Capitalism varies across as well as within individual countries
There is a large literature on the varieties of capitalism seen around the world. In their Introduction to the much-cited volume on Varieties of Capitalism (Oxford University Press, UK, 2001), Hall and Soskice classified capitalist countries into two broad groups: Liberal market economies (LMEs) such as the US, UK, Canada, Australia, New Zealand, and coordinated market economies (CMEs) such as Germany, France, Japan, Sweden and Austria. In LMEs, firms coordinate their interaction with each other and other stakeholders through hierarchies and the market.
In CMEs, firms rely more heavily on non-market institutions to coordinate their interactions. LMEs and CMEs are polar models. Capitalist countries in the real world lie along a spectrum between these two ends, yielding intermediate models such as Mediterranean capitalism, East Asian capitalism, Social capitalism, state-guided capitalism, etc.
This taxonomy is usually used to classify whole countries as belonging to one or another group. In this column, I suggest that varieties of capitalism are to be found even within countries. I should add that the lens of nested dualisms proposed here is a by-product of my ongoing conversation with Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers, though he is in no way responsible for the views expressed here.
Developing countries are often described as dualistic societies, where the private sector comprises a formal sector of large firms and an informal sector of medium or small enterprises, including small farms in agriculture. However, the existence of thousands of small businesses alongside a small number of large firms is not limited to developing countries. It is also typical of advanced
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