Peter A. Hall and David Soskice,

Abstract

The Varieties of Capitalism (VoC) approach became widely known through the collective volume by Peter Hall and David Soskice that investigates the cross-national institutional variations of advanced economies. They distinguish two ideal types of capitalism: the Liberal Market Economy (LME) model following neoclassical economics and the Coordinated Market Economy (CME) with a consensus-enhancing institutional infrastructure between firms as well as employers and unions. This chapter introduces the approach, summarizes the main contributions along key institutional spheres, and discusses applications of its comparative typology. Furthermore, it criticizes the initially rather static and apolitical approach which led to subsequent revisions and extensions. The recent financial and economic crisis has deepened the controversy over the fate of coordinated market economies subject to institutional changes resulting from intensified global economic pressures and transnational diffusion of liberalization.