How Many Varieties of Capitalism? Structural Reform and Inequality in Western Europe

Both scholarly and public debate over the future of West European welfare capitalism has tended to posit a simple choice between, on the one hand, Anglo-American style liberal market economies with small welfare states, and a continental European ‘social model’, in which markets are more constrained by state intervention and welfare provisions are generous (for instance Albert 1993, Hall and Soskice 2001). According to this schema, Western Europe has to choose between a coordinated and a liberal market economy, trading off the benefits and costs of these two models. The notion that one can obtain the ‘best of both worlds ’ is implicitly rejected. This dichotomous representation of the state-economy relationship builds on a long tradition, and finds its most recent expression in the much-cited Hall and Soskice project. However, the political economy and social policy literatures have also provided more nuanced categorizations of the institutional arrangements of modern capitalism (Esping-Andersen 1990, Garrett 1998, Kitschelt et al 1999, Schmidt 2002), and even a range of quite idiosyncratic national models, suggesting a wide range of possible combinations of economic institutions. However, the problem with more nuance