Models of Capitalism Essay

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Models of Capitalism
Hybrid Models

LMEs (AMERICA)
FINANCIAL SYSTEM
1.Strong economic performance Post war American hegemony
2Domination of particular sectors i.e. Biotechnology
3Equity rather than debt, companies can raise equity capital very easily
4High stock market capitalization, bonds rather than long term bank loans (weak banks)
5Dispersion and fluidity of shareholdings and no blockholders
6Arms length relationship between managers and shareholders (Wall street rule)
7High incidence of Mergers and Acquisitions
8US-UK high stock market cap as opposed to Germany and Japans’ banking sector assets (% of GDP)
9Percentage of firms with dominant shareholders are very low for US
10Takeovers as corporate government mechanism
11Senior managers earnings tied to economic performance
12 Degree of Shorttermism?
LABOUR MARKET
Few structures governing employee representation (no co-determination or works councils)
Barriers to laying off staff also weak - firms hire and fire at will (legal doctrine: ‘employment at will’ à dismissal for any reason, doesn’t need to be “fair”)
Few regulations of working time
Few rights to industrial action
Exception is strong anti-discrimination legislation
WORKER PARTICIPATION RIGHTS VERY LOW (1970-2004) 5%
DISMISSAL REGULATION (1970-2004)

WORKING TIME REGULATION US AND UK very low
RIGHT TO INDUSTRIAL ACTION llowest (10%)
(DEAKIN LELE SIEMS)
Reasons for Weak Labour Protection
Weak unions and no socials (social democracy)
Historical factors
-US labour movement did not have to fight for political rights- early universal white male suffrage
-Ethnical and cultural divide
-Relatively high rates of social mobility
Union crushing employers (FORD)
Individualism

CONSEQUENCES of US LABOUR MARKET
Low coverage of collective bargaining
Firms can undertake major shifts in composition of their workforce- easy exit of declining industries
High inter-firm mobility of labour- long term job commitments are rare
Employees encouraged to have general skills- EMPLOYABILITY is the goal

EDUCATION and TRAINING
Elite university system produces a highly skilled / qualified / educated strata at the top of the labour market
Vocational training revolves around ‘general’ and ‘portable’ skills
Certification process measures and assesses general skills – apprenticeships, for example, are rare
No national (federal level) training system / subsidies to states

Unregulated in-house training (“brief, narrow and job specific”) tops up these general skills à unskilled and semi-skilled workers
Danger of ‘poaching’ given fluidity of labour market
Result – labour force well equipped for growth in mass production and sectors requiring radical innovations and in much of the service sector ….
.... but not so good for sectors requiring craft-based skills
INTER-COMPANY RELATIONS
Strong ‘anti-trust’ regulations designed to prevent collusion (cf. Shareman Act in 1890)
Mergers rather than alliances
Leading to large vertically integrated firms
Large firms = well adapted for relatively homogenous US market à standardised mass production è economies of scale
Inter- company relations emphasis on written details of contracts / ‘Relational’ contracts are weaker than in CMEs
Industry and employers’ associations are relatively weak à contrary to Europe or Japan è more individualism, less ‘class consciousness’

Hall & Soskice 2001: 1. Different institutional spheres following same ‘logic’ (market or coordination) 2. Different institutions reinforcing each other’s effect
CHANGES in the US MARKET
The relative decline of the large vertically integrated firm (‘bust-up takeovers’ of 1980s) and the rise of inter-firm collaboration e.g. the collaborative business networks of Silicon Valley and North Carolina à more CME like?
2) Changes in banking à raise of universal banks since 1999 à more CME like?
3) State more interventionist than often portrayed e.g. the
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