Seminar 6: Varieties of Capitalism (23 February)

This week we focus on an influential piece that tried to classify different styles of capitalism, which has had huge influence, followed by a piece by Whitman (author of the Harcourt book review from seminar 1.  the other two papers are critiques of teh Hall and Soskice approach

Hall and Soskice Varieties of Capitalism (2001), Introduction

Copy here: http://www.lse.ac.uk/government/whosWho/Academic%20profiles/dwsoskice@lseacuk/Hall-Soskice-Intro-VoC-2001.pdf

James Q. Whitman ‘Consumerism Versus Producerism: A Study in Comparative Law’ (2007) 117 Yale Law Journal 340

One from:

Bohle and Greskovits ‘Varieties of Capitalism and Capitalism “tout court”’ (2009) 50(3) European Journal of Sociology 355

Wolfgang Streeck, MPIfG Discussion Paper 10/12E Pluribus Unum? Varieties and Commonalities of Capitalism
http://www.mpifg.de/pu/mpifg_dp/dp10-12.pdf

7 comments on “Seminar 6: Varieties of Capitalism (23 February)

  1. Ola Innset says:

    I long resisted James Whitman’s conceptualization of consumerism and producerism as two different ways of organizing capitalist society. After all, I have gotten quite used to seeing the main antagonism of society as lying within the realm of production: that of the owners versus the workers. Seen from this marxist standpoint the category of “consumer” is little less than a passive version of the worker, and it is easy to suspect that reimagining workers as consumers essentially serves the interest of the owners. But Whitman takes great care to highlight how there is no single producer interest and how “the world of producer politics was a world of conflicting producer interests”. Thus I found his article the most interesting when he pointed to how most people are both producers and consumers and that: “… the real debate is not about some clear economic choice for the community. The real debate is about how we should imagine that community – whether we should conceive of it as a community of consumers, or as a community of producers (371)” Thisi is quite lucid, and seems to rest on the ideas of historians like Lizabeth Cohen that the consumer identity was (succesfully) introduced in American politics to defuse class politics of the European kind. All in all I think Whitman does a good job at explaining some of the differences between what Soskice and Hall call LMEs and CMEs, (a dichotomy that I found less engaging, if only for the connotations I have to adjectives such as liberal and coordinated – is there no co-ordination involved in the American economy? And what does liberty have to do with it?)

  2. Fabrizio says:

    Whitman’s framework is interesting, but it seems a bit misleading to me in as much as it considers consumerism and producerism as two alternative labels to attach on a legal system. Instead, it seems to me that they are two different and complementary perspectives.

    As example, consider the discussion made by Hall and Soskice on how in the UK and in Germany firms address an appreciation in the exchange rate (p. 16). In the UK, firms raise price and respond to reduction of market shares by firing workers. In Germany, firms accept profit reduction and maintain the level of labour force. Under a producerist perspective, UK protects capital while Germany protects workers. Under a consumerist perspective, UK protects capital and Germany protects consumers. Therefore, capital protection is the dominant business strategy in the UK under both a producerist and a consumerist perspective. In Germany it is the opposite: capital protection is the dominated strategy under both points of view.

  3. Haukur says:

    I think Whitman is onto something with his distinction between consumerist and producerist. His treatment of the differences between the US and the European models is however poorly executed, mainly due to his initial unmotivated bias in favour of the US approach. He employs the well known logical fallacy of ‘guilt by association’ when introducing the concept of producerism; apparently it not only has its ‘paternalistic’ roots in Marxism and socialism, but also in antisemitism and fascism (p 356-9). Contrasting this unfortunate legacy, the American consumerism was, on Whitman’s account, the ‘key to creating justice and social peace in democratic America’ (p 361). Much of the rest of the article relies on this poorly motivated distinction, and he keeps surprising himself throughout the article that despite this mix of fascism and Marxism, the European approach still seems to produce great bread and humane working conditions for the labor force.

    If he would have bothered to look at the concepts he employs more closely he perhaps would have found out that the key to understanding the difference between the Franco-German way and the Anglophone way is the in way in which the firm is perceived. The continental way is to see the labor force as stakeholders in the firm and thus in the production, while the Anglophone system only sees the capital owners as stakeholders. This enables the US-UK reduction of the labour force to simple consumers, while the continental consumer is also a stakeholder in the production. Seen in this way we can also understand that the US-UK consumer is keen on Kaldor-Hicks efficiency improvements in production, while the Continental consumer is not keen on improvements beyond Pareto due to his simultaneous stake in the production.

    • I read Whitman’s treatment of the history of producerism and corporatism more charitably. It seemed to me, given that much of the research on the legal structure of early 20th century authoritarianism, that part of what he was trying to do was to show linkages between corporatism and neo-corporatism. The alternative would be to ignore these linkages and lose insight into the continuities and discontinuities between the legal-political-ideological assemblages that have been combined and recombined in Europe and beyond since the rise of ‘capitalism.’ I was thrilled to find out that someone had done such a close reading of the ideological coordinates of economic law under European fascism. I think this kind of work acts as a useful corrective to a common imagining of modern legal/political/economic form as representing a sharp break from the fascist era. To me, that isn’t guilt by association, so much as it emphasises (like this piece by Koskeniemmi on the legal legacies of fascism in Europe: http://www.germanlawjournal.com/pdfs/Vol07No02/PDF_Vol_07_No_02_155-172_Articles_Koskenniemi.pdf) that no one legal form or mode or governance is ever going to be enough to tell you whether something is sliding toward ruthless authoritarianism. Paranoid structuralism won’t work: you have to actually look at the content of the law, and the actions of those in power.

  4. Elias says:

    I just realized that I was mistaken and did the wrong readings and reaction paragraph on the Mirowski book (that we will discuss only next week). I will try to catch-up with the reading until tomorrow. My apologies for this.

    I will re-post my paragraph as soon as the discussion for next week is open:

    I found the reading of the Mirowski partially interesting, but not very convincing or instructive.
    Mirowski states in the beginning, that his book purports to give a more sophisticated account and analysis of the Neoliberal paradigm which goes beyond “leftist” narratives and conspiracy doctrines putting the neo-liberal label on every idea/phenomenon they are politically opposed to. Nevertheless, Mirowski’s narrative of the genesis, rise and persistence of THE “Neoliberal Thought Collective” reads like a Dan Brown novel describing the rise of an obscure elitist sect which unnoticeably gained control over our society. The account starts with the foundation of the ominous “Mont Pèlerin Society” which becomes the headquater of a subversive, mafia-like, transnational and hierarchical network. This network spreads it tentacles via satellite institutions (universities, tax-avoiding foundations, think-tanks and publishing houses) over the globe and hitchhikes the control centers of our economies, polities and societies in order to spread its “right-wing” ideology.Thus, Hayek, Friedman and co. try to organize from the magic Pèllerin mountain (like Hitler from his “Berghof” in Berchtesgaden) the successful take-over of the world and succeed in “refabricating the society”.

    Admittedly, the reliance on the Mont Pèllerin Society and the “multilevel, multiphase, multisector” conspiracy-approach of the Neoliberal Thought Collective is a nice plot. Moreover, it allows Mirowski to avoid entering into a serious discussion about the (various) intellectual origins and the historical context of the emergence of the Neoliberal school of thought. Indeed, there is no single word in Mirowski’s account on the original “motivations” and underlying reasons for the renaissance of a new liberal paradigm after the Second World War. Contrary to Foucault’s analysis in the Birth of Biopolitics, Mirowski’s narrative lacks any serious analysis of the “neo-liberal” writings as initial reaction to Totalitarianism and Socialism (e.g. German Ordoliberals, Hayek: The road to serfdom; von Mises “Im Namen des Staates”) and the further rhetorical (ab-) use of this “founding myth” as justification of the Neoliberal paradigm.

    Moreover, by relying on an institutional criterion (the “Mont Pèllerin Society” and its ever growing and mutating network/entity) in order to define Neoliberalism as “Thought Collective”, Mirowski also does not provide any differentiated analysis of the inner tensions, divergences and pluralism within the Neoliberal paradigm. In the beginning, Mirowski acknowledges the divergent tendencies between the Austrian School, German Ordoliberalism and Neo-classical economics (Chicago School). Nevertheless, he does not hesitate to summarize all these different approaches under the category of “THE Neoliberal Though Collective”. Compared to Foucault’s analysis of the Neoliberal theory which clearly differentiates between “German Ordoliberalism” and “American Neoliberalism”, or Harcourt’s description of the inner tensions between the Hayekian and Utilitarian traditions, Mirowski’s account of THE NTC remains quite simplistic.

    This lack of a distinctive delimitation of the content of Neoliberal thought is also the reason why Mirowski falls in the same trap as other conspiracy-narratives of Neoliberalism. His concept of the Neoliberal Thought Collective becomes a label for a theory / ideology about everything and nothing. Suddenly, a huge variety of phenomena such as the “neutralization of the financial reform”, the denial of global warming, the Tea Party movement (p.52-53), “network sociology” and other “sciences” (p.56), the Internet and social networks (59), liberalization of the international capital markets after Bretton Woods (p. 62) socio-economic inequalities (p. 63), incarceration (p.65), etc. becomes part or even driving force of a gigantic Neoliberal “experiment”.

    The reader finally asks himself “What on earth is in this case not “Neoliberal”?”. If we belief Mirowski, there is nothing which is not Neoliberal since his narrative conveys as underlying message that Neoliberalism is a new form of totalitarian ideology and governance. This message is most obvious when Mirowski discusses the internal contradictions of the Neoliberal paradigm in chapter 2 and the debates of the orthodox economics in the aftermath of the crisis.
    Admittedly, the discussion of the inner tensions and contradictions of Neoliberalism (for instance also the impact of Carl Schmitt on Hayek’s “The Constitution of Liberty”) is one of the more interesting parts of his account. However, here again Mirowski does not enter in any in-depth discussion, but offers very simple answers: For instance, the author does not discuss the potential merits of the catchy Hayek quote according to which democracy can under certain circumstances turn into a totalitarian regime. In this regard, he simply oversees that every democratic constitution contains some “anti-democratic” limitations in order to avoid that democracy turns into a totalitarian and illiberal regime. Moreover, he does not mention that the legal and political writings of Carl Schmitt, despite his infamous role during the Nazi regime, are still referred to by numerous intellectuals and not only by Neoliberals. On the contrary, the only purpose of his reference to the role of Schmitt in Hayek’s work is to make a punchy, crucial point: Hayek’s thinking and Neoliberalism in general represent just a new form of totalitarianism, in which “the Führer was replaced by the figure of the entrepreneur” (p.85 f.). Apparently, Hayek and the Neoliberal Thought Collective have succeeded in what Hitler and Stalin failed: conquering the world and destroying democracy.

    Moreover, the inner contradictions and tensions within the Neoliberal school of thought as well as the alleged fake debate on the reasons and the consequences of the crisis serve for Mirowski as evidence that the success of Neoliberalism is based on skillful propaganda and sophisticated brainwashing. According to Mirowski’s account the contradictions within the Neoliberal theory and the failure of the economic discipline to provide clear responses in the aftermath of the crisis are not the potential consequence of inner diversity or caused by the complexity of the crisis. No, they are clear evidence for a purposive strategy of “double truth” as means of a political propaganda strategy aiming at spreading ignorance, doubts and “BIG LIES” “among the “populace” in order to shelter a capitalist elite from democratic accountability and control.

    To turn to some positive aspects of Mirowski’s analysis: The 13 points by which Mirowski tries to pin down the Neoliberal thinking raise some interesting points and contradictions which merit further discussion (e.g. the constructivist agenda of the Neoliberal thought, the naturalization of markets, the lack of a clear definition of markets, the issue of equality, the Neoliberal understanding of freedom as purely negative concept, the tension between democracy (political freedom) and markets (economic freedom) etc.). But again, Mirowski’s analysis remains quite superficial. Mirowski for instance employs Foucault’s description of individual “entrepreneurship” as synonym for the ambiguous Neoliberal understanding of freedom. However, Mirowski understands this concept of “entrepreneurship” as purely market-oriented self-realization (individuals become entrepreneurs investing in their capabilities in order to succeed in market exchanges). In this regard, he ignores the the potential “empowering” nature of the concept of “entrepreneurship”. He does not engage in any discussion on whether the alleged Neoliberal focus on self-realization entailed any substantive increase in opportunities of individuals to realize their individual ends and personal life-concepts. Mirowski does not discuss by any word to what extent the last four decades brought about new positive freedoms in terms of mobility, access to information, gender and racial emancipation, diversity in life plans, tolerance etc. which could arguably linked to the concept of enterpreneurial self-realization. Moreover, with regard to the changing attitude of the Neoliberal paradigm towards monopolistic concentration of market power, Mirowski does not differentiate between different forms (EU vs. US; Ordoliberal vs. Chicago) and generations of Neoliberalism.
    Furthermore, also rather minor arguments of Mirowski’s account lack any substantive justification or deeper reflection. Thus, Intellectual Property Rights are presented as evidence for the neoliberal departure from “labor” as justification of property, despite the fact that “intellectual labor” in terms of inventive or creative effort serve as widespread justification for exclusive Intellectual Property Rights (p. 60). Another example: According to Mirowski, the European Commission has suspended (pursuant to the Schmittian logic of exception) any control of competition rules (for instance State aid rules) during the crisis. This claim is simply unfounded, since financial support in favour of financial institutions also had to be examined and authorized by the EU Commission under Art. 107 (3) (b) TFEU during the crisis.

    The major drawback of Mirowski’s account consists in the fact that it does not really provide any alternative account to the Neoliberal paradigm. Mirowski does not clarify by explaining his own point of views which assumptions of Neoliberalism are totally misconstrued. Furthermore, he does not provide any own explanation for the financial crisis neither, although all discussed explanations are apparently wrong and constitute a purposive attempt to spread BIG LIES in order to shelter Neoliberalism in the aftermath of the crisis. Above all, the alleged response to his “research question” concerning the reasons for the paradoxical survival and continuous success of Neoliberalism after the crisis boils down to the trendy concept of “cognitive dissonance”. Apparently, we are all like the “Seekers” developing an even stronger belief in Neoliberalism despite the fact that the Crisis confronted us with the contrary evidence that Neoliberal theories and neo-classical economics are just rubbish. This conclusion hinges upon the presumption that Neoliberalism would be rejected by the populace if it could fully understand its deceptive “double-thought” strategy. By contrast, a more balanced approach would perhaps also seriously discuss the potential “attractiveness” of Neoliberalism for instance in terms of self-realization. It would mention that different products of the Neoliberal ideology such as the liberalization of financial markets and increasing financialization of the economy did not only contribute to the current crisis, but also enabled innovations for instance in the internet sector by providing Silicon Valley start-ups such as Google or Facebook with capital. But it is perhaps simpler and more paying to explain the success of Neoliberalism by “double truth” and “cognitive dissonance” which fooled everybody. Everybody – except some very smart guys like Mirowski.

    In order to avoid any misunderstandings: This is not an attempt to defend “Neoliberalism”. On the contrary, it is important and interesting to discuss the “hegemony” of the Neoliberal thought and its inherent contradictions and shortcomings. But Mirowski’s narrative, even though it is an interesting reading, is from my perspective not compelling.

  5. I think that Whitman’s piece suffers from a conflation of two central concepts, and I am not sure that his argument can be rescued, or in which direction the argument should go, once they’ve been differentiated.
    Whitman hangs his entire piece on a claimed division between “consumerist law” and “producerist law.” But once he gets into the nitty gritty, and takes on board his warnings about the diversity of interests involved in each system, it’s clear he actually talking about, or also talking about, two political orientations of law-making: law driven by producer vs. producer politics, and law driven by producer vs. consumer politics.
    Whitman claims that the consumer is a universal subject. Of this, I am highly unconvinced–inequality works just as well, if not better, on the demand side as it does on the supply side; the think of, e.g. the image of the decadent, Daddy Warbucks, Monopoly-man capitalist, champagne in hand, cigar in his mouth, sporting a tux.
    If it’s nonetheless true that the consumer, or some ideal of the consumer, came to dominate politics in the United States, then the question is, from what forces did the consumer need protection? What was the foil? It seems to me that there was a still a foil, still an ‘enemy’ implied in the political economy that was consolidated after the Supreme Court shut down the possibility of corporatism. Namely, it was clear that political battles, especially after the neoliberal turn, came to be framed as a battle between consumers and producers. One need only think about the treatment of unions as “special interests” who will only raise prices for consumers, to see that the politics lies along an axis, not just at a specific point.
    If we accept, though, that the proper way to read economic law is through the lens either of a political axis defined by producer-producer conflict, or by a political axis defined by consumer conflicts of interests with (specific groups of?) producers, then what are we to make of the section at the end on professional identity in France? I can’t figure out how it all fits together.

  6. Christopher Johnson says:

    It is interesting to consider the compatibility of the ideas expressed in the paper by Hall and Soskice and the paper by Whitman. Hall and Soskice focus on the role of institutions, whereas Whitman focuses on the creation and implementation of rules. Reading the Whitman piece I felt that there was a degree of complimentarity between the two ideas – rules necessarily being created and enforced by institutions.

    This complimentarity is well illustrated by Whitman’s discussion of EU competition law. On the basis of his descriptions, it is possible to see in the Commission, when creating and, in particular, enforcing rules, aspects of the three mechanisms highlighted by Hall and Soskice: that institutions are socializing agencies that instill a set of attitudes or norms in those operating within them; that the effects of an institution follow from the power it bestows upon its actors; and that institutions operate as a matrix of sanctions and incentives to which firms respond.

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