Varieties of politics, varieties of capitalism: The effects of political institutions on capitalist diversit

A strong correlation exists between varieties of political regimes and varieties of capitalism (VOC). Majoritarian political regimes are correlated with liberal market economies (LMEs) and consensus political regimes are correlated with coordinated market economies (CMEs). Still, correlation is not causation. The purpose of this project is to open the "black box" and identify mechanisms linking political institutions and variation in capitalist systems. Empirical findings illustrate that partisanship and policy legacies, the number of political parties, electoral rules, and constitutional constraints are significant indicators of LMEs and CMEs. I find that majoritarian institutions are conducive to an environment of adversarial politics and strong competition between actors. This makes credible commitment to nonmarket coordination mechanisms unlikely. Consensus institutions promote an environment of cooperation and coordination between actors, thus encouraging credible commitment to nonmarket coordination mechanisms. Qualitative case studies of Germany, Britain, and New Zealand chiefly confirm the quantitative findings, and suggest that political regimes were instrumental in shaping the economic adjustment paths of the countries under investigation during the era of liberalization in the 1980s.