The Verso blog has an interview, originally published by Revue de la Régulation, with distinguished German “socio-economist” Wolfgang Streeck. Streeck discusses his intellectual formation, the intersections between sociology and economics, and the “variety of capitalisms” theory that he helped develop. Read an excerpt from the interview below or the full text here.
RR: You are one of the founding fathers of the Variety of capitalisms [VoC] approach. Yet you are critical of what has become presently the VoC mainstream and its increasingly static-functionalist-economistic outlook. Could you tell us a few things both about the genesis of this approach and the critics to this new mainstream?
Wolfgang Streeck: VoC theory originated in the 1980s when nonliberal political economies like Japan and Germany were flourishing while the Anglo-American economies appeared to be in decline. We were looking for institutional explanations for the difference, in particular because what came to be called “the German model”, but to an extent also Japan, promised to combine competitiveness with social equity and egalitarianism. The idea was that the right sort of politics could force capitalism to modify its operation and outcomes, without having to pay a price in terms of prosperity. In this sense VoC was also a theory of non-convergence: there was no “need” for a capitalist political economy to become like the United States or Britain at the time. In my view of the world, the crucial factor was the right kind of power balance in a society, combined with the right kind of productivity institutions exercising a “beneficial constraint” on capital. I was convinced early on that if that balance was to shift, let’s say as a result of increasing international mobility of capital, the game would change. This premise was not shared by what soon became the VoC mainstream; there the idea was that there were two alternative equilibria in capitalism, one resulting in a “liberal market economy” and the other, in a “coordinated market economy”, both driven by rational interests of capitalist firms in profitability (“firm-centered approach”). I always believed that capital had to be made captive – forced for its own good – for nonliberal capitalism to be possible. This is why I began sharply to criticize the functionalist, economistic, rational choice version of VoC, to bring back the political and politicized variant…
RR: Your current work is much more focused on the general dynamics of capitalism. In your acclaimed book Buying Time. The Delayed Crisis of Democratic Capitalism3, you trace the transformation of the tax state into a debt state, and from there into the consolidation state of today. Doing this, you oppose the Staatsvolk (the citizens, the people) to the Marktvolk (those of the markets) and you show that governments became more accountable to the market than to the people. Hence, markets became increasingly immune to the demand of the citizens. You develop an impressive macro-sociological view on the influence of “those from the markets” and the way it undermines democratic capitalism. In this broad perspective, you don’t detail the sociological composition of the Marktvolk. Who are they? What are the social groups and subgroups that fall into this category?
Wolfgang Streeck: That question is often asked, and behind it is mostly the issue of pension funds etc. which, it is suggested, connect ordinary people to the capital market and make them part of the Marktvolk as well. There is of course to this, but it needs to be heavily qualified. For example, private pensions or returns on invested capital typically make up only a small share of the income of most people, so they mostly and overwhelmingly remain dependent on their wages and on public provision. Moreover, as Thomas Piketty has rightly pointed out, returns on capital are the higher the more capital you have. Today, in the zero-interest rate environment, it is the small investors who suffer most while the oligarchs are doing fine thank you. The more important members of the Marktvolk today are large global corporations and their leading managers, who have very effective and at the same time highly impenetrable (for outsiders) methods of making money even if interest rates are low. Incidentally, we know very little about the superrich and what they do all day, when they don’t happen to be buying letter boxes in Panama or Luxembourg, or passports of low-tax or no-tax countries. It is my impression, and indeed a veritable nightmare, that today’s oligarchs have made themselves and their families independent from the fate of the societies out of which they extract their wealth, so they don’t care anymore what happens to what used to be their countries.