Capitalism approach to economics
The aim of this paper is to discuss the Varieties of Capitalism approach and determine whether the recession of this approach which began in 2008 has paid little attention to the common features of all the capitalist economies (Witt & Jackson, 2016). This essay will discuss the overview of the Varieties of Capitalism framework and approach while deliberating more on the two forms of the capitalist model and the extent of their differentiation in the economic coordination (Hall & Gingerich, 2009). The paper will discuss the common features of the capitalist economies and how these features are comparing with the continuing variations in organizations such as outcomes and politics. The paper will also cover both weaknesses and strengths for both the coordinated market and liberal approach to employment during the recession.
Additionally, the paper will investigate the correlations between the Varieties of Capitalism approach and the recession. The forces of demand and supply will push the prices downward and upward depending on the decisions of the individual sellers and buyers. This is called the “invisible hand” of Adam Smith (Wilkinson & Wood, 2012). Discussion According to Hall (2001), there are two types of economies that are distinguished by some sets of institutions (Hall, 2001). They include the coordinated market economy and liberal market economy. The coordinated market economy is making up the core of the Eurozone such as Germany, Sweden and Denmark while the liberal market economy is present in Australia, Canada and UK and is also similar to the United States (Hall, 2001). For instance, Germany is a typical coordinated market economy, mainly in her employment relations and has her status for the training of her labor force to help them thrive in various industries, particularly in the engineering industries.
On the other hand, the United Kingdom is characterized by the independent employer regulation, limited collective bargaining coverage and weak trade unions (Wilkinson & Wood, 2012). All these have been attributed to the high degree of inequality of incomes particularly between women and men, inclination of market competitiveness on the basis of cheap labor, and highly flexible labor markets (Walker, 2010). Hall also confirmed that sometimes the economic ideas may be very influential. Together with his colleagues, they defined how the monetarist and Keynesian philosophies had stimulated the institutional changes and political agendas globally (Hall, 2001). With regards to the understanding of the post 2008 crisis neo-liberalism, it is important to pay attention to the relationships between the state, capital and labor force (Clark, Heyes & Lewis, 2011).
Main developments In the 19th century, employ contracts were based on the Servant and Master Act 1823 that was established with the aim disciplining and repressing the combination of workers in the trade workers (Witt & Jackson, 2016). The Employment Law in the United Kingdom has rapidly developed in the last 40 years, given the Trade Union movement. Looking at the modern development of the UK, the key feature of the labor market is “voluntarism” in which the role of the study exists between the organized labor and the social forces of capital. Since 1979, the limited coverage and collective bargaining in the United Kingdom decreased from 75 – 27. The bargaining structure in the United Kingdom is decentralized and highly fragmented. In the recession, key changes in the employment relations that affected the workplaces like cut or freeze in the wages and the restructuring in several organizations (Lane & Wood, 2009).
Though institutional changes due to market pressures, Varieties of the Capitalism approach is clearly evident. This does not seem to be moving convergence. Indeed, the amendments in the clauses in the industry-wide agreements, the work council encourage wage reductions or there exists increase in the working hours and lastly most organizations are exiting the bargaining agreements (Lane & Wood, 2009). This was on the basis that the Japanese trade unions were weak by comparison (Heyes, Lewis & Clark, 2012). Besides, their workforce movements had not been influenced by the political actors. This implies the workforce of Japan had been marginalized and this still remains (Wood, Dibben & Ogden, 2014). These findings indicate that the best-fit model which can truly describe the type of economies a nation falls under (Paraskevopoulos, 2017).
Mainly, this is because the coordinate market economies and the liberal market economies are not competing against each other, but they compete on the way they can dominate the global markets (Hall, 2001). The major concern of the contributors to the Varieties of Capitalism approach literature has been the examination of the roles played by the networks, hierarchies and markets in the coordination of the economic activities and the analysis of the comparative advantages that are conferred by the various institutional constellations (Kapelyushnikov, Kuznetsov & Kuznetsova, 2011). The Varieties of Capitalism approach has implicitly focused on the manufacturing sector and much attention has been accorded to the institutions in their role to support the different corporate strategies (Feldmann, 2013). Implicit focus was on the various types of productive activities.
With regards to the financial capital, the focus is on the access of the firms to finance and the corporate governance (Paraskevopoulos, 2017). The Varieties of the Capitalism approach is paying very little attention finance development as a distinctive capital fraction, the role of finance as an agent of discipline on capital accumulation, and the manner in which the finance representatives have decided to influence various government policies (Witt & Jackson, 2016). The necessity to address the deficiency was made clear by the crisis (Boyer, 2005). In the place of the Varieties of Capitalism focus on institution, transactions and forums in which they occur, it is necessary to reaffirm the process of investing, realizing, and generating surplus value, the forms adopted by the capital (such as, interest-bearing capital, industrial capital, and the analytical basis of the concept of capital (Lane & Wood, 2009).
Therefore, it is important to understand the concrete relationship between the actors in a specific capitalist society be understood with the reference to the underlying social relationship which are common to the capitalist societies, processes of reproducing the social and economic relations and the forces disrupting their reproduction (Hall & Gingerich, 2009). Conclusion It is surprising that both capitalism, an economic system and neo-liberalism, an ideology have both remained strong. It seems that neo-liberalism is playing a critical role at the top of most of the catastrophic crisis. D. W. Soskice (Ed. Oxford: Oxford University Press. Heyes, J. Boyer, R. How and why capitalisms differ. Economy and society, 34(4), 509-557. Lane, C. , & Wood, G. Work, employment and society, 25(4), 627-641. Wilkinson, A. , & Wood, G. Institutions and employment relations: The state of the art.
From $10 to earn access
Only on Studyloop