Varieties of liberalism:Anglo-Saxon capitalism

in crisis?Sue Konzelmann,

Marc Fovargue-Davies & Gerhard Schnyder

SASE ANNUAL MEETINGSMadrid, 27 June 2011

Market capitalization & Cost of bank bail-outs

Change ($bn)

1999-2009

Bank bail-out package as a %

GDP (March 2009)

Canada 97.5 0.0 %

Australia 85.6 0.1 %

UK -244.3 19.8 %

USA -676.1 6.8 %Source: Financial Times, 23 March 2009, p.9. 1999 values are as of 31 May 1999; 2009 values are as of 17 March 2009; Stewart 2009.

Contemporary economic liberalism

• The return to economic liberalism• ‘Varieties of economic liberalism

– Neo-classical liberalism: Britain & America– Pragmatic liberalism, akin to

‘Ordoliberalism’: Canada & Australia

• Variety stems from interpretation of theory and translation into policy– Private sector and the state; financial

sector and the broader economy

The return to liberal capitalism

• The return to economic liberalism in the Anglo-Saxon world during the 1970s– US discontinues gold backing of the American dollar,

leading to the collapse of Bretton Woods – UK introduces policy of ‘Competition & Credit Control’

and makes a ‘Dash for Growth’

• ‘Reaganomics’ and ‘Thatcherism’– Shift in balance in favour of the private sector – finance

in particular – relative to the state

• Pragmatic liberalisation in Canada and Australia– Liberalization accompanied by ‘market friendly’

regulation

Early effects & responses to

crises• Australia’s ‘corporate cowboys’ • The American Savings & Loan

crisis• Canadian and British bank,

insurance trust & investment house failures

• Looking into the abyss …

Financial market liberalization

• Financial Market liberalisation & regulation – US & UK: ‘May day’ 1975 & ‘Big Bang’ 1986– Canada & Australia: incremental & prudential

• Britain & America: ‘light touch’ regulation & return of global finance– Framework of regulation: UK integrated & US diffuse

• Canada & Australia: Incremental liberalization & re-regulation– National branch banking system– Framework of regulation evolves into ‘twin peaks’

• The structuring role of theory and policy, tempered by context

• Getting it right & getting it wrong?• ‘Ordoliberalism’• Varieties of liberalism & the crisis of

contemporary capitalism

Conclusions