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Capitalist Varieties and Stages of Capitalism

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By Terrence McDonough

National University of Ireland Galway

Terrence McDonough

If capitalism survives the current global crisis, what form will it take? Predicting the future is a task outside the scope of social science, but two literatures in the broadly heterodox tradition can address aspects of this question. These are the varieties of capitalism discussion and the Marxian concept of stages of capitalism. Bruff (2011) defines the comparative capitalisms literature as “contributions which take institutions as their starting point when considering the evolution of national political economies (p.482).” A dialogue with the Marxist tradition of historical capitalist stages can serve to address a number of shortcomings in this literature. Criticisms revolve around three common themes. The first is that the framework is biased towards an assumption of stability rather than change (Deeg and Jackson, 2006, 150). Bohle and Greskovits (2009) sum up this perspective in the following way:

From the very moment that factor-based and specific asset-based models are imputed into history, they set in motion a “perpetuum mobile” of systemic logics, which then allow L(iberal) M(arket) E(conomies) and C(oordinated) MEs to survive as clear alternatives, world wars, global economic crises and political cataclysms (370).


A second critique is that the observation of widespread change in institutional structures challenges the coherence of the limited number of typologies. Indeed, empirical investigation uncovers a wide variety of institutional configurations. (Deeg and Jackson, 157)

In addition to these critiques, a third, more foundational criticism has been advanced. This is that the comparative capitalisms literature has become so enamoured with its discovery of the trees that, to its cost, it has started to ignore the wood. Bohle and Greskovits conclude their consideration with the following:

More fundamentally, the instability of contemporary capitalism in all its variants suggests the need for a return to very old literatures and debates, which had had crucial insights into the system’s expansionary nature, specific vulnerabilities, destructive and irrational tendencies, and recurrent crises: that is, features of capitalism tout court that got lost in the course of the extensive study of its varieties. (382)


Such an approach to capitalist institutions can be found in the Marxian stage theoretic tradition. While it by no means denies the possibility of capitalist variation across countries or regions, the Marxian stage theoretic tradition locates these differences in national responses to capitalist crises which demand for their resolution the reorganization of the institutional conditions of the capitalist accumulation process. In this way the emphasis is instead on the dynamics of capitalism over time. This contrasts with the comparative capitalist emphasis on the survival of capitalist variation over space in the context of global competition.

There is a continuous tradition of Marxian stage theory from the beginning of the twentieth century until the present day. This history begins with the pioneering work of Rudolf Hilferding (1910) on finance capital, Nicolai Bukharin (1915) on the world economy and V.I. Lenin (1917) on imperialism. All three argued that the capitalist economy had, with the advent of monopoly capitalism, entered into a new and higher stage of capitalism. The second wave of Marxian stage theorizing emerged with the end of the post-World War II expansion. Ernest Mandel’s Long Wave Theory (LWT), the Social Structure of Accumulation Framework (SSAF), and the Regulation Approach (RA) analyzed the stagflationary crises of most of the advanced capitalist countries as the end of a long wave of growth following the end of the second world war. This long wave of accumulation was underpinned by the emergence of a new stage of capitalism after World War II which was analogous to the reorganization brought about by monopoly capital at the turn of the century. Since this new stage was the resolution of the crisis of the monopoly stage, these new schools were reluctant to predict the non-resolution of the then current crisis. This reluctance opened up the possibility of further stages of capitalism in the future. Recently the SSAF has identified the current crisis as the crisis of the global neoliberal SSA which followed the stagflationary crisis (Kotz and McDonough 2010).[1]

In addition to providing a Marxian tradition of the integration of institutions into the creation of dynamic capitalist variety, the Marxian stage theoretic tradition, and the SSA framework more specifically, have the potential to resolve the problems identified earlier in the varieties of capitalism literature. The emphasis here is specifically on the “varieties of capitalism” school rather than the broader comparative capitalisms literature of which this school is a prominent part.[2] The most fundamental critique is that institutional analysis needs to be rooted in a conception of the basic underlying nature of capitalism. This is indeed the starting point of the stage theoretic tradition and the SSA framework in emphasizing the dynamics of capital accumulation.

Capitalism contains multiple conflicts, instabilities and crisis tendencies which need to be moderated and channeled through institutional means. At the same time, capital accumulation tends to erode its own institutional preconditions. This creates an historical dynamic of both the success and failure of capital accumulation, alternating periods of growth and crisis.

It is the onset of capitalist crises that allows the stage theoretic tradition to also escape the first critique of the comparative capitalisms literature that the complementarity of the institutions predicts a stasis and inability to transit from one institutional regime to another. The SSA framework predicts precisely the opposite dynamic. Capitalist contradictions eventually come to the fore, eroding the institutional conditions of capitalist accumulation and precipitating crisis. The stagnation will only be overcome through the construction of a new SSA. Contrary to any stability thesis, the new SSA differs fundamentally from the previous SSA.

Wolfson and Kotz (2010, 81-89) draw a striking contrast with the Hall and Soskice (2001) conceptualization of Liberal Market Economies (LMEs) and Coordinated Market Economies (CMEs) and their relationship over historical time. Wolfson and Kotz elaborate a conception of Liberal SSAs and Regulated SSAs which roughly parallel Hall and Soskice’s LMEs and CMEs.

Liberal SSAs tend to enter into crisis because capital’s ability to dominate labour leads to stagnant wages, inadequate demand and overcapacity. Unregulated economies are often prey to financial crises. These Liberal crises are most easily resolved through an increase in the strength of labour, a limited redistribution of income, and the regulation of demand and finance – that is, the establishment of a Regulated SSA. Regulated SSAs by contrast are prone to “profit-squeeze” crises, due to rising wages and popular demands for intervention by government in the markets. These crises are most often resolved through the reassertion of capital’s dominance over labour and the promotion of deregulation through the creation of a Liberal SSA.

Thus the dynamic is directly the opposite of that hypothesized in the Varieties of Capitalism argument. Types of capitalism are not internally reproduced over the medium term. Rather they enter into crisis and succeed one another, sometimes in a repeated leap-frog fashion.

This analysis does not require any purity in the two types of SSA, thus addressing the second critique of insufficient variety. Indeed the suggestion of two types runs against the tendency of the rest of the literature. The emphasis is on the concrete historical origin of SSAs in the context of the crisis which precedes them. Further, the inclusion of political institutions, as well as cultural and ideological institutions, means that, at least before advent of the global neoliberal SSA in the 1980’s, SSAs were conceived as primarily national in character. Thus a large variety of institutional regimes are capable of characterization as SSAs.


Becker, Uwe (2007): “Open systemness and contested reference frames and change. A reformulation of the varieties of capitalism theory,” Socio-economic Review, 5, 261-286.

Becker, Uwe (2009): Open Varieties of Capitalism: Continuities, Change, and Performances. Basingstoke: Palgrave Macmillan.

Bohle, Dorothee/Dela Greskovits (2009): “Varieties of Capitalism and Capitalism Tout Court,” European Journal of Sociology 50, 355-386

Bruff, Ian (2011): What about the Elephant in the Room? Varieties of Capitalism, Varieties in Capitalism, New Political Economy, 16:4, 481-500.

Bukharin, Nikolai (1973 [1915]): Imperialism and World Economy. New York: Monthly Review Press.

Deeg, Richard/Gregory Jackson (2007): The State of the Art: Towards a more dynamic theory of capitalist variety, Socio-Economic Review, 5, 149-179.

Gordon, David M./Richard C. Edwards/ Michael Reich (1983): Segmented Work, Divided Workers. Cambridge: Cambridge University Press.

Hall, Peter A. / David Soskice (2001): Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press, New York.

Hilferding, Rudolf (1980 [1910]): Finance Capital. London: Routledge and Kegan Paul.

Kotz, David M. /Terrence McDonough/Michael Reich, Eds., (1994): Social Structures of Accumulation: The Political Economy of Growth and Crisis. Cambridge: Cambridge University Press.

————–/Terrence McDonough (2010) “Global Neoliberalism and the Contemporary Social Structure of Accumulation,” in Contemporary Capitalism and Its Crises: Social Structure of Accumulation Theory for the 21st Century eds. Terrence McDonough, Michael Reich and David M. Kotz. Cambridge: Cambridge University Press.

Lenin, V.I. (1968 [1917]): Imperialism, The Highest Stage of Capitalism. In Selected Works. Moscow: Progress Publishers, 169-262.

McDonough, Terrence/Michael Reich/David M. Kotz (2010): Contemporary Capitalism and Its Crises: Social Structure of Accumulation Theory for the 21st Century. Cambridge: Cambridge University Press.

—————————-/David M. Kotz/Michael Reich (2014): Social Structure of Accumulation Theory, Volumes 1 and 2. Northampton, MA: Edward Elgar.

Wolfson, Martin H./David M. Kotz (2010): “A Reconceptualization of Social Structure of Accumulation Theory,” in Terrence McDonough, Michael Reich and David M. Kotz. 2010. Contemporary Capitalism and Its Crises: Social Structure of Accumulation Theory for the 21st Century. Cambridge: Cambridge University Press.

[1] For a useful collection of articles explaining, reviewing and applying the SSA approach see Kotz et al. (1994). See also McDonough et al. (2010). A comprehensive collection is now available in McDonough et al. (2014)

[2] For a discussion of these issues from the perspective of the comparative capitalisms approach see Becker (2007 and 2009)

From: pp.10-11 of World Economics Association Newsletter 5(4), August 2015

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