Academic journal article Capital & Class

The UK: Less a Liberal Market Economy, More a Post-Imperial One

Academic journal article Capital & Class

The UK: Less a Liberal Market Economy, More a Post-Imperial One

Article excerpt


It is conventional in much of the comparative capitalisms (CC) literature to treat the US and the UK economies as examples of one particular capitalist model, to be contrasted with one or more other models, which are invariably treated as socially superior but economically suspect. Sometimes the typology is that of liberal market economies (LMEs) against coordinated market economics (CMEs). Sometimes, it is Anglo-Saxon capitalism against Rhineland capitalism. Sometimes it is liberal welfare states against conservative and social-democratic welfare states; but regardless of the specific categorisation, there is a tendency in the relevant literatures to group the USA and the UK together. The argument here is that putting them together obscures more than it illuminates; and it does so precisely because the similarities of the two economies are rooted in the one thing that dominant typologies in CC studies systematically fail to emphasise: namely, the institutional consequences of past and present imperialisms.

The limits of 'LME' as a category

Prime responsibility for linking the US and UK together as LMEs lies with Peter Hall and David Soskice (2001: 19). Though their predominant concern was visibly with the defence of CMEs, in treating both the US and UK as non-coordinated economies Hall and Soskice stressed the distance between government and business in both of them, the systemic weakness of organised labour when compared to more coordinated market economies, and the predominance of idea systems within the liberal model, privileging the right of managers to manage and of capital freely to move (see also Gallas, in this special issue, on the UK). The LME/CME distinction was always a politically charged one, largely functioning as a defence of European welfare capitalism against its neoliberal critics. But in conceding the viability of LMEs as well as CMEs, and by placing the US and UK economies firmly in the LME camp, Hall and Soskice inadvertently gave retrospective reinforcement to the Reaganite enthusiasm for business deregulation and to the Thatcherite assertion that the UK's late-20th-century economic weaknesses had much to do with the partial nature of the constraints on private enterprise created by years of half-hearted social democracy. It was Hall and Soskice (2001: 57), after all, and not Margaret Thatcher, who insisted that 'because international liberalization enhances the exit options of firms in LMEs ... the balance of power is likely to tilt towards business. The result should be some weakening of organized labor and a substantial amount of deregulation, much as conventional views predict.'

My general unease with the LME/CME distinction, and with the new institutionalist paradigm it helps sustain, has been laid out elsewhere (Coates 2002, 2005; see also my other paper in this special issue). What concerns me here is a more specific weakness in the basic typology: the relatively unexamined inadequacy of LME as a category of analysis in the original Hall and Soskice formulation. Applying the label 'liberal market economy' to either the USA or the UK brought with it three significant weaknesses on which it is valuable to dwell: the lack of fit between the model and the reality it labelled; the truncated and ultimately misleading view of institutional development and change it helped to sustain; and the systematic failure of the whole approach to place models of capitalism on some more systematically developed historical and contemporary global map (see also Bieling and Jessop in this special issue).

The lack of fit

The gap between model and reality is clearest in the case of the USA as a LME. When labelling it in that way, Hall and Soskice focused on financial systems and corporate governance, industrial relations, education and training, and inter-company relationships. That focus led them to ignore or downplay, among other things, the close working relationship between the Pentagon and the US engineering industry, between the oil industry and the Department of Energy, between large agribusinesses and the Agriculture Department, and between large pharmaceutical companies and federally funded basic research and Medicare/Medicaid spending. …

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