Anglo-Saxon Capitalism in Crisis? Models of Liberal Capitalism and the Preconditions for Financial Stability

S. Konzelmann and M. Fovargue-Davies

Working Papers from Centre for Business Research, University of Cambridge

Abstract: The return to economic liberalism in the Anglo-Saxon world was motivated by the apparent failure of Keynesian economic management to control the stagflation of the 1970s and early 1980s. In this context, the theories of economic liberalism, championed by Friederich von Hayek, Milton Friedman and the Chicago School economists, provided an alternative. However, the divergent experience of the US, UK, Canada and Australia reveals two distinct 'varieties' of economic liberalism: the 'neo-classical' incarnation, which describes American and British liberal capitalism, and the more 'balanced' economic liberalism that evolved in Canada and Australia. In large part, these were a product of the way that liberal economic theory was understood and translated into policy, which in turn shaped the evolving relationship between the state and the private sector and the relative position of the financial sector within the broader economic system. Together, these determined the nature and extent of financial market regulation and the system's relative stability during the 2008 crisis.

Keywords: Corporate governance; Regulation; Financial market instability; liberal capitalism; Varieties of capitalism (search for similar items in EconPapers)
JEL-codes: E44 G38 N10 N20 P16 P17 P52 (search for similar items in EconPapers)
Date: 2011-06
New Economics Papers: this item is included in nep-his, nep-hpe and nep-mac
Note: PRO-2
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