Varieties of peripheral capitalism: on the institutional foundations of economic backwardness

This paper critically analyses the literature spawned by Peter Hall and David Soskice’s influential book on the varieties of capitalism. It takes as a starting point the critiques within the comparative political economy literature about the supply-side views on economic growth, and the problems with emphasizing the nature of firm behavior as the source of institutional variety. It argues that demand-led growth, as discussed by Post-Keynesian authors, provides an important alternative to the conventional approach to the explanation of varieties of institutional experience. It suggests that understanding the reasons for institutional variety within capitalism requires incorporating the work of Cambridge Keynesians which recovered the work of Classical political economy authors and extended Keynes’s ideas on effective demand to explain the process of accumulation. It also requires incorporating the ideas of Prebisch and the Latin American Structuralists, who analysed the limits to accumulation in peripheral countries. The paper also discusses the limitations of Neo-Kaleckian models of demand-led growth used by some authors in the comparative political economy literature, and it suggests a new taxonomy for ordering varieties of capitalism.