The Chimera of Competitiveness: Varieties of Capitalism and the Economic Crisis

In this paper we assess the different definitions and theories of economic competitiveness at the firm and national levels. First we contrast the theories of classical liberal economists with those of the German historical school of national economics, noting the importance of the historical school for theories of national economic competitiveness. Drawing on the comparative political economy literature on ‘varieties of capitalism’, we then discuss the factors underlying competitiveness in social market economies, social democratic economies, and liberal economies. These models of capitalism are compared under six headings: labour markets and labour market institutions; financial markets; corporate funding and governance; inter-firm relations; the role of the state; and economic culture and history. In the penultimate section of the paper we discuss how the different models of capitalism have responded to the economic crisis and the impact of the crisis on their economic competitiveness. The paper concludes with a summary of the key points to emerge from the analysis and looks to how the scene may evolve as national economies begin to adapt