Varieties of Capitalism

"Americans, especially, are inclined to be critical of Europe’s long holidays, inflexible labour markets, and so on. The Hall and Soskice book is an articulate statement of the view that there are different ways of cracking the same nut. There are different ways of organising market economies – different constellations of social and economic institutions that, in combination, can be equally efficient. Europe has very significant strengths in precision manufacturing. It has apprenticeship training programmes and employment stability that facilitates the acquisition of skills on the job. It has patient banks to fund the operations of firms investing in their workers. It’s not obvious that this constellation of institutions is inferior, from the point of view of growth and competitiveness, to that of the United States. Ten years ago, the so-called experts would have been unanimous that the US had a leg-up on Germany in terms of innovation and export competitiveness. Now, to put an understated gloss on the point, this is no longer obvious. I published a book in 2007 that, to avoid being too self-referential, I didn’t include on this list. In that book, The European Economy Since 1945 , I forced myself to ask: “What should I say now, in 2007, about the competitiveness and growth prospects of the European economy that will still sound right 10 or 20 years from now?” Which set of economic institutions is superior from the point of view of building social cohesion, investing in skills and competing globally over the next 20 years – in providing public as well as private goods? As your question suggests, the answer is far from obvious."