Globalization, liberalization, and national capitalisms

STRUCTURAL CHANGEAND ECONOMIC DYNAMICS ELSEVIER

St~cturalChangeandEconomicDynam~s8(1997)87-98

Globalization, liberalization, and national capitalisms J o n a h D. L e v y Department of Political Science, University of California at Berkeley, Berkeley, CA, USA

Abstract

In an era of rapidly expanding international trade, investment, and capital flows, the capacity of national authorities to exercise meaningful coordination of the economy is being called into question. One interpretation is that globalization is putting an end to nationallydistinct capitalisms: globalization is driving liberalization, liberalization is eroding sovereignty, and the final outcome is convergence on some kind of Anglo-Saxon, deregulated form of capitalism. This paper offers an alternative understanding of the relationship between globalization, liberalization, and nationally-rooted capitalisms. It puts forward three basic propositions: (1) that the turn towards a discourse of liberalizing reform stems as much from political and institutional considerations as from international economic pressures; (2) that liberalization generally entails a transformation of the purposes and forms of public coordination of the economy, as opposed to their eradication; and (3) that convergence is precluded both by intellectual disagreement as to the virtues of the Anglo-Saxon model and by differential institutional and political capacity to emulate this model. Taken together, these propositions suggest that rather than mechanically translating intemational pressures into the domestic arena, liberalization is itself defined and refracted by the political and institutional context into which it is imported. © 1997 Elsevier Science B.V. Keywords: Globalization; Liberalization; National states

1. Introduction

Traditionally, for scholars of the advanced industrial democracies, 'capitalism' was a word to be used in the plural. There was not one capitalism, but several. Alongside the familiar liberal, market-oriented capitalism of the United States and, to a lesser extent, Britain, one could observe state-directed capitalism in Japan and France, social democratic capitalism in Sweden, and concertational capitalism in G e r m a n y - - to name but the most emblematic ideal-types (Shonfield, 1965; Katzenstein, 1978; Zysman, 1983; Hall, 1986). In recent years, however, all of these national systems have experienced crisis, reform, and ample doses of self-criticism. 0954-349X/97/$17.00 © 1997 Elsevier Science B.V. All rights reserved. PH S0954-349X (96) 00065-3

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Many believe that these changes are driven by 'globalization' - - that in a world of ever-tightening economic integration, multiple capitalisms no longer have a place. The globalization hypothesis rests upon two basic claims: (1) that globalization is driving liberalization; and (2) that liberalization is erasing national differences. This paper offers an alternative understanding of the relationship between globalization, liberalization, and national capitalisms. It makes three basic claims. The first is that liberalization cannot be reduced to the effects o f globalization. Globalization remains a relatively limited phenomenon, with unclear implications for public coordination of the economy. The turn towards a discourse of liberalizing reform stems at least as much from political and institutional factors as from international economic pressures. The second, related claim is that liberalization is best understood as a change in the purposes and forms o f public intervention, as opposed to the eclipse of politics and institutions. Despite the rhetoric of a shift from 'state' to 'market', public authorities have found ample opportunity to shape the political economy, even when pursuing ostensibly liberalizing measures. What is more, authorities are not just shedding economic missions; they are also defining new missions. Perhaps for this reason, the weight of regulation and taxation in the advanced industrial democracies does not appear to have diminished significantly. The third claim is that cross-national convergence in the institutions o f economic regulation remains elusive for a combination o f intellectual and institutional reasons. Intellectually, there is no agreement as to the ideal political economy, with proponents pointing to the Anglo-Saxon, Japanese, and German models, respectively. Institutionally and politically, even if such agreement existed, different countries possess differential capacity for undertaking the requisite changes.

2. Globalization and liberalization

The turn towards a discourse of liberalizing reform and markets is often portrayed as the inescapable correlate of 'globalization'. The spectacular growth of international trade, investment, and capital flows is said to be depriving national authorities of the instruments of economic sovereignty (McKenzie and Lee, 1991; Ohmae, 1991; O'Brien, 1992; Wriston, 1992; Goodman and Pauly, 1993). The globalization hypothesis overstates the extent of international constraints, however, while neglecting other factors driving economic reform. 'Globalization' is itself a contested phenomenon. If we take as our starting point 1945 or 1960, then a case can be made that national economies have become significantly more integrated. But 1945 and 1960 were unusual moments in economic history, marked by the disturbances of two world wars and interwar protectionism. If we set the baseline at 1913, rather than 1945, then the extent of change appears far less dramatic. Levels of trade, international investment, and capital flows (as a percentage of GDP) are not significantly higher today than they were in 1913 (Wade, 1996). In many respects, the advanced capitalist nations have simply gone 'back to the future'.

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To the extent that internationalization is occurring, it is occurring on an overwhelmingly regionalized basis. Among the advanced industrial democracies, the lion's share of trade is conducted within the three trade blocs of North America, Asia, and Western Europe. Less than 10% of GDP is traded between these blocs, and trade with low-wage countries is in the range 3-5% of GDP (Wade, 1996). Combining these two facts - - (1) there is far less intemational economic integration than meets the ear, and (2) much of what is described as 'globalization' is actually regionalization - - we arrive at a very different understanding of economic developments than that suggested by the globalization hypothesis. From an analytic and political perspective, it makes a real difference whether economies are becoming globalized or regionalized (Zysman, 1995). Globalization entails the transfer of economic activity from the national arena, where it is potentially subject to national regulation, to the anarchic international arena, where few salient regulatory institutions are to be found. Regionalization, by contrast, constitutes a more ambiguous shift, for all regional institutions are not created equal. At one extreme, the Asian context does indeed resemble the anarchic international arena: coordinating institutions are weak, and cooperation is undermined by geopolitical rivalries. At the other extreme, West European economic activity is heavily regulated by the European Union - - an economic alliance built upon a political and military alliance. In between, North America lacks the powerful institutions of the EU, but as the case of NAFTA demonstrates, the combination of US hegemony and local security and immigration concerns provides significant opportunities for regional coordination. Thus, to the extent that the world is regionalizing, rather than globalizing, the issue is less a loss of sovereignty, a shift from states to markets, than a transfer of sovereignty, a shift from nations to regions - - with some regions in a better position than others to assume new economic responsibilities. Even if we allow that economic integration is advancing rapidly, it is by no means self-evident that the consequence is to bring about a reduction in public intervention. In the 1960s, French policymakers responded to the creation of the Common Market by intensifying voluntarist industrial policy measures, arguing that German industry would drive French industry out of business in the absence of sustained government intervention to close the competitiveness gap (Stol6ru, 1969). In the 1970s, French authorities "resisted the protectionist temptation" (Milner, 1988); they kept markets open, but at the same time they multiplied the forms of intervention designed to help French firms weather the crisis: subsidized credits, lucrative public procurement contracts, and nationalizations combined with hefty capital infusions (Berger, 1981; Cohen, 1989). In the 1980s, the French accepted the idea that international integration and European solidarity precluded a nation-based industrial policy, but immediately set about creating a European-level industrial policy in its place (Cohen, 1992). Whether the French approach was justified is not the issue. What the French case tells us is that international market signals are filtered through domestic political lenses and are, therefore, interpreted in different ways: one country's pressures for liberalization are another country's prod to intensified intervention. While something like 'economic liberalization' may be occurring (although, as will be described below, this label raises as many questions as it answers), this policy

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shift cannot be reduced to the irresistible pressures of globalization. The turn towards a discourse of markets and minimal states has been driven by a number of developments - - both international and domestic, economic and political. Three developments, in particular, stand out. The first is a response to the political context of the late 1960s and 1970s. Across the advanced industrial democracies, conditions of near-full employment and worker militancy multiplied the demands on the state. As pundits lamented a 'crisis of democracy', government authorities began casting about for ways to relieve the 'overburdened state' (Crozier et al., 1975). Corporatism offered one such remedy, allowing state authorities to offload responsibilities to societal organizations (Goldthorpe, 1984; Offe, 1985). Liberalism offered another remedy (often undertaken in the wake of the failure of corporatism), allowing authorities to deny responsibility for functions better left to the market or to voluntary associations (Berger, 1979). The post-OPEC economic slowdown intensified the temptations of liberalism. Where once government authorities had sought to claim credit for the postwar boom, as the economy soured and unemployment skyrocketed, they sought to distance themselves from unpopular economic outcomes. The appeal of liberalism was that it made economic performance a function of market forces, not government policy. There was little that government could do to improve the situation other than unleashing the miracle of the market. A second factor in the turn towards liberalism was the crisis of mass production (Piore and Sabel, 1984). Many of the characteristic institutional arrangements and practices of the postwar national systems - - centralized wage bargaining, Keynesian demand management, strategic industrial policy centered around giant 'national champions' - - were predicated upon the existence of relatively stable, predictable mass markets. As mass markets fragmented and competitive strategies shifted towards something defined (with deliberate negative ambiguity) as 'post-Fordism', the postwar arrangements appeared as hindrances to industrial reorganization. Thus, liberalism held appeal as a way of clearing away the inherited institutional underbrush associated with Fordist mass production. A third driver of liberalization was a set of international linkages, as distinct from international economic pressures (Berger and Dore, 1996). Diffusion effects were one such linkage. When Margaret Thatcher and Ronald Reagan embraced free markets in the late 1970s, they represented something of an outlier among the advanced industrial democracies. But the apparent improvement in the competitive positions of the United States and the United Kingdom quickly began to inspire admiration - - and emulation. The notion that markets, not states, offered the solution for economic competitiveness was reinforced by a second international political development: the end of the Cold War. While it is, of course, possible to argue that the collapse of Soviet communism in no way discredited social democratic or state-centered 'third ways' between state and market, this distinction was often lost in the political shuffle. What is more, the left's post-Cold War crisis of identity tended to erode the political voice and constituency for such 'third-way' policies. The final international linkage driving liberalization reflected not so much the strengths of American capitalism as its weaknesses. As the US trade deficit skyrock-

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eted in the 1980s, successive governments sought to 'level the playing field' that allegedly underpinned the imbalance, notably in relations with Japan. Japanese authorities developed an interest in trade and financial liberalization, not simply out of growing faith in markets, but as a result of US pressures backed by Super 301. Liberalization represents more than the unconditional surrender of sovereignty by outgunned nation-states. It originated with a variety of concerns beyond international economic pressures: to distance governments from difficult allocative choices and undesirable economic outcomes; to adapt to shifts in production strategies; to borrow the political capital of Reagan and Thatcher or avoid the political wrath of the US Congress. This understanding of the origins of liberalization has important implications for both the form and content of liberalization. Seen as an instrument of economic reform and political legitimation, rather than an inescapable consequence of internationalization, liberalization seems an unlikely vehicle for the annihilation of domestic sovereignty.

3. Liberalization and national regulation The rhetoric surrounding liberalization tends to be phrased in radically dichotomous terms: 'state' versus 'market', 'public' versus 'private', 'regulated' versus 'deregulated' or 'liberalized'. Implicit to these polarities is a sense of fundamental opposition between sovereignty and liberalization. If public authorities are allowing greater scope for market forces, then they must be narrowing the scope of public regulation. If the market is growing, then the state must be shrinking. Liberalization may have originated for all manner of reasons, but the bottom line is that once it happens, it spells the eclipse of politics and the state. Without denying the fact that some specific liberalizing policies do indeed entail a shift in power from state to market, such a dichotomous characterization is misleading for three reasons. The first is that liberalizing reforms are often consciously designed to preserve the possibilities for discretionary intervention by state authorities. Steven Vogel, in a comparative study of Japanese and British liberalization of the financial and telecommunications sectors, notes that Japanese authorities have used liberalization to forge new sources of leverage over industry (Vogel, 1996). For example, rather than allowing free entry into finance and telecom, the authorities are licensing one or two new entrants per year. The result is to create a 30-year queue of applicants, dependent upon the benevolence of a government ministry to enter a lucrative new business. On the one hand, Japanese reform entails liberalization, in that the number of players, the extent of competition in finance and telecommunications has been increased. On the other hand, Vogel points out that this liberalization is by no means incompatible with ministerial control. Indeed, it appears to have generated new instruments of government control. A second sense in which liberalization is not necessarily antithetical to sovereignty is that the unleashing of market forces often generates unanticipated problems, leading to new demands for public intervention. Britain's privatizations offer a case in point (Riddell, 1992). While the transfer of ownership from public authorities to

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private investors marked a rollback of government control, this was not the end of the story. Many of the privatized enterprises were utilities or quasi-monopolies in the electricity, gas, and telecom sectors. Freed of the obligations associated with government ownership and not subjected to any serious domestic competition, these companies behaved as one might expect of unregulated monopolists: they raised prices, cut investment, and allowed maintenance and safety to lapse. The ensuing public outcry compelled the government to create new regulatory boards (Oftel, Ofgas, etc.) to supervise the private monopolies. Thus, privatization did not lead to an elimination of public intervention, but rather to a transformation of that intervention - - from regulation via direct ownership and ministerial supervision to regulation via an independent agency. This kind of 'deregulation-reregulation' dynamic is not confined to situations of monopoly power. French labor market reforms have unfolded in much the same way (Levy, 1998). Prior to the 1980s, hiring and firing decisions were subject to a host of government regulations. Any company wishing to lay off more than 10 workers was required to gain the approval of an inspector from the Ministry of Labor. As French unemployment reached double-digit levels, governments of left and right alike began rolling back labor market regulations on the assumption that greater freedom to fire would reduce reluctance to hire. Despite these reforms, French unemployment continued to climb, and the government came under pressure to do something about the resulting social dislocation. The response of the authorities has been to multiply programs to cushion the impact of insufficient job creation: training programs and employment subsidies for youths and generous early-retirement programs for workers over age 55. Today, France spends as large a share of GDP on labor market policies as Sweden, and its labor force participation rate between the ages of 55 and 60 is the lowest in Western Europe. In short, as in the case of British privatizations, French labor market deregulation has produced a transformation of government intervention, rather than its elimination. The third and final reason for being suspicious of claims that liberalization is eclipsing national sovereignty is that authorities are not just eliminating old policies; they are also creating new policies, in pursuit of new objectives. Small-and-mediumsized enterprises (SMEs), long neglected by policymakers during the era of triumphant multinationals, are now an object of solicitude in virtually every country (Sabel, 1989). Whereas during the 1950s and 1960s SMEs were widely portrayed as retrograde, inefficient, and destined to decline, they are now praised as innovative, capable of rapid growth and job creation, and offering a human-scale, less conflictual set of social relationships (Berger and Piore, 1980). SMEs have become an object of growing public attention, not only because they are desirable, but because they are seen as promotable. Unlike multinationals, SMEs are incapable of generating most of their critical resources internally. They are highly dependent upon their external environment for capital, technology, assistance with marketing, managerial talent and partners in production. Government intervention can conceivably improve this environment. What is more, such intervention is not very expensive: aid that would be a drop in the bucket for a multinational like General Motors could spell the difference between success and stagnation for some high-tech SME; it could help grow the next Microsoft. Notwithstanding the discourse of liberalization and freer

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markets, then, just about every country has increased public assistance for SME-centered programs: high-tech industrial zones, industry-university ties, venture capital pools, joint marketing boards, regional testing and technology centers, etc. The case of SMEs points to a broader dynamic behind recent economic reform. While liberalization is an end in itself for some politicians, for most it is a means to the end of greater industrial competitiveness and employment. To the extent that this objective can be achieved by other means, liberalism becomes dispensable (witness the promotion of SMEs). Thus, many of the most significant shifts in economic policymaking entail changes in the forms and purposes of public intervention, as opposed to their elimination. To cite but a few examples: (1) Industrial relations in countries like Germany and Sweden have shifted from macroeconomic to microeconomic objectives, from centralized wage bargaining, designed to balance inflation and employment, to sectoral and firm-level bargaining, designed to enhance flexibility, multiskilling, and high-value-added production (Thelen, 1991; Turner, 1991). (2) Industrial policy in countries like Japan and more recently France has moved away from centralized sectoral planning toward more variegated strategies (Samuels, 1994; Levy, 1998): • Underwriting the initiatives of entrepreneurs (preferably acting together), rather than dictating to the market. • Promoting technology diffusion, not just technology generation. • Providing an 'enabling environment' for all firms - - thanks to enhanced education and training, technology transfer, and access to capital - - instead of confining aid to a few privileged national champions. (3) Welfare policy in a number of nations has been shifting from social objectives to productivist objectives (Jessop, 1994): • Humanization of work and training programs, which originated in response to the industrial unrest of the late 1960s as a way of reducing blue-collar alienation, are becoming vehicles for enhancing 'value-added' and 'flexibility' (by giving factory personnel a range of skills that enable them to shift between tasks in response to fast-changing global markets). • Welfare policy (in the US sense of the word), which originated as a kind of poor relief, is being refocused on the goal of making recipients more employable and placing them in jobs. These critical transformations in industrial relations, welfare provision, and industrial policy fall between the stools of the 'state-versus-market' polarity. Rather than being depicted as the negation of sovereignty, 'liberalization' should be seen as an instrument for the exercise of economic sovereignty under changed political and economic circumstances. Thus, not only is globalization not compelling liberalization, but liberalization is not necessarily eclipsing political and institutional sovereignty.

4. Liberalization and convergence

Predictions of an end of national political economy represent a kind of revival of 1960s liberal modernization theory. Once again, the US and U K systems are equated

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with 'modernity', the ultimate destination towards which other countries are said to be converging. Yet such a convergence claim rests upon two questionable presumptions: (1) that leaders of the advanced industrial democracies wish to converge on the liberal Anglo-Saxon model; and (2) that they are able to undertake such a convergence. The case for the Anglo-Saxon free-market model is by no means self-evident. While the economic performance of the United States and Britain has been respectable, it has not put that of the other advanced industrial democracies to shame. What is more, the Reagan or Thatcher 'miracles' have been purchased at a very high price: under-investment in infrastructure and education, rising inequalities, social dislocation, crime, etc. Finally, many politicians reject the Anglo-Saxon model precisely because it is identified with an eclipse of sovereignty, with the notion that they must sacrifice their instruments of economic regulation on the altar of the free market. Alongside the Anglo-Saxon blueprint, one can generally find at least two other equally plausible prescriptions for reform. The first is convergence of a different kind - - convergence on the Japanese model or, more often, on the German model. Germany and Japan have roughly matched the economic performance of the AngloSaxon nations. At the same time, Germany has combined economic dynamism with an enviable quality of life: high wages, the world's shortest working hours and longest paid vacations, a generous welfare state, and reasonably cooperative relations between unions and employer associations. For influential pundits and politicians, from Robert Reich to France's Michel Albert (Reich, 1992; Albert, 1993), the solution is not to plunge into the jungle of Anglo-Saxon competitive capitalism, but to import elements of the cooperative German model: extensive worker training and apprenticeships, balanced industrial relations, an independent central bank, bankindustry partnerships, decentralized promotion of small business, and technology diffusion. This is not to say that Germany has achieved the perfect capitalism. Women and foreign guestworkers in Germany are generally relegated to a subordinate position; unemployment has surpassed 10% of the labor force; and German industry is weak in the high-tech industries of the future. Indeed, even in Germany, influential politicians are clamoring for deregulation, tax and spending cuts, and a move towards the dynamic US model of capitalism. The point, quite simply, is that intelligent and powerful figures disagree as to just what constitutes 'modern capitalism'. Further complicating matters, alongside the desire to be like the United States, or Germany, or Japan, we find another characteristic position in economic policy debates - - the desire to be like one has been in the past. Instead of borrowing foreign models, many argue for reforming and adapting existing domestic arrangements. Institutional borrowing is a difficult and dangerous undertaking. It is unclear which institutions are responsible for which economic results, and in any case, a particular institution is likely to operate in a completely different manner when transplanted, in isolation, to a different cultural and institutional context. Governments have often been burned in their efforts to emulate successful foreign practices, from Japanese industrial policy, to German concertational industrial

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relations, to Anglo-Saxon free-wheeling capital markets. The alternative position, then, is to tinker with existing institutional arrangements, rather than chasing some foreign model. This position is not only the path of least institutional resistance (and risk); it also carries political appeal, assuaging concerns about national identity. A country can remain true to its institutional roots, even as it pursues modernization and change. In Sweden, the Social Democrats were returned to power in 1994 by pledging to protect the welfare state while curbing its excesses. In France, Jacques Chirac was elected president in 1995 on a pledge to revive state intervention to combat unemployment and social dislocation. Neither of these positions represents a rejection of change or competition. Rather, the goal is to undertake such change and liberalization within the familiar institutions and values of the postwar order. Once again, the claim is not that French neo-statism or Swedish social democracy offers the ideal capitalism, but that there is more than one plausible vision of such an ideal. The obstacles to convergence are not just ideational. Even if consensus existed as to the ideal capitalism, different countries are differentially endowed to pursue economic and institutional reform. Robert Reich is a great believer in the virtues of German industrial relations and apprenticeships, but as Secretary of Labor in a US government confronting a hostile Republican Congress and a skeptical public, he has enjoyed little opportunity to implement his beliefs. We can identify two broad sets of institutional factors that condition the possibilities for change and/or convergence. The first is conveyed by the title of a book on Thatcher's economic policy, The Free Economy and the Strong State (Gamble, 1994). Proponents of marketization confront powerful opposition from those who stand to lose from the withdrawal of state support and the intensification of competition: unions, workers in privatizable companies, managers in regulated and protected sectors, recipients of government benefits of all sorts (notably pensioners). Ironically, then, convergence on the liberal model often entails very unliberal projections of state power (Richardson, 1994). 'Strong states' like France may be better able to move towards the market than concertational states, like Germany, or 'weak states', like Italy or even the United States. Indeed, one could make the case that during the 1980s, France under the left moved far more sharply towards the market than Germany under the right. Likewise, while Margaret Thatcher and Ronald Reagan shared a roughly similar view of the economy, the 'Iron Lady' was in a far better position to pursue it (Levy et al., 1996). Backed by a solid parliamentary majority, unchecked by a written constitution or judicial review, Thatcher undertook reforms that Reagan could only dream of: passing seven major pieces of anti-union legislation; abolishing hostile Labour-controlled local governments (including the Greater London Council); introducing market mechanisms into the provision of health, educational and even administrative services. Thus, not only have most countries not converged on the Anglo-Saxon model of capitalism, but arguably, the two emblems of this capitalism - - the United States and the United Kingdom - - have not converged on each other. The second sense in which institutional factors shape the possibilities for convergence relates to societal institutions, as opposed to the state. If 'state strength'

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offers a potentially powerful instrument of marketization, it appears somewhat less useful if the goal is to converge on the German model. German-style capitalism rests upon a dense network of powerful societal and local institutions: banks, unions, employer associations, local government authorities, and technology institutes. Would-be reformers have enjoyed little success in building up such institutions where none existed previously. In the 1980s, French authorities struggled in vain to create German-style bank-industry ties, German-style workplace codetermination, and German-style decentralized promotion of SMEs (Levy, 1998). The 'strong French state' found it easier to weaken or ignore societal institutions than to resurrect them. The French experience paralleled that of Britain in the 1970s (failed corporatism) and 1980s (state-imposed deregulation). By contrast, recent studies of Swedish industrial relations suggest greater success in evolving towards German practices. In the early 1990s, Sweden's highly centralized and redistributive system of wage bargaining collapsed (Pontusson, 1992; Pontusson and Swenson, 1992). Rather than full-scale deregulation, however, Sweden appears to be moving towards a Germanstyle system, characterized by industry-level and plant-level bargaining and toleration of sizable wage differentials (Thelen, 1993). Simplifying egregiously, we might posit that if the goal is to emulate Germany's institutionally-mediated capitalism, then the existence of powerful societal institutions (Sweden) is more useful than the existence of a powerful state (France). Conversely, if the goal is to emulate Anglo-Saxon liberal capitalism, then the existence of a powerful state may be more useful than powerful societal institutions - assuming that those who run the state wish to emulate the Anglo-Saxon model (a very uncertain assumption). In other words, to the extent that one might anticipate any kind of convergence among the advanced industrial democracies, it is likely to be driven less by international economic pressures than by domestic political choices and institutional constraints.

5. Conclusion: endogenizing liberalization We live in an age of liberalization. What started out as an Anglo-Saxon peculiarity under Ronald Reagan and Margaret Thatcher has spread the world over - - from Beijing to Bogota, Peru to Prague, Sweden to Slovenia. Today, concerned public officials everywhere are seeking to improve the environment for profit-seeking entrepreneurs. While the fact of liberalization is uncontestable, the causes and consequences are less certain. From the globalization perspective, liberalization is a kind of transmission belt - - mechanically translating international economic pressures into domestic policy convergence. Ever-tighter international constraints are driving liberalization, and liberalization is eviscerating national capitalisms. This paper has portrayed liberalization in a different light. At the broadest analytical level, it has sought to endogenize the concept of liberalization - - to suggest that liberalization is driven by national logics, that it occurs in nation-specific ways, and that these ways reflect distinct national institutions and political struggles.

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International pressures are not irrelevant to this process, but they are but one factor among many, and not always the most important one. Within the confines of international constraints, national authorities enjoy considerable room to maneuver - - to resist liberalization, to pursue nationally-distinct strategies of liberalization, and to counter liberalization with new forms of intervention. In short, even in a world of growing economic integration and triumphant liberal discourse, scholars would be well advised to continue writing the word 'capitalism' with an 's'.

Acknowledgements This paper was prepared for a meeting on globalization organized by the Berkeley Roundtable on International Economy (BRIE), 8 March 1996.

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