A Reassessment Beyond the Global Crisis
2. On the political economy of global capitalism In his classic study on ‘the economic institutions of capitalism’ Oliver Williamson has suggested regarding the firm not just as a production unit but more basically as governance structure (Williamson 1985: 13). This idea can be extended to the market and to capitalism in general. In particular, if the frame of reference is not just transaction costs but a broader conception of ‘governance costs’, that is, the costs of creating and maintaining order in social relations, then varieties of capitalism can be evaluated according to perceived costs and benefits of specific governance modes. In practice, such an evaluation presupposes criteria of ‘good governance’ and an analysis of the core components of the various governance regimes. The legitimacy of capitalism hinges on its capability of being seen to be embedded in democracy. For this reason Chinese capitalism may be successful but it is in no way legitimate. Varieties of capitalism differ in their propensity to accept public scrutiny of private transactions as soon as there is an imbrication of public and private components of economic affairs. In this chapter we will look at some dimensions of this convergence of private and public aspects which sustain the need for reconfiguring the governance of capitalism. A comparative institutional assessment of varieties of capitalism of course cannot be done here. Instead, we will focus on a few of the hinges which connect capitalism and democracy as governance modes of complex functional subsystems of society. A kind...
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