Varieties of capitalism and societal happiness: theory and empirics

Thomas Palley

No 108-2024, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper investigates the impact of different varieties of capitalism (VoC) on societal happiness. It begins with a critique of Neoclassical welfare economics which emphasizes Pareto optimality, and it argues for focusing on reported societal happiness. The paper identifies five VoC. Using a sample of twenty-six high-income countries drawn from the 2020 World Happiness Report, the paper shows societal happiness is systematically impacted by variety of capitalism type. Social Democratic economies report higher happiness levels. The US benefits from its standing as global economic hegemon, but it still reports lower happiness than Liberal and Social Democratic economies owing to its adverse societal relations. The public policy implication is the Social Democratic variety of capitalism produces greater societal happiness. More generally, happiness analysis can fill a gap in VoC theory and strengthen it by providing an operational form of welfare analysis. Making happiness the focus of attention will also likely change how economists interpret economies, which stands to change both economic theory and policy.

Keywords: Happiness; varieties of capitalism; US hegemon; Liberal; Social Democratic; East Asian; Mediterranean Corporatist (search for similar items in EconPapers)
JEL-codes: D6 P0 P1 P5 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2024
New Economics Papers: this item is included in nep-hap, nep-his, nep-hme, nep-mac and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:imk:fmmpap:108-2024

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