coordinate the firms’ activities. Market institutions and marginal calculations based on neoclassical economics influence the actor’s willingness to supply and demand goods or services. The shareholder model of governance prevails over the stakeholder model as shareholders have the main role in decision-making while other constituencies dispose of very limited influence only. In an attempt to reconstruct the development process of the UK into a liberal market economy, the paper intends to describe and analyze key aspects as well as difficulties of economic policy making. Furthermore, it seeks to present and clarify strategic differences between the two political economies by comparing the presented varieties of capitalism with special emphasis on corporate governance and labor market policies as found in Germany (a CME) and the UK (a LME). [...]
Table of Contents
- 1. Introduction
- 1.1. The Context of CMEs and LMEs as Varieties of Capitalism
- 1.2. Adopted approach and argument structure
- 2. The Development of the UK into a LME
- 2.1. Postwar Settlement and Welfare State (1945-1979)
- 2.2. Conservative Government (1979-1997): Market Capitalism
- 2.2.1. Conservative capitalism: the experiment
- 2.2.2. Conservative capitalism: an assessment
- 2.3. New Labor (1997-): New Capitalism – a LME?
- 3. A Comparison Approach: CME vs. LME
- 3.1. The Power of Government
- 3.2. Business Government Relations
- 3.2.1. Varieties of Labor Market Policy: Britain vs. Germany
- 3.2.2. Varieties of Corporate Governance: Britain vs. Germany
- 4. Conclusion
Objectives and Key Themes
This paper aims to analyze the development of the UK's economy into a Liberal Market Economy (LME), comparing it to Coordinated Market Economies (CMEs). It will examine key policy decisions and their impact, focusing on the differences between the UK and Germany as examples of LMEs and CMEs, respectively. * The transformation of the UK economy from a post-war welfare state to an LME. * The role of government policy in shaping the UK's economic trajectory. * A comparison of the UK's LME model with Germany's CME model. * The impact of different corporate governance structures on economic performance. * The influence of labor market policies on the development of LMEs and CMEs.Chapter Summaries
1. Introduction: This introductory chapter sets the stage by introducing the "varieties of capitalism" approach, differentiating between Coordinated Market Economies (CMEs) and Liberal Market Economies (LMEs). It establishes the framework for analyzing the UK's economic development, highlighting the key characteristics of each model—CMEs emphasizing non-market coordination and stakeholder governance, while LMEs prioritize market mechanisms, competition, and shareholder value. The chapter lays out the paper's objective: to analyze the UK's transformation into an LME, comparing its trajectory with that of a CME (using Germany as a case study), focusing on the government's role and the differences in corporate governance and labor market policies. 2. The Development of the UK into a LME: This section charts the UK's economic evolution, starting with the post-World War II "postwar settlement" and its Keynesian policies and welfare state model. It tracks the shift towards a market-oriented approach under Conservative governments, emphasizing the Thatcherite reforms. The chapter explains how these policies fundamentally reshaped the UK economy, paving the way for the LME model. The impact of New Labour's policies on this transformation are also explored. It analyzes the key events, government interventions, and their effects on the economy's structure and performance. 3. A Comparison Approach: CME vs. LME: This chapter delves into a comparative analysis of CMEs and LMEs, using Germany and the UK as prime examples. It investigates how business-government relations, labor market policies, and corporate governance structures differ between the two models. The analysis explores the interplay between institutional frameworks and public policies, showing how these factors influence industrial relations and firm behavior. The comparative approach helps highlight the distinct features and consequences of each economic model, demonstrating the contrasting approaches to economic coordination and regulation.Keywords
Liberal Market Economy (LME), Coordinated Market Economy (CME), UK economic development, government policy, Thatcherism, New Labour, corporate governance, labor market policies, varieties of capitalism, post-war settlement, Keynesian economics, comparative capitalism.
Frequently Asked Questions: A Comprehensive Language Preview
What is the main topic of this paper?
This paper analyzes the development of the UK's economy into a Liberal Market Economy (LME), comparing it to Coordinated Market Economies (CMEs). It examines key policy decisions and their impact, focusing on the differences between the UK and Germany as examples of LMEs and CMEs, respectively.
What are the key themes explored in the paper?
The key themes include the transformation of the UK economy from a post-war welfare state to an LME; the role of government policy in shaping the UK's economic trajectory; a comparison of the UK's LME model with Germany's CME model; the impact of different corporate governance structures on economic performance; and the influence of labor market policies on the development of LMEs and CMEs.
What is the structure of the paper?
The paper is structured into four chapters: an introduction setting the context and outlining the approach; a chapter detailing the UK's development into an LME, covering the post-war period, Thatcherite reforms, and New Labour's influence; a comparative chapter analyzing the differences between LMEs and CMEs using the UK and Germany as case studies; and a concluding chapter summarizing the findings.
What specific historical periods are analyzed in the paper?
The paper analyzes several key periods in UK economic history: the post-war settlement (1945-1979), the Conservative governments under Thatcher (1979-1997), and the New Labour era (1997-present).
What are the key differences between LMEs and CMEs highlighted in the paper?
The paper highlights differences in the power of government, business-government relations, labor market policies, and corporate governance structures between LMEs (like the UK) and CMEs (like Germany). LMEs emphasize market mechanisms, competition, and shareholder value, while CMEs prioritize non-market coordination and stakeholder governance.
What specific policies and their impacts are discussed?
The paper discusses the impact of Keynesian policies in the post-war period, Thatcherite reforms (privatization, deregulation), and New Labour's policies on the UK economy's transformation into an LME. It also analyzes the contrasting labor market and corporate governance policies of the UK and Germany.
What is the purpose of the comparison between the UK and Germany?
The comparison between the UK (an LME) and Germany (a CME) serves to highlight the contrasting approaches to economic coordination and regulation, illustrating the distinct features and consequences of each economic model.
What are the keywords associated with this paper?
Key words include: Liberal Market Economy (LME), Coordinated Market Economy (CME), UK economic development, government policy, Thatcherism, New Labour, corporate governance, labor market policies, varieties of capitalism, post-war settlement, Keynesian economics, comparative capitalism.
What is the intended audience for this paper?
The intended audience is academic, focusing on researchers and students interested in comparative political economy, economic history, and the varieties of capitalism approach.
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- Rouven Dresselhaus (Author), Stefanie Vielplanells, Cristina, Weltzer (Author), 2005, Great Britain and the development of a liberal market economy, Munich, GRIN Verlag, https://www.grin.com/document/69232
