Edited by Geoffrey M. Hodgson
Chapter 11: Varieties of capitalism and varieties of economic theory
Geoffrey M. Hodgson* The twentieth century was dominated by the ideological polarization between capitalism and socialism. Strikingly, what has emerged out of the collapse of the Eastern Bloc in 1989–91 is the view that we are now at ‘the end of history’ (Fukuyama, 1992). It is widely held that liberal-democratic capitalism is the normal or ideal state of affairs: once established and reﬁned it cannot be surpassed. I challenge this view here – but not by arguing for the feasibility or superiority of a socialist or any other alternative to capitalism. Essentially, pronouncements of the ‘end of history’ ignore the tremendous variety of forms of capitalism itself. In addition, a theoretical blindness to the immense variety within the modern system is curiously engendered by inﬂuential economic theorists from both right and left. In particular, although both Karl Marx and Friedrich Hayek have contributed an enormous amount to our understanding of how capitalist systems function, they both sustain a view of a singular and puriﬁed capitalism. Furthermore, there is no unique or optimal combination of subsystems and institutions within capitalism that will necessarily triumph over other combinations. Although not all capitalisms are equal in performance, the advantages or efﬁciencies of one type of capitalism over another are typically dependent on their historical path and context and thereby none can be said to be ultimately superior to all the others. The views of the American institutional economists, particularly Thorstein Veblen, provide an important counter to the differing approaches...
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