Why do some advanced capitalist economies achieve higher economic performance than others while still obtaining relatively equal and inclusive societies? Neocorporatist and Varieties of Capitalism scholars often contend that cooperative institutions (i.e. coordinated market economies) can create positive externalities resulting in higher economic growth and equality. Prior research has found some, although inconclusive, evidence for the economic claim, and mounting evidence for the social claim. It is, however, unclear under what conditions varieties of coordination is conducive for economic performance and social solidarity.
In this thesis, I try to advance the debate on the economic and social effects of varieties of coordination by integrating the welfare state and the state’s constitutional structures with the Varieties of Capitalism-framework. I first develop a theoretical framework based on Varieties of Capitalism theory, Welfare Regime theory, Welfare Production Regime theory and some of the literatures on Constitutional Structures. Regarding the economic effects of coordination, it is theorized that a decommodified welfare state and state structures with few veto points can complement production – and hence economic performance – in coordinated market economies, by stimulating cooperation and incremental innovation. At the same time, it is theorized that a commodified welfare state and relatively many constitutional veto points can complement production in liberal market economies, by stimulating flexibility and radical innovation. In relation to the social effects of coordination, it is theorized that a relatively big welfare state with few constitutional veto points conditions the effects of coordination. Only in political economies with big welfare states and few constitutional constraints are the positive social effects from coordination expected to be greater, since big welfare states and political systems with few constraints are supportive for interest organization.
Based on the theoretical framework I then test several hypotheses on 17 advanced capitalist systems from the 1970s to the 2000s using a variety of regression techniques. In accordance with the theoretical framework I find solid support for the claim that different welfare state compositions and constitutional structures can complement the effects of coordination in different market economies and hence increase economic performance at the macro level. The theoretical framework even seems more qualified at explaining economic performance at the macro level than the original Varieties of Capitalism-framework. I also find support for the claim that relatively big welfare states with few constitutional constraints increase the positive social effects from coordination. There is, however, a methodological caveat. The framework is only capable of explaining the level of equality and inclusiveness, but not the change in these social outcomes over time.
In conducting comprehensive empirical analysis, I also develop a new methodological approach for studying the effects of institutions in advanced capitalist systems. It is argued that much empirical research focuses too narrowly on what is methodological “best practice”, overlooking inconsistencies between data structure, theory and method. I therefore argue that one needs to pay close attention to the consistency between these three factors. The usefulness of the methodological approach is furthermore shown by applying it to the empirical analysis.
At a more abstract level I, furthermore, try to move beyond the often-heated debate between scholars focusing on Williamsonian institutions and Durkheimian institutions. I argue – from an outcome perspective – that institutions perceived as either Williamsonian or Durkheimian can complement each other in creating better economic performance as well as equality and inclusiveness. Institutions that are perceived as either increasing economic performance or social solidarity can indeed be supportive for both aspects.