Do Globalization, Deregulation and Financialization Imply a Convergence of Contemporary Capitalisms? Robert Boyer

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Discussion Paper Series 2018 #09

Do Globalization, Deregulation and Financialization Imply a Convergence of Contemporary Capitalisms?

September 2018

Robert Boyer Institut des Amériques, Paris

This work has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No 645763.

INCAS Understanding institutional change in Asia: a comparative perspective with Europe http://incas.hypotheses.org/ ABOUT THE INCAS PROJECT

INCAS is a Marie Skłodowska-Curie Actions R.I.S.E funded project under the European Commission’s H2020 Programme.

The project INCAS aims at creating a top-level research and advanced training network on institutional change in Asia, in comparative perspective with Europe. The coordinator, Ecole des Hautes Etudes en Sciences Sociales (France), promotes this network together with Oxford University (UK), Freie Universität Berlin (Germany), and in collaboration with Waseda Uni- versity (Japan). The aim of the proposed mobility scheme is to give birth to a European consortium and network of faculties and advanced graduate students specialized in the comparative analysis of institutio- nal change in Asia and Europe. The partners have chosen Japan as a reference point because of its com- parability with Europe as shown by previous studies, its historical influence on development and further institutional changes in Asia, and the expertise accumulated within our research team.

Analyzing current economic dynamics in Japan and later expanding this analysis to other Asian countries promises to generate insights that might be help to better understand challenges for Europe and to prepare relevant policy proposals. Our purpose is to compare the results obtained in the case of Japan and few other Asian countries (South Korea, Taiwan, China, and possibly Thailand, after having checked the data availability), not only to previous results on Europe but also to original results we will get on European countries (primarily France – which will be our reference country in Europe – and then the UK, Germany, and Italy) in mobilizing new historical data and applying our theoretical framework. INCAS DP SERIES / 2018 #09 research been still the wide valid diffusion research given 3 régulation Robert Boyer Septembre 2018 Septembre Institut des Amériques, Paris Amériques, des Institut Convergence of Contemporary Capitalisms? Contemporary of Convergence Do Globalization, Deregulation and Financialization Imply a Imply Financialization and Deregulation Do Globalization, Acknowledgment 2018. 20-21 Berlin, September Incas Conference, for prepared has been work This JEL Classification B52 - E02 - F62 - G28 - P51 Capitalism variety, Institutional complementarity, Global finance, Internationalization, Deregulation, National National Deregulation, Internationalization, finance, Global complementarity, Institutional variety, Capitalism relations. International democracy, and Capitalism inequality, international and and social costs of their protectionist strategy. strategy. social their protectionist and of costs Keywords interactions imply more their complementarity than their frontal competition. Consequently, all capitalisms all capitalisms Consequently, competition. their frontal than their complementarity more imply interactions nationalist of Therise configuration. a canonical towards converge they do not but been transformed have the economic underestimate not they should but relations international the present challenge may movements an institutionalist and historical approach that also helps in redesigning a relevant macroeconomic approach. approach. macroeconomic a relevant in redesigning also helps that approach historical and institutionalist an and their growing forms institutional among specificcomplementarities displays brand Each capitalism impact of finance, rise of inequalities within many Nation-States in response to deregulation, social and to deregulation, response in Nation-States many within of inequalities rise finance, of impact place mature between the trading democracy, and conflict open between capitalism political polarization, by they but can be explained theories stylized Thesemost economic factschallenge economies? emerging and Distinctive political compromises prevailed and explained various brands of capitalism observed from capitalism of brands various explained and prevailed political compromises Distinctive by this finding key 1990s. Is theearly WWII to overwhelming theworld, in industrialized productivity slow the 2000s: since structural changes common of Abstract INCAS DP SERIES / 2018 #09 4 driving principle is the exchange of solidarity against labor mobility within within mobility labor against solidarity of the exchange is principle driving in which a typical market logic, adopted by the entities in charge of competition competition of in charge the entities by logic, adopted in which market a typical is based on frequent negotiations between social partners and public authorities between authorities social public partners and negotiations based is frequent on is characterised by an economic circuit where most of the components (innovation, (innovation, the components of most where circuit economic an by characterised is gulation mode (V). The more so, the more has internationalization implied the complementarity complementarity the implied internationalization has more the so, more mode (V). The gulation é Social democratic capitalism Social democratic Astate-driven capitalism The meso-corporatist capitalism’s A market-oriented capitalism The previousThe crisesrevealedworld had of the variety capitalisms Introduction

countries are flag-bearers for this model. this for flag-bearers are countries • The Scandinavian activity. social economic of and life the components of most the rules governing concerning production, demand, industrial relations, credit, etc.) are moulded by a myriad of public interventions occurring interventions public of myriad a by moulded are etc.) credit, relations, industrial demand, production, part countries intaking the continental of the is typical local configuration This or level. regional, national, a at process. integration European examples of this configuration. this configuration. of examples • • two are Korea and Japan busts. and surviveto temporary booms enough diversified and large conglomerates • find we this group In procedures. all almost coordination for principle organizing the main supervision,constitutes theall English-speaking countries of 2. 1.

account for an entire distribution of modern economies. All studies (Boyer, 1991; 1995; Amable & al., 1997; Théret, 1997; Théret, & al., 1991; 1995; Amable (Boyer, All studies modern economies. of distribution entire an for account 1). (table configurations four least at reveal to converged 2003) have 1997; Amable, of capitalism. From a régulationist perspective, it is difficult to accept that the dichotomy of two polarized models can twopolarized of models dichotomy the that accept to difficult is perspective, it régulationist a From capitalism. of of Peter Hall and David Soskice (2001)’s Variety of capitalism analyses. Liberal capitalism is not the only, nor the nor the only, not is Liberal analyses. capitalism capitalism of Variety Soskice David (2001)’s and Hall Peter of forms various of the distribution the proposedichotomize to sake, they simplicity’s For configuration. efficient most 1980s, the evolutions of the US, German and Japanese economies have revealed clear differences. This is the origin is the This differences. revealed clear have economies Japanese the US, German and of 1980s, the evolutions Until the 1970s, both macroeconomists and political scientists who analyzed the institutions of capitalism were were capitalism of the institutions whoanalyzed political scientists and the 1970s, both macroeconomists Until since the But configuration. economy mixed a common for relevant modelling a core of the existence about convinced

convergence towards the same socio-economic regime. This hint borrowed from institutional economics has to to be has economics institutional from borrowed hint This regime. socio-economic the same towards convergence 1). evidence (Figure empirical some against checked national sovereignty over transnational economic logic. Nevertheless common pressures do not necessarily imply the imply necessarily do not pressures common logic. Nevertheless economic transnational over sovereignty national National evolutions appear more synchronized than previously and governments now face unprecedented and largely largely and face unprecedented now governments and previously than synchronized more appear evolutions National defend to prone population part of a large hurt neoliberal reforms of consequences the adverse challenges: common these policies enter crisis with the spectacular collapse of the US financial system that diffuses to all other economies. diffuses to other economies. all that the spectacular system crisis with the US financial these of policies enter collapse the problem, market mechanisms are the solution. Opening to world competition, deregulation of product, labor and and labor product, of deregulation competition, Opening world to the solution. are mechanisms market the problem, and vision This economy. contemporary any quite permeated have global innovations financial and markets capital differences. Nevertheless, governments have implemented reforms inspired by a common vision: State intervention is intervention State vision: common by a inspired reforms implemented have governments Nevertheless, differences. to any economy with only minor adjustments, the 1980 and 1990 decades have falsified the hypothesis of a single a single of hypothesis falsified the 1990 decades have the 1980 and adjustments, minor only with economy any to structural institutional and revealmajor that evolutions different followed have the post WWII capitalisms pattern: The flow of the argument is the following. Whereas most conventional theories states that the same basic model applies applies basic same model the that states theories conventional most Whereas following. isthe argument ofthe flow The between finance led, external competition led and natural resources rentier regimes (VI). rentier resources natural and led external led, competition between finance featuring a new a r featuring None of these paradigms seems able to capture all the post 2008 stylized facts: this calls for a more syncretic approach approach syncretic all the post stylized2008 more a facts: this calls for capture to theseseems able paradigms of None capitalism of brand canonical a of new to diagnoseemergence difficult the is it conversely (IV). But macroeconomics to let them be new classical, Keynesian, evolutionary or Marxist and last but not least old and new institutionalisms (III)? new institutionalisms and old least not but last and Marxist or evolutionary let them be Keynesian, new classical, many Nation-States, the social and political polarization, the open conflict between capitalism and democracy, the democracy, and the conflict open between capitalism the social political polarization, and Nation-States, many paradigms, economic existing (II). Can they be by analyzed nation-States developing and between place trading mature trends: slow productivity in the industrialized world, the overwhelming impact of finance, the rise of inequalities within within of inequalities the rise finance, of impact the overwhelming in the industrialized world, productivity slow trends: various brands of capitalism. This could explain their divergent trajectories since the end of WWII the post socio- end since the trajectories divergent their explain could This capitalism. of brands various common some exhibiting novelties many bring crisis seems to the 2008 world (I). Nevertheless regimes economic of institutional architectures of contemporary capitalisms. Distinctive political compromises prevailed and explained explained and prevailed political compromises Distinctive capitalisms. contemporary of architectures institutional of The second phase of regulation theory research had stressed the need to take into account the significant diversity diversity significant the account need to into stressed take the had theoryresearch regulation of phase The second INCAS DP SERIES / 2018 #09 5 Figure 1 – The synopsis of the present article present the of synopsis 1 – The Figure INCAS DP SERIES / 2018 #09 6 Source: Amable, Barré, Boyer (1997: 194-195). Boyer Barré, Amable, Source: Table 1 – A taxonomy for OECD national economies national OECD for 1 – A taxonomy Table INCAS DP SERIES / 2018 #09 7 Source: OECD Compendium of Productivity Indicators 2017, May 18 2017. 2017, May Indicators Productivity of Compendium OECD Source: Graph 1 – A quasi stagnation of hourly Value added in finance led countries and Italy and countries led finance in added Value hourly of stagnation 1 – A quasi Graph

The slow down of productivity and the threat of a zero sum game sum game of a society zero productivityand the threat slow The of down

The novelties of the post 2008 decade: many common features of the 2008 post decade: The novelties common many 3.1

3.

challenge adressed to most economic theorizing of the link between innovation and productivity. and the link between of innovation theorizing economic most to adressed challenge generic technologies that launched the post WWII mass production and consumption era (Gordon, 2016). This is a is This 2016). (Gordon, era consumption and production thepost mass WWII launched that technologies generic advances from the minority of frontier technology firms to the rest of the economy (Graph 2). Thus a growing productive productive growing a Thus 2). (Graph of the economy rest to technologythe firms frontier of the minority from advances of the the equivalent not are ICT all after the stagnation: productivity of be could the hidden source heterogeneity A more convincing analyse shows that the productivity paradox may originate from the poor diffusion of technicalof the poor diffusion from originate may paradox the productivity that shows analyse convincing A more 1). It is more and more difficult to invoke the long lag between a promising innovation and the building of an entire entire an of building andthe innovation promising lag between a long the invoke to difficult more and more is 1). It rise sun as firms? valuation market the stock on prosper and exist Facebook and industry: Google, Amazon, Apple but National Accounts point out the quasi stagnation of hourly labor productivity, especially in the US and UK (Graph especially(Graph UK in the US and productivity, labor hourly of stagnation the quasi out point Accounts National but The productivity puzzle of the 1990s – Computers are everywhere except in the productivity indexes- surfaces again surfacesagain indexes- productivity everywhere in are the except of 1990s – the puzzle Computers productivity The of radical innovations, out empires building newof entrepreneurs dynamism praise the media 2008 crisis: the the after

transformations have wrecked this grand scenario. scenario. this grand wrecked have transformations of Western world. Last but not least, free trade was promised to unleash an unlimited prosperity. Quite unexpected Quite prosperity. unlimited unleash an to free least, trade promised was not Last but world. Western of stability. Within such a context, higher growth would push employment and reduce income inequalities, and the alliance and inequalities, income reduce and employment push would higher growth context, a such Within stability. aegis under era the un-precedent an open democracyof would the diffusion and impulses capitalist betweenrenewed ICT, financial innovations were assumed to deliver more efficiency in the allocation of capital and bring macroeconomic macroeconomic bring and capital of efficiencyin the allocation more to deliver assumed were innovations financial ICT, Most of expectations by leading economists have been disappointed: a new productive paradigm should emerge from from emerge paradigm should a new productive been disappointed: have economists leading by expectations of Most

they brought a form or another of convergence of the various brands of capitalism? of brands the various of convergence of another or a form they brought This taxonomy is two decades old and since then many structural changes have taken place. What are they and have have and they are What place. taken have structural changes many since then and decades old is two This taxonomy whereas RT prefers the other way around. way the other prefers RT whereas endowment is extended to statist and social democratic capitalisms, each deploying an economic specialization that that specialization economic an each deploying social and capitalisms, democratic statist to extended is endowment relevance, more or precision of to detriment the parsimony prefer to VoC seems predecessors. its two from differs States (Hall & Soskice, 2001: 42–43), but now the hypothesis that competitive advantage stems from one’s institutional institutional one’s from stems advantage competitive that the hypothesis now & Soskice, 2001: 42–43), but (Hall States purpose of which is to smooth out economic imbalances and to overcome social conflicts. For example, we find an we find example, socialFor conflicts. overcome to and imbalances economic smooth out purpose to whichis of observe we thein United that to capitalism type of and system between theinnovation complementarity equivalent simple intermediaries between market-oriented and institutional coordination. Both are built on original principles the original principles on built Both are coordination. institutional and between market-oriented intermediaries simple In a sense, this includes and generalises the dichotomy between LME and CME, since the two other forms are more than than more are forms other the two since CME, between and LME the dichotomy generalises and a sense, this includes In INCAS DP SERIES / 2018 #09 8

Graph 2 – The widening labour productivity gap between frontier firms and laging firms laging and firms frontier between gap productivity labour 2 – The widening Graph

and public policy: public and a firm level perspective,www.oecd.org/global-forum-productivity/Lisbon2016

The domination of finance over macroeconomicover of finance evolutions The domination

Source: Andrews Dan, Chiara Crisuolo and Peter Gal (2016), The global productivity slow down, Tecnology divergence Tecnology divergence down, slow Galproductivity (2016), The global Peter and Crisuolo Chiara Dan, Andrews Source: 3.2

Bankers is far ahead the required theorizing by economists (Graph 4). (Graph economists by theorizing ahead the far required is Bankers that monetary and many German Scholars expected did not materialized. The practice of pragmatic practice of practice Central pragmatic of practice The expected materialized. German Scholars did not many monetary and that 1930s, Central bankers had to accept the massive bailing out of banks by fully opening of the open market and they and market the open of fully opening banksby of out bailing the massive accept to had Central1930s, bankers the hyperinflation but negative became slightly rate cases lending extreme some In products. toxic and bad credit bought audacious bets over future returns. In order to prevent the repetition of the dramatic depression and deflation of of the deflation and depression the dramatic of the repetition prevent to order In returns. future bets over audacious The financial unbalances have thus been recurring without a rapid catching up of growth that would validate the past thepast would validate that growth of up catching rapid a thusrecurringwithout been have unbalances financial The (Graph 3). (Graph up into a frantic speculative bubble that is a follow up to the bursting out of the subprime fever. The time has come come has The time fever. the subprime of out the bursting to up a follow is that bubble speculative a frantic into up 2015 after prices oil of the plummeting by stopped is the hype and instruments speculative become to contracts oil for to credit derivatives explosion in the early 2000s. The partial opening of Shanghai stock market to foreign capital ends ends capital foreign to market stock Shanghai of 2000s. The partialopening in the early explosion derivatives credit to the expectations of high returns of various innovations, technical or financial, and the opening of new territories to newterritories of opening and the financial, technical or innovations, various of high returns of the expectations response is the real estate of surge 1990s. The in the late the ICT bet to on prone are traders market Stock speculation. Thus contrary to a widely accepted vision, the US growth is not led by large and effective productivity increases but by but increases productivity effective and by large led not is US the growth vision, accepted to a widely contrary Thus INCAS DP SERIES / 2018 #09

9 Graph 3 – Contemporary economies are exuberant are economies 3 – Contemporary Graph https://www.ft.com/content/f762413e-76df-11e7-a3e8-60495fe6ca71 Source: Financial times (2017), The warning from history that Wall Street ignored, 7 august 7 ignored, Street Wall history that from warning times (2017), The Financial Source: INCAS DP SERIES / 2018 #09 , 16 august. Financial Times Financial 10 (1910-2010) Graph 5 – Deregulation and income disparities: The US banking sector sector banking US The disparities: income and 5 – Deregulation Graph

Source: Wolf Martin (2017), Nothing like this has happened in 323 years in 323 years happened this has like (2017), Nothing Martin Wolf Source:

Financial liberalization, inequality within and among nations nations inequality within among liberalization, and Financial

Graph 4 – Monetary policies explore unchartered territories: a lending rate near zero (UK 1800-2016) zero near rate lending a territories: unchartered explore policies 4 – Monetary Graph 3.3

deregulation strategies (Graph 5). (Graph strategies deregulation remuneration by sectors, skills, firm size: the logical outcome is an impressive surge of income inequality in mature mature in inequality of income surge an impressive is skills, sectors, firm size: logicaloutcome the by remuneration such of impact lasting long ofthe emblematic is to finance linked remunerations of explosion The economies. in historical perspective. The long run process of product, labor and finance deregulation brings a differentiation of a differentiation brings deregulation finance and labor product, of process run long perspective. The in historical The codification and institutionalization of competition, labor and credit allocation had allowed a synchronization a synchronization had allowed credit allocation and labor competition, of institutionalization and codification The very levels reached had low inequality Income living. of rise general a with in standards advances technological of INCAS DP SERIES / 2018 #09 , Vol. 49 (1): 8. , Vol. 11 (Higher percentile) (Higher Journal of Economic Literature Economic of Journal Graph 7 – The opposing forces influencing global income inequality inequality income global influencing forces opposing 7 – The Graph Source: Atkinson Anthony B., Piketty Thomas, Emmanuel Saez (2011), “Top Incomes in the Long Run of History”, History”, of Run in the Long Incomes Saez (2011), “Top Emmanuel Thomas, Piketty B., Anthony Atkinson Source:

Graph 6 – Capital Gain and Income are the Main Sources of the Rise of Inequalities from the Top of the Distribution Distribution the of Top the from Inequalities of Rise the of Sources Main the are Income and Gain 6 – Capital Graph

converging set of researches shows that the opening to world trade has reduced the income gap between developed and between and developed gap the income reduced trade has world to the opening that shows researches set of converging regimes. growth national of variety the to take seriously an invitation is 7). This (Graph countries developing The issue of income inequality is also a discriminating test against the fallacy: “The same theory and model for all”. A fallacy:the against test is alsoa discriminating inequality for of income all”. theory same “Theand model issue The

instability has triggered a succession of financial and economic crises. A fresh approach concerning linksthe between concerning approach crises. A fresh and economic financial of triggered a succession has instability required. is inequality and macrodynamics promotion of innovation. Unfortunately growth rates never reached again the level of the Golden Age and economic economic and the Golden Age of the level again reached never rates growth Unfortunately innovation. of promotion inequality but this not the major driver of the transformation of the US society. This concentration of income and wealth and of income concentration This the US society. of the transformation of driver the major this not but inequality and investment more effort, work to via trickle effects: incentives growth down stable and a fast restore to assumed was impact of financial deregulation (Graph 6). Of course labor market deregulation adds to the widening of income of income to widening the adds deregulation market labor Of course 6). (Graph deregulation financial of impact A systematic analysis of the source of the income for the upper decile of american tax payers confirms this overwhelming this confirms tax payers american decile of the upper for the income of thesource of analysis A systematic INCAS DP SERIES / 2018 #09 24/08/2017. Financial Times Financial 12 Economic dynamism and financial disequilibria migrate to developing countries countries to Economicdeveloping financial dynamism disequilibria and migrate Graph 8 – Macro stabilization at the world level: trading places between low and high income countries income high and low between places trading level: world the at stabilization 8 – Macro Graph Source: Cardiff Garcia (2017), “How global income inequality has shifted since the crisis”, the sinceshifted crisis”, has inequality global income “How (2017), Garcia Cardiff Source: On the other side in emerging economies, especially in China, leveraging is extended in order to favor favor to especially in order extended is in China, leveraging economies, side in emerging On the other On one side since 2008 in mature economies, a significant deleveraging is taking place for private actors but the but actors private for is place taking deleveraging a significant economies, 2008 in mature side since On one

3.4

investment in spite of massive overcapacities in major sectors and the absence of surge in private consumption: the consumption: in private surge of the absence and sectors in major overcapacities massive of in spite investment is credit buoyant processwhen a Minsky of form is a This financial fragility. of the zone approaching is economy accumulation. capital of reversal the brutal preparing against the productive investments that would prepare growth recovery and the return to financial sustainability. sustainability. financial to the return and recovery growth prepare would that investments the productive against • • capital of a misallocation pushes and governments of the autonomy limits that debt public a swelling is counterpart

have been delocalized from North America and Europe to Asia. This is still another challenge addressed to all theories to all addressed theories challenge stillanother is This Asia. to Europe America and been delocalized North have from The precise institutional architectures differ largely but seemingly, the future of growth and the financial crisis risks crisis financialand the growth of future the but seemingly, largely differ architectures institutional precise The that belongs to the past (Boyer, 2016). Consequently the world financial stability faces a dual challenge (Graph 9): (Graph dualchallenge faces a stability financial the world Consequently 2016). (Boyer, the past to belongs that of growth in response to the progressive exhaustion of the previous engine of growth: productive investment and net net and investment productive growth: of engine the previous of exhaustion the progressive to in response growth of strategy a development prolong to tends credit declining because ofpolicy thiscontinuously is export. effectiveness The Chinese government is recurrently relaxing the credit to large nationalized firm in order to limit the normal deceleration deceleration normal the to limit order firm in nationalized large to the credit relaxing recurrently is Chinese government Is this rapid catching up of emerging economies sustainable in the long run? Not necessarily because they are reiterating reiterating because necessarily they are run? Not in the long sustainable economies emerging of up catching this rapid Is The Recession. Great 2008 and the system financial American the North of the led collapse to that process the dangerous has to cope with partially autonomous policies implemented by China. by policies implemented partially with cope to autonomous has of international relations and thus the North American Government cannot act as a pure Stackelberg leader, because it because it leader, Stackelberg act a pure as cannot Government American the North thus and relations international of 2010s they are milder (Graph 8). Conceptually this might mean that the hierarchical domination of old industrialized old of domination the hierarchical that mean this might Conceptually 8). milder (Graph they2010s are the evolution to do contribute Chinese authorities instance interdependency: for a mutual towards evolved has countries mature economies. Consequently whereas previously world recessions were more acute in low income countries, in the countries, income low in acute more were recessions world previously whereas Consequently economies. mature role by softening the risk of world depression by continuing to grow in response to vigorous reflation programs. programs. reflation to vigorous response in to grow by continuing depression world of the risk softening by role of that overcome GDP countries emerging that means productivity of terms in up catching the ongoing Furthermore and diffuses to quite all national economies but for the first time the BRICS and especially China have a stabilizing a stabilizing especiallyhave and China BRICS the time first the for but economies allnational quite diffusesto and the rise Japan, Asian dragons, China and ultimately India has challenged this vision but the US economy remained remained the US economy but this vision challenged has India ultimately China and dragons, Asian the riseJapan, US the from stilloriginates crisis world 2008 The theworld. of the rest for stabilisation and growth of theengine had been widening, supporting the intuition that the club of industrialized countries had been closed. In the been 1970s had closed. In countries industrialized of the club that the intuition beenhad supporting widening, The coexistence of opposite mechanisms at the domestic and international levels makes the world economy a complex a complex economy world makes the levels international and at domestic the mechanisms opposite of coexistence The livings and development of between standards the gap world the western of the industrialisation Since system. dynamic INCAS DP SERIES / 2018 #09 , 24/08/2017 Financial Times Financial 13 Source: NatCen Social Research (2015), British Social Attitudes, Social p.5. class, Social Social (2015), British NatCen Research Attitudes, Source: Graph 9: Credit exuberance migrates from mature to emerging economies. economies. emerging to mature from migrates exuberance 9: Credit Graph Table 2 – A growing perceived difficulty of moving between classes, 2005- 2015, UK classes, between moving of difficulty perceived 2 – A growing Table Source: Martin Sandbu (2017), “The credit crisis did not lead to deleveraging”, leadto deleveraging”, not (2017), “The crisis did credit Sandbu Martin Source: Polarisation of societies of globalisation and under liberalisation Polarisation

3.5

internationalization of economies and financial globalization. In the UK, the blue collar workers and self-employed and self-employed workers collar blue In UK, the the globalization. financial and economies of internationalization A second dimension has to be added: all the social groups have not the same perception about the impact of of the impact about perception the same not be to added: has all have the social dimension A second groups succession of right and left parties, labor and conservative party. The survey conducted for the UK is quite illustrative illustrative quite is for UK the surveyThe conducted party. conservative and left parties, and labor right of succession 2). (table in pacifying social conflict and the design of rather consensual political program, only moderately affected bythe affected moderately only program, political in pacifying consensual socialof rather designand the conflict by middle class and working class that social mobility has been significantly reduced during the last two decades. It decades. two during last the reduced been has social significantly that mobility class working and middle class by important quite was middle class to belonged now the population of the majority because the belief that important is economic elites and the perception by citizens at the grass root level. This polarization materializes the general feeling feeling general the materializes This polarization level. root the grass at citizens by the perception and elites economic convergence between the Brexit vote in the UK, the election of Donald Trump in the US and the rising electorate electorate the rising in the US and Trump Donald in the UK, the election of vote between the Brexit convergence and financial between political, divergence revealbrutallysurprises These the growing Lepen in France. Marine for Let us now turn to mature economies social transformations. Three major electoral events have pointed a surprising surprising a pointed have electoral events major Three social economies transformations. mature to turn Let now us INCAS DP SERIES / 2018 #09 14 Source: NatCen Social Research (2015), British Social Attitudes, Social p.13. class, Social Social (2015), British NatCen Research Attitudes, Source: The end of the synergyend The between democracy and capitalism

3.6 Table 3 – Political orientations and attitudes towards immigration by occupation and class identity, UK, 2015 UK, identity, class and occupation by immigration towards attitudes and orientations 3 – Political Table

with respect to the post WWII Golden Age (Piketty, 2015). (Piketty, the post respectwith to WWII Golden Age on a multiplier of stock market indexes. Thus the divergence between individuals income is largely the projection of the projection the is largely income individuals between divergence the Thus indexes. market stock of multiplier a on break a of interwar quite period,the repetition of form a profit, and between wage income of functionaldistribution fraction of the population that holds capital: the first group income is at best indexed on productivity, the second one one the second productivity, on at indexed best is income group the first capital: holds that thefraction population of this allows divergence across skills, sectors, geographical areas for wage earners (See Graph 6 supra). Nevertheless the Nevertheless supra). 6 (See earners Graph wage for areas skills, geographical sectors, across divergence thisallows the small with but themselves earners wage- among take place does not incomes real individual of heterogeneity larger social groups. But with deregulation and decentralization market mechanisms take back control of remuneration and and remuneration of take control back mechanisms market decentralization and deregulation with But social groups. of income distribution by collective agreements and public transfers, the outcome would be an equal austerity for all for be equal austerity an would the outcome transfers, public and collective agreements by distribution income of democratic institutions enter into conflict with the autonomy of economic transnational forces. The quasi stagnation of stagnation quasi The forces. transnational of economic autonomy with the conflict into enter institutions democratic been the institutionalization still Had binding game. sum a zero into distribution income converts productivity factor total The structural changes already pointed out, set into motion a dangerous process whereby the smooth functioning of smooth the functioning whereby process a dangerous motion set into out, pointed already structural The changes

belonging to a large and homogenous middle class. This has definite consequences over economic policy conduct and policyconduct over economic consequences definite has This middle class. homogenous and large a to belonging relations. international of the future misrepresentation of contemporary societies that do not oscillate around a median voter who perceive herself as as herself who perceive voter median a around oscillate societies not do that contemporary of misrepresentation This novelty calls for an aggiornamento of socio-economic research: the representative citizen is a dangerous is a dangerous citizen representative the research: of socio-economic aggiornamento an for calls novelty This but detrimental for Brexiters (Ashcroft, 2016). (Ashcroft, Brexiters for detrimental but European Treaty was finally adopted by the Parliament. The Brexit vote is simply updating this polarization of European European of polarization this updating simply is vote Brexit The Parliament. by the finally adopted was Treaty European society, be to good assumed for were immigration of acceptation and multiculturalism group, societies: the Remain for the Dutch and the French citizens have rejected by referendum the project instituting the Euro but a slightly modified a slightly but the Euro instituting the project referendum rejected by have citizens the French and the Dutch they would gain, on the other side probable losers (small firms, low skilled workers, welfare dependent, retirees) retirees) who dependent, welfare skilled workers, losers (small low firms, probable side the other on gain, theywould 2005, in way, By the 2000). (Boyer, Euro the after their personalposition of the evolution be about to pessimist declared on one side the likely winners (large firms, professionals, young people with academic degrees) who thought that that academic degrees) with who thought people young professionals, firms, (large winners side the likely one on Republic…) but also in the core of the founding nations of the European Union (France, Netherlands…) as shown by by shown as Netherlands…) (France, Union the European of nations the founding of also thecore in but Republic…) between, opposition a clear surveysshown had the Euro, to leading 2016. During the process July of the Eurobarometer anti-Europe movements is not specific to UK. It is present in Central and Eastern Europe (Hungary, Poland, Czech Czech Poland, (Hungary, Europe and in Eastern Central present is It specificto UK. not is movements anti-Europe Such a transformation is not specific to the UK. First of all this polarization of public opinion between pro- and and pro- between opinion public of of all this polarization specific to First UK. the not is a transformation Such pointing out this divergence, largely unnoticed and neglected by policy makers (table 3). 3). policy neglected (table and by makers unnoticed largely this divergence, out pointing less privileged tend to favor authoritarian parties, at odds with the rest of society. The social surveys about Britain were were The social Britain surveys about society. of odds the rest with parties, at authoritarian favor to tend privileged less declare themselves very preoccupied by immigration, whereas upper classes do not express the same fear. Similarly, the Similarly, fear. the same express not do classes upper whereas immigration, by very themselves preoccupied declare INCAS DP SERIES / 2018 #09 15 Source: European Community, Eurobarometer July 2016 July Eurobarometer Community, European Source:

Graph 10: European integration but no democratic advances advances democratic no but integration 10: European Graph

diffusion of electoral democracy (Graph 11). democracyelectoral of (Graph diffusion The collapse of Soviet Union back in 1989 was generally interpreted as victorythe of the alliance between democracy interpreted generally in 1989 was back Union of Soviet collapse The rapid opened surprisingly De facto a this of the future? regimes socioeconomic universal the defining as capitalism and become the key referee in economic policies decisions to which citizens have to comply with in the name of economic economic of the in name with comply to have which citizens to policies decisions in economic the referee become key rationality. and they could thus respond to citizens demands. Today they are so highly indebted that international finance has has finance international that so highly they indebted are Today demands. citizens to respond they thus could and a dysfunctional European integration. It has a still more structural important origin, the domination of finance over over finance of the origin, domination structural important a still has more It integration. European a dysfunctional systems financial domestic used control to states powerful the national past 2016). In (Streeck, principles democratic But the conflict between economic efficiency and social justice, between capitalism and democracy and not to specific is capitalism and efficiency justice, between social theconflict between economic But

(Graph 10). (Graph national public opinions blame the lack of accountability of many Brussels decisions and directives. Member States are are States Member directives. and decisions Brussels many of accountability of the lack blame opinions public national enough transnational democracy become of not has the organization but interdependent economically more and more decisions. The same criticism is addressed to the building of supranational institutions: in the European Union many many Union European in the institutions: supranational of building to the is addressed criticism The same decisions. countries. Consequently the governments are frequently perceived to be captured by the limited but powerful group powerful group but thelimited by be to captured perceived frequently are the governments Consequently countries. key to political of citizen each of equal participation principle democratic the contradicts This internationalists. of mass consumption and mass production, the less skilled workers are hurt by the competition from industrializing industrializing from the competition by hurt are skilled the less workers production, mass and consumption mass family allowances, unemployment benefits) (Stiglitz, 2014). Whereas capital-owners benefit from internationalization internationalization from benefit capital-owners Whereas 2014). (Stiglitz, benefits) unemployment allowances, family between domestic complementarity the previous relaxes that and their investment for new territories opens that of less progressivity of personal income tax, a “rationalization” of the supply of public goods (education, health, goods (education, public of the supply of tax, a “rationalization” personal income of progressivity less of This strong dividing line in the economic sphere is converted into the power to influence State policies in the direction indirection policies the State to influence the power into converted is sphere in line economic the dividing strong This INCAS DP SERIES / 2018 #09 16 interpreter-1480452951332-facebookJumbo.png Graph 11: A peak for the number of electoral democracies in the 2000s. the in democracies electoral of number the for peak 11: A Graph Graph 12: New generations are less and less concerned by democratic values democratic by concerned less and less are generations 12: New Graph The peak of globalisation and the search for national sovereignty national The for peakand the of search globalisation

Source: https://static01.nyt.com/images/2016/11/29/world/americas/democracy-interpreter-1480452951332/democracy- Source: 3.7

facilitated by ICT, the reduction of transportation costs due to acute competition and the mobilisation of very low labor very labor of low the mobilisation and competition acute to due costs transportation of the reduction ICT, by facilitated benefits. their potential of most delivered all seemcosts, these have to factors and the brutality of this reversal is impressive (Graph 13). The reduction of tarifs, the delocalisation of production production of of delocalisation tarifs, the reduction 13). The (Graph impressive is this reversal of the brutality and Many statistical investigations suggests that the intensification of global value chains has peaked before the Brexit vote vote Brexit the has peaked before chains of global value the intensification that suggests investigations statistical Many the case more no is it but GDP world than faster trade used grow to 1981 world Since presidency. Trump Donald and absolute national sovereignty might suggests that is the main source of the reversal of globalisation trends is political. political. is trends globalisation of the reversal of source the main is that suggests might sovereignty national absolute The polarisation of contemporay debates around the oppsition between an internationalist elite and the defenders of an of defenders and the elite an internationalist between oppsition the around debates of contemporay The polarisation versus markets, emotions versus rationality.. This brings unprecedented levels of political uncertainty into the economy. into of uncertainty political levels unprecedented brings This rationality.. versus emotions markets, versus decision opposes two camps with antagonic representations and ideologies: cosmopolitism versus nationalism, state state nationalism, versus ideologies: cosmopolitism and representations antagonic with camps two opposes decision perceived as less and less essential (Graph 12). The issue of governability of modern societies is at stake sinceany major major modern of stake sinceany at societiesis governability of issue 12). The (Graph essential less and less as perceived Nevertheless some countries have abandonned electoral democracy in favour of more autocratic and populist regimes regimes populist and autocratic more of democracy electoral in favour abandonned have countries some Nevertheless democracy is generations of the succession through feature: preoccupying a more is there but years in the recent INCAS DP SERIES / 2018 #09 17 Source: https://www.wto.org/english/news_e/pres17_e/pr791_e.htm Source: Graph 14 : Trade imbalances are narrowing and shifting after 2011 after shifting and narrowing are imbalances 14 : Trade Graph

Graph 13: Since 2011, international trade is not any more the engine of world growth growth world of engine the more any is not trade international 2011, 13: Since Graph Source: Financial Times (2017), Globalization in retreat: capital flows decline since crisis, 23 August. crisis, 23 since decline flows capital in retreat: (2017), Globalization Times Financial Source:

regulatory principles (Graph 15). (Graph principles regulatory Symmetrically this means that the net international financial transfers have been decreasing and the domestic financial financial domestic and the been decreasing have transfers financial international the net that Symmetrically this means international common implement and elaborate to the inability to be in response looking, may inward more are systems

and UK deficits and the German and Northern Europe surpluses is significantly reduced. ( Graph 14). 14). Graph ( reduced. is significantly surpluses Europe Northern and and the German UK deficits and The rise of trade imbalances observed since the mid 1990s has stopped after 2008 and the polarisation betweenthe US andthe polarisation 2008 after observed of The trade imbalances risestopped has mid 1990s since the INCAS DP SERIES / 2018 #09 18 (Trillions Dollars) (Trillions are more respectful of some features of the 2000s. The Minsky Minsky the 2000s. The of features respectful some of more are is the less equipped to explain the seven stylized explain facts review: to under equipped theless is are part of a larger evolutionary paradigm that points out the endogeneity of innovation innovation of the endogeneity out points paradigm that evolutionary a larger part of are Graph 15: Global cross-border capital inflows have declined since 2007 peak 2007 since declined have inflows capital cross-border 15: Global Graph the new classical macro theory Source: Financial Times (2017), Globalization in retreat: capital flows decline since crisis, 23 August crisis, 23 since decline flows capital in retreat: (2017), Globalization Times Financial Source: Keynesian and post-Keynesian theories post-Keynesian and Keynesian Neo-Schumpeterians

The The No surprise if No Can existing theories capture the novelty of the 2010s? the of the novelty theories capture Can existing

in terms of products, processes and organizations and its leading role in economic dynamics. The stagnation of stagnation The dynamics. economic in role leading its and organizations and processes products, of in terms economies. Nevertheless Keynesians do have a point of view on some key issues of contemporary world. contemporary of issues key some view on of a point do have Keynesians Nevertheless economies. • capital remuneration have definite consequences for personal income distribution. For Post Keynesians, erroneous erroneous Keynesians, Post For distribution. income personal for consequences definite have remuneration capital The the population. of the social the exacerbated majority between divide and rich people policies have austerity national isolated mainly consider to continues this easily within paradigm dealt that not is globalization of issue hot model proposes some of the mechanisms that generated the internet and then subprime bubbles. It can be can extended It bubbles. then subprime and the internet generated that the mechanisms of some model proposes productive the from away allocation capital diverted has instruments financial of the high return how explain to and of wage dynamics contrasted The growth. and productivity of a recovery engineered have would that investment catching up since the 1990s and not before if according to the neoclassical growth theory frontier technology a theory is the neoclassical to growth frontier if according before not the 1990s and since up catching relevance). of withthe criteria clashes purity for axiomatic or country?The firm search any to good available public • it cannot cause any economic crisis, the representative agent totally hides the polarization of most societies, most of polity hides the polarization totally agent crisis, the representative economic any cause cannot it this prevents closed is and sake the economy simplicity for and spheres autonomous conceptually are economy and been have economies do emerging why Furthermore another. country to one from disequilibria of contagion any • and thus exist doesnot technology finance shock, a negative by explained tautological is stagnation productivity 4.

contemporary capitalisms are simply ignored as negligible compared with the intrinsic and universal properties of a of properties universal and theintrinsic with compared negligible as ignored simply are capitalisms contemporary 4). (Table economy market over observation, simulation and calibration over refutation by econometric tests. The structural transformations of structural The tests. transformations econometric by refutation over calibration and observation, simulation over return of a more fundamentalist approach of a pure market economy. This culminates with the domination of the newof the domination with the This culminates economy. market a pure of approach fundamentalist a more of return theory: axioms the primacy reassesses of it macroeconomic classical and the model becomes benchmark the walrasian economy. In turn the maturing of the post WWII growth regime monitored according to Keynesian ideas the feeds Keynesian to according monitored regime the post WWII growth of the maturing turn In economy. pure theory could be tested by adequate econometric techniques. The Keynesian approach had proposed to revise to proposed some had approach Keynesian The techniques. econometric adequate theory by bepure could tested British of interwar the newcharacteristics of observation of the in light the finance and labor concerning hypotheses core inherited from British political economy. Theorems could be deduced from quite few axioms and propositions from from propositions and few axioms quite could be deduced from Theorems political economy. British from inherited Basically after WWII the American economic analysis originated from an impressive clarifying effort of the concepts concepts ofthe clarifying effort an impressive from originated analysis American WWII economic Basicallythe after

careful assessment of the novelties of the 2010s. of the novelties of assessment careful These reversals of past trends support the hypothesis that globalization might well have reached its apex with the its reached have well might globalization hypothesis that the support of trends past reversals These be a to open should it and regularities the past extrapolate not should theorizing so, the 2008 crisis. If of out bursting INCAS DP SERIES / 2018 #09 19 Table 4 – The last decade stylized facts: testing alternative theorizing alternative testing facts: stylized decade last 4 – The Table INCAS DP SERIES / 2018 #09 but not with with not but an observation based socio- based observation an Karl Marx is back Marx Karl 20 build upon the heritage of all the previous approaches and they aim at taking they at aim and approaches all the of previous the heritage upon build analysts take seriously the transformation in basic social relations that define a capitalist a capitalist define that in basic social relations the transformation take seriously analysts i.e. a precious antidote to the axiomatic and normative approach of most contemporary research. research. contemporary most of approach normative and the axiomatic to antidote a precious i.e.

A challenge addressed modelling macro-economic to Institutional politicalInstitutional economists Contemporary Marxist

that is here to last given the structural factors that have eroded the legitimacy of domestic political institutions. political institutions. eroded the domestic legitimacy of have that the structural given factors last to here is that movements that challenge the capital led globalization. The existing party system cannot cope with the superposition superposition cope with the cannot party system existing The led globalization. the capital challenge that movements the along markets, and State mix the between concerning axis the right/left along lines: dividing orthogonal two of democracy electoral the crisis of Hence sovereignty. national of defense and between internationalism opposition risk that was largely assumed by firms is now born by wage earners in order to deliver stable and high returns returns highand stable to deliver order in earners by wage born now is firms by assumed largely was that risk skilled and by low neoliberalstrategies of support erodes the and inequality income This widens investors. to nationalist of the part form to tend and alliances governmental the from excluded are They workers. paid poorly but also an evidence for the radical uncertainty about the next productive paradigm. The hierarchical domination domination hierarchical paradigm. The productive the next about the radical uncertainty also evidence for an but the but innovation and of deregulation outcome unintended the not is forms other institutional allover finance of The economic rentiers. of newclass a and managers allies financiers, bloc that newa hegemonic of veryexpression seriously the variability in time and space of the complex interactions between polity and economy that allow allow that economy between and polity interactions the complex of space in time and the variability seriously of run consequence be long might the slow-down productivity The regimes. socio-economic of a multiplicity radical by innovations breakthroughs productive for the search finally inhibits that formation wage of flexibility This is the surprising outcome of a bizarre u-chronie, i.e. a partial return to competition and finance led capitalisms. led finance and to competition a partiali.e. return u-chronie, bizarre of a outcome surprising is This the • social resistance, the delocalization ends up against the rise of skilled workers wages. wages. skilledthe riseof workers against up ends the delocalization socialresistance, From themselves. the time being, the capitalists for struggle class are, of the winners since the victory proletariat of ideology. and nonsense be as to discarded too paradigm view is enlightening the of Marxist point analytical a purely by the opportunism of transnational corporations. Nevertheless no source of exploitation can continue forever forever continue can exploitation of source no Nevertheless corporations. transnational of the opportunism by indexes- in productivity hike no ever but than innovations – more puzzle the so called and productivity unchanged clear find concessions wage and intensity work limits, deepening encounters becan partially capital explained: inequality among two groups: wage earners living out of the sale of their labor force on one side, capital owners owners capital side, one on force the their sale labor of of out living earners wage groups: two among inequality capital that show countries industrializedThe new other. on the rentiers or financiers let them be entrepreneurs, overwhelmed are politicalprocesses the domestic thus and political borders cross to tends naturally accumulation resurface in modern economies. Finance is leading the ups and downs of the economies where productive capital capital productive where theeconomies of downs and the ups leading is Finance in modern economies. resurface crises.financial severe during up show capital of the contradictions and the logic high to returns submitted is income recurringit unleashes widening to leads crisesand conflict the capital/labor motion of laws own its Under • led accumulation competition of the patterns typical markets so many of the deregulation to response In economy. capitalisms, innovators are part of a competitive game where the winner gets all. Thus any paradigm only captures only captures paradigm any all. Thus the gets winner where game a competitive part of are innovators capitalisms, hints some with incompatible always not is it and economies existing in really operating the a fraction processes of (see section one IV infra). another the heart of at income and wealth inequality but their wide diffusion reduces progressively the innovation rents and leads to a more more to a leads and rents innovation the progressively reduces their wide diffusion but inequality wealth and income some that stresses socioeconomic investigations by inspired approach Another income. of balanceddistribution led market in typical whereas innovation of the dividends smoothly rather distribute compromises institutionalized no development can be exponential indefinitely since the typical pattern of any social system of innovation looks innovation of social any system of typical pattern since the indefinitely be can exponential development no of wave trigger to another powerful enough innovation an with recover only can logistic a curve.like Growth of a widening mechanically fosters initially radical innovations of wave any that points research of line One growth. productivity in mature economies is interpreted by a long period of adjustment of all organizations and institutions to to institutions and all organizations of period adjustment a long of by interpreted is economies in mature productivity North outside to diffusion up their is countries newof industrializing emergence The opportunities. the technological Nevertheless multinationals. the aegis of under chains value of the delocalization in response Europe America and 5.

(Boyer, 1988) but the opening of the economy is favoring profit led demand regimes (Bowles & Boyer, 1990) and and 1990) regimes (Bowles & led demand Boyer, profit favoring is the economy of the opening 1988) but (Boyer, of formalization 1997). The policy (Lordon, economic and formation wage of reorientation a complete this calls for (Billaudot, 2001). The fordist growth model is structurally different from the competitive regime of the interwar of the period regime competitive the from structurallymodel is different growth fordist The 2001). (Billaudot, hypotheses of standard macroeconomics: a general theory can be elaborated, relevant whatever the territory and the territory and whatever relevant theory general a be can elaborated, macroeconomics: standard of hypotheses approach macroeconomic institutional and historical an with alternative an theorythe epoch. Régulation built has This permanent evolution of techniques, products, organizations and institutional forms challenges one of the founding founding of the one challenges forms institutional and organizations products, techniques, of evolution This permanent universal and a-temporal theory? a-temporal and universal If capitalisms experience large structural and political transformations, why should economists look for a canonical, a canonical, look for economists should why political structural transformations, experience and large capitalisms If This approach is indeed quite marginal among economic profession since it promotes promotes it since profession economic among marginal quite is indeed approach This economic discipline, INCAS DP SERIES / 2018 #09 of the limits to growth growth to the limits of classical and Marxian vision vision Marxian and classical Malthusian analysis 21 the formation of productive capital and the access to credit for for credit to the access and capital productive of the formation of speculative bubbles and their bursting out. The Schumpeter’s The Schumpeter’s out. their bursting and bubbles speculative of expresses the absence of collective institutions governing the wage labor labor thewage governing collective institutions of theabsence expresses able to impose nominal wage and stable income hierarchy, with permanent permanent with hierarchy, income stable and wage nominal impose to able Minsky’s cycle Minsky’s financial markets govern markets financial competitivewage formation regime of organized labor organized of regime One could add other configurations- for instance a small open economy with or without the power to set the the power or without with open a small economy instance for configurations- add other could One A resource constrained process is relevant when the limitation of food, water, primary commodities influence influence primary commodities food, water, of when the limitation relevant is process constrained A resource When When When large and deep and large When In a In

price of its product on the international market (Aglietta, Orléan & Oudiz, 1982) and this is an invitation to test test to invitation this an is & Oudiz, 1982) and Orléan (Aglietta, market the international on product its of price modelling. any by be to captured the features key are what empirically national boundaries. boundaries. national • demography or the supply of industrial activities. One recognizes the recognizes activities. One industrial of the supply or demography economic that perception the contemporary With regimes. used pre-capitalist be to usefulthat understand to the transcends that a level at but account, be to taken into again has this process the ecosystem part is activity of technical change in response to labor conflicts upon control of work organization. organization. work of control upon conflicts labor to in response technical change • • of hints the it encapsulate and cycle a Goodwin’s drives conflict labor the capital nexus, of endogeneity tothe linked profit, of of rate the dynamics openrun long the leaves This accumulation. capital of innovation and diffusion cycle allowed by the credit given to entrepreneurs displays a longer time span but it follows follows it but span time a longer displays to entrepreneurs given by credit the allowed diffusion cycle and innovation contrarythat to the second innovation, technological with fits a declining ofperiod variant logic. first the The same paradigms. productive new emerging possible when explore firms likely more is • a is pattern the typical consumers overcapacity and nearly closed economy, the Keynesian principle of effective demand is relevant. Involuntary Involuntary relevant. is demand effective of principle the Keynesian closed economy, nearly and overcapacity are conditions these until of activity permissive level the influence policy may the rule is State and unemployment uncompetitive. becomes or if the economy fulfilled near full more no employment •

one economy to another, from one epoch to the next. The intuition is rather simple: the convergence towards a unique a unique towards convergence the simple: is rather intuition epoch The the next. to one from another, to economy one unlikely. quite priori is a mechanisms of articulation by the same model defined of the relevant processes typical of a capitalist economy. Second their mix is largely idiosyncratic and may differ from differ from may and idiosyncratic Second largely their mix is economy. a capitalist of typical processes the relevant of This brief overview delivers two major teachings and a hint. First of all any grand theory is only capturing a fraction theory only capturing grand is of any all First a hint. and teachings major overview brieftwo This delivers

associated a specific mix of basic economic processes in function of the precise institutional architecture. Here is a list is a list Here architecture. institutional precise of the in processes function of a specificbasic economic associated mix 2): (figure processes or these mechanisms elementary of some of The analysis can be pushed a step forwards by the following generalization: to any socioeconomic regime can regime can be socioeconomic any to generalization: following by the forwards step a pushed be can analysis The a canonical capitalist economy (Hausmann & Marquez, 1986). & Marquez, (Hausmann economy capitalist a canonical (Boyer, 2000a). Pure rentier regimes require genuine formalizations because they are not imperfections with respect of respect of with imperfections not because they are formalizations genuine require regimes rentier 2000a). Pure (Boyer, finance led regimes is still different and supposes precise conditions that are fulfilled for a limited number of countries countries of number arefor a limited fulfilled that conditions precise supposes and stillis regimes different led finance INCAS DP SERIES / 2018 #09 22 Figure 2 – The interaction of processes belonging to different logics: why leading theories fail to capture contemporary macro-economic evolutions evolutions macro-economic contemporary capture to fail theories leading why logics: different to belonging processes of interaction 2 – The Figure INCAS DP SERIES / 2018 #09 23 Table 5 – Commonalities and differences among OECD economies in the 2010s in the economies among OECD and differences 5 – Commonalities Table INCAS DP SERIES / 2018 #09 exhibit various mix of market market mix of various exhibit wage labor nexus labor wage 24 exhibits an unprecedented intensity in the international division of of division in the international intensity unprecedented an exhibits are the rule not the exception (figure 3). (figure the rule the exception not are common pressures have not led to the emergence of a common brand of of brand a common of emergence the to led not have pressures common has potentially become the hierarchically dominant institutional form. form. institutional dominant the become hierarchically potentially has has significantly changed. During the Golden Age, the autonomy of public interventions interventions public of autonomy the Age, During the Golden changed. significantly has is more and more governed by transnational forces, contrary to the post-WWII to contrary forces, transnational by governed more and more is competition regime financial and monetary financial regime integration into the into integration world economy State / economy nexus / economy State Dyadic even or triadic configurations based on the same development model. Furthermore, the previous findings suggest that no modelis no thriving that suggest findings the previous Furthermore, model. development based the same on The The The The The search for flexibility is quite general indeed but the different butthe different indeed general quite is flexibility for The search Is a common régulation mode régulation emerging? a common Is

financial intermediation and finally the rentier economies living out of the export of natural resources. Thesethree resources. natural of ofthe export out living economies rentier finallythe and intermediation financial model growth thesame of variants minor to belong they do not that so contrasted are specializations international mode. régulation and productive system is to be observed at the world and no more at the domestic level. Nevertheless, the integration the integration Nevertheless, level. the domestic at more no and be to is observed the system world at productive of charge those in production, specialized countries manufacturing in for differs largely economy the world into are operating: far from converging, they are largely complementary, since none of them can exist in isolation. exist them can of none since complementary, largely they are converging, from far operating: are • the of the coherence thus, and chains value international been by replaced have sectors integrated Vertically labor. economies that harbor an international financial center enjoy more autonomy than others that have to finance finance to have others that than autonomy more enjoy center financial international an harbor that economies imperative: one by shaped largely ismode regulation Their abroad. by borrowing trade deficits and twin public modes régulation different two Therefore, investors. international the territory for of the attractiveness maintaining • and the Withfinancial liberalization flows. of capital control and the regime rate a fix exchange by warranted was some again But of financiers. under the scrutiny now are governments all innovations, financial of multiplicity have to comply with rule of the game they do not master. The crisis of the euro has made clear this polarization: the clear this made polarization: has of euro the crisis The master. they rule do not with the game of comply to have IMF. ECB and of the requirement with comply to had economies weaker Nevertheless, a major difference relates to the localization of the relevant financial actors: are they belonging tothe arethey belonging actors: financial relevant of the to localization the relates difference a major Nevertheless, UK and the US the instance For system? financial world a distant of they the expression are territory or domestic countries financially dependent whereas system, of financial their on the evolution influence an have to continue largely price-makers in the North, typically price-takers in the South. price-takers typically in the North, price-makers largely • still enjoy oligopolistic rents at the world level, since they are price makers. By contrast, other economies specialized economies other contrast, By makers. price they since are level, the world at rents oligopolistic stillenjoy adjust to they since have competition, pure of the equivalent facing are commodities goods and standardized in a such polarization: of goodis a example Union European contemporary The level. the international to their price • economies national some of sectors the manufacturing Nevertheless, level. the national at competition oligopolistic are approaching a typical competitive wage formation. By contrast, social democratic configurations rely to market market to rely social configurations democratic contrast, By formation. wage competitive a typical approaching are the Consequently training. and mobility labor of organization a collective of the constraint under but mechanisms significantly. differs productivity respect with to wage real of evolution • deregulation market labor and product of forefront at the countries The arrangements. institutional and mechanisms 6.

interdependence is here to last in spite of the apex of globalization, no theory based on a closed economy can be can deemed theory no globalization, based a closed of economy the on apex of in spite last to here is interdependence relevant. as in isolation from the others, since each logically or empirically requires links with a counterpart. Given the fact that the fact that Given links a counterpart. with requires empirically each logically since or the others, from in isolation A major conclusion comes out: strong and and strong out: comes conclusion A major capitalism distinctive features continue to characterize mature economies (table 5). (table economies mature characterize to continue features distinctive the 1990s (table 1 supra)? Many institutional forms have been evolving under the pressure of the same forces, but but forces, the same of the pressure under been evolving have forms institutional Many 1 supra)? the 1990s (table Let us check this proposition by looking back at figure 1: do the seven transformations (section III supra) end up end (sectionsupra) III do 1: the seven transformations figure at back looking by thisproposition Let check us observed during the taxonomy blurring mode, thus régulation own its with of capitalism brand genuine a defining INCAS DP SERIES / 2018 #09 25 Figure 3 – Farewell to the closed economy: configurations are dyadic or triadic. or dyadic are configurations economy: closed the to 3 – Farewell Figure INCAS DP SERIES / 2018 #09 , with state led or led or state , with Chinese competition led led competition Chinese welfare capitalismwelfare compatible and viable contrasted inequality inequality contrasted viable and compatible and thrive out their differences. out thrive and (figure 4). 4). (figure 26 is associated with external trade deficit, growing public debt debt public externalgrowing trade with deficit, associated is complementary , very relevant in Latin America, either typical (Venezuela) or hybrid (Brazil), (Brazil), hybrid or (Venezuela) typical LatinAmerica,in either very, relevant two capitalism brands co-evolve brands capitalism two in the United States in the United

evolution of Chinese and North American capitalisms. capitalisms. American North and Chinese of evolution and in some cases in some and compatible : the permanent over supply finds an outlet in a structural trade surplus that is partiallythe usedstructural in a to finance that outlet surplus trade an finds supply over : the permanent finance-led capitalism

The macro-economic imbalances, generated by the widening of inequality within each domestic economy, are are economy, domestic within each of inequality by widening the generated imbalances, macro-economic The The resource based rentier regimes rentier based resource The The Euro crisis of the 2010s strikes another regime that could could be labelledas regime that another strikesof 2010s the crisis Euro The The More than convergence the interdependence of contrasted socioeconomic contrasted of interdependence the convergence than More , themselves embedded into complementary development models. Furthermore this explains the puzzling the puzzling this explains Furthermore models. development complementary embedded into , themselves

overcapacity due to the squeeze of labour share in China and low American household saving rate versus Chinese versus rate saving household American low in China and share labour the squeeze to of due overcapacity system. the US financial partially to back high savings, channelled symmetric in the US and in China and consequently only the compensating movements in international trade and trade and in international movements the compensating only consequently in Chinasymmetric and in the US and abundant closed within sustained borders: be not could regimes that of socio-economic viability the restore finance industrial in the US, massive income real average stagnant with living of way the American sustain to credit political economy approach is required to understand these episodes (Palombarini, 2000). these episodes (Palombarini, understand to required is approach political economy • world demand and prices of primary resource collapse, the viability of these regimes is at stake. Again this reversal this reversal Again stake. at is these regimes of the viability collapse, primary resource of prices and demand world the US. When China and of that to complementary is that specialization Latin American by explained is fortune of A challenged. are democracy, to the transition by political the past alliances, allowed out crises burst economic are structurally dependent from the demand from industrial and financial capitalisms. When both are booming booming are When both capitalisms. financial and industrial from the demand from structurally dependent are the and new socioeconomic regime and inclusive an of the success celebrate governments 2010s, thein early when the social Nevertheless extreme an polarization. from starting inequality in economic (modest) reduction thus partially shaped by the partially by thus shaped • moderate. But a redistributive tax system and a generous public spending are under the joint pressures of Chinese of pressures the joint under are spending public a generous and taxsystem redistributive a But moderate. victoryAmerican by the the recurring global crisesgenerated of financial and industries in most up catching rapidly is capitalisms welfare ofthese future The finance. and capital, trade, of globalization and liberalization in promoting • rather remain inequalities the income and the solidarity ideal of defends opinion Public social-democrat variants. capitalism productive by rapid the generated inequality of surge in China the allows complementarity This economy. American these Consequently modernization. • the of image the mirror is It income. top of the explosion to due the inequality riseand of 7. regimes

widening inequalities for individuals within the nation-state (see graph 7 supra). 7 supra). (see graph the nation-state within individuals for inequalities widening observation of opposite evolutions concerning inequality: less inequality between nations since globalization allows allows globalization since inequality:between nations inequality concerning less evolutions opposite observationof nurtures these regimes each of led- but export led, innovation led, credit regimes- growth and capitalisms a variety of regimes Thus the internationalization of production, capital and finance makes makes finance and capital production, of internationalization the Thus

and make them make and The present framework faces one major question: if there is no single pattern in socio-economic regimes how to to how regimes in socio-economic no single pattern is if there question: major one faces framework present The another one compensating are disequilibria internal Basically external and their their respective persistence? explain INCAS DP SERIES / 2018 #09 27 Figure 4 – An interdependent world, complementarity development modes and growth regimes growth and modes development complementarity world, interdependent An 4 – Figure INCAS DP SERIES / 2018 #09 common that are are that develop new develop deliver a better a better deliver . This is an invitation to an invitation is . This than enlightening the enlightening than confusing an ever varying mix of processes of mix ever varying an according to distinctive configurations. distinctive to according large and long distance interdependencies distance long and large Marx andMarx institutional political economy towards the same mode of régulation. mode the of same towards recombined institutional configurationanalyzed 28 inherited from a three centuries long history of capitalism. Second, Second, capitalism. history of long centuries three a from inherited convergence (market-led, meso-corporatist, state-led, and social democrat) have undergone undergone social have and democrat) state-led, meso-corporatist, (market-led, for instance between finance-led, competition-led, and rentier regimes. Nationalist Nationalist regimes. rentier and competition-led, between finance-led, instance for represented by new classical macroeconomics, postulates universal and a-temporal a-temporal and universal postulates new macroeconomics, classical by represented the diversity of configurations of diversity the (internationalization, new waves of innovation, domination of finance) are largely endogenous but but endogenous largely are finance) of domination innovation, of new waves (internationalization, should be one of the tasks of professional economist. professional the of tasks of be one should complementarity four brands of capitalism Conclusion

Standard economic Standard theory, These early findings falsify the widely held vision that all economies are bound to converge and merge into a into merge and converge to bound are all economies that falsifyheldvision findings theThese widely early The Modern economies dynamics is the outcome of the interactions of of the interactions of the outcome is dynamics economies Modern Keynesian and post-Keynesian theories and the neo-Schumpeterian evolutionary approach capture many but but many capture approach evolutionary the neo-Schumpeterian theories and post-Keynesian and Keynesian The new classical explanation stresses the role of large exogenous shocks upon a basically invariant macroeconomic macroeconomic a upon basically invariant shocks exogenous of large role stresses the newclassical explanation The This article was built upon two core hypotheses. First, the task of the economist is not to test his favorite model favorite his test to not is of the economist hypotheses.the task First, core upon two built article was This

and growing growing and game sum zero a of the illusion but labor of division international the present challenge and prosper movements game. the protectionist to all the participants for living of standard of lead a reduction to might 7. interact decisions the do political strategic only Not structural the same forces. of the impulse modelsingle under the era of but forms, institutional of the redeployment with Anglo-Saxon configuration that is the implicit benchmark of most analyzes and economic policies recommendations. recommendations. policies and economic analyzes most of benchmark is implicit the that configuration Anglo-Saxon are presented previously mechanisms and processes The 6. the towards converged not they have Nevertheless, intensity. unequal an with but structuralsimilar transformations pointed out by diverse theories in the macroeconomic literature. The relevance of these processes (neoclassical, processes of these relevance The literature. theories in the macroeconomic diverse by out pointed theprecise to up is Marxist) Schumpeterian, Keynesian, capitalism. of brands epochs and the various with in accordance macroeconomics, historical and institutional an intelligibility about the new interactions between the polity and the economy, the national and the global. They are the global.are They and the national the economy, between and the polity the new interactions about intelligibility crises. economic of the structural analyze nature to and diversity capitalism recognize to equipped well 5. 4. indeed, Paradoxically all the stylizednot facts review. under mechanisms, typical of a pure market economy devoid of any institutions. This article shows that that articleshows This institutions. any of devoid economy market a pure of typical mechanisms, transformations the deliver finally to sufficient not they are that regime change 3. 2. try to detect but to detecting crisis. Therefore goes into been generally has it detected, socioeconomic regime soon genuine a as as mechanisms governing market economies. This dominant paradigm is more more is paradigm dominant This economies. market governing mechanisms economies. capitalist of transformations contemporary 1. 8.

catching up of new industrializing countries and the recent stop in the process of globalization? This very This briefsurvey globalization? of in the process stop the recent and countries new industrializing of up catching conclusions. theory provisional some suggest régulation by advances the recent and the literature of polarization and the open conflicts between capitalism and democracy in most national economies, the impressive impressive the economies, democracyand national most in conflicts the open between capitalism and polarization Can contemporary theories explain the seven major stylized facts pointed out by the last decades evolution? Why the Why decades the last evolution? by out stylized facts pointed the seven major theories explain Can contemporary social inequalities, crises, recurring financial wider income economies, in mature productivity of exhaustion quasi INCAS DP SERIES / 2018 #09 , , 15 , London: , London: , vol. 2, n° 1, p. p. 1, n° 2, vol. , Defense of Marxism Defense of , Vol. 9, Issue 1, p. 59-81. 1, p. 9, Issue , Vol. Creating Nordic Capitalism. The The Capitalism. Nordic Creating , Editions de l’ENS, Septembre. de l’ENS, , Editions Socio-Economic Review Socio-Economic , Princeton University Press, Princeton. Press, University , Princeton , Princeton University Press. Press. University , Princeton , Harvard University Press, Harvard. Press, University , Harvard , La découverte, Paris. , La découverte, Socio-Economic Review Socio-Economic L’Économie politique du néolibéralisme. Le cas de la la de Le cas néolibéralisme. du politique L’Économie Transnational governance. Institutional dynamics of of dynamics Institutional governance. Transnational Capitalist Diversity and Diversity within Capitalism within Diversity and Diversity Capitalist National Identity and the Varieties of Capitalism. The Danish The Danish Capitalism. of Varieties the and Identity National 29 La grande bifurcation The Crisis of Neoliberalism of Crisis The Varieties of Capital-ism, The Institutional Foundations of Comparative of Comparative Foundations Institutional The Capital-ism, of Varieties The National Origins of policy Ideas policy of Origins National The , Palgrave-MacMilan, New York. New , Palgrave-MacMilan, Trajectories of Neoliberal Transformation: European Industrial Relations Since Since Relations Industrial European Transformation: Neoliberal of Trajectories , 11(2), p. 233-263. , 11(2), p. Mondialisation et compétition : Pourquoi certains pays émergents réussissent et et réussissent émergents pays certains : Pourquoi compétition et Mondialisation Sources of National Institutional Competitiveness. Sense-making and institutional institutional and Sense-making Competitiveness. Institutional National of Sources Welfare States in Transition. Social Security in the New Global Economy Global New the in Security Social Transition. in States Welfare The Three Worlds of WelfareCapitalism Worlds of TheThree La flexicurité danoise. Quels enseignements pour la France la pour enseignements Quels danoise. La flexicurité , Editions de l’ENS, rue d’Ulm, Paris rue d’Ulm, de l’ENS, , Editions Socio Economic ReviewSocio Economic , La Découverte, Paris. , La Découverte, http://www.marxist.com/Norway-and-crisis-of-capitalism.htm , DJOF publishing, Copenhagen. publishing, , DJOF , Oxford University Press, Oxford. Press, University , Oxford

, Cambridge: Cambridge University Press. University Cambridge , Cambridge: , Cambridge university press, Cambridge press, university , Cambridge

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