Institutional Economics 6 The French Régulation School

1. InstitutionalEconomics 6The French Régulation School Bernard Chavance ABIK, June 2010

2. A heterodox current of thought • Started in the 1970 • Intellectual influences • Marxist theory of capitalism • Post-keynesian theory of growth and distribution • French historical school « Les Annales » • A macroeconomic historical approach • Combining history and theory

3. Significant authors and books • Michel Aglietta, Theory of Capitalist Regulation: The US Experience,1976 • Robert Boyer, Jacques Mistral, Accumulation, inflation, crises, 1978 • Robert Delorme, Christine André, L’État etl’économie [The State and the Economy], 1983 • Alain Lipietz, The Enchanted World: Inflation, Credit and the World Crisis, 1983. • Robert Boyer, The Regulation School, 1986. • Robert Boyer, Yves Saillard (eds.), Régulation Theory: The State of the Art, 2002. • Bruno Amable, The Diversity of Modern Capitalism, 2003. • Michel Aglietta, Antoine Rebérioux, Corporate Governance Adrift: A Critique Of Shareholder Value, 2004. • Benjamin Coriat, Geneviève Schmeder, Pascal Petit, eds., The Hardship of Nations : Exploring the Paths of Modern Capitalism, 2006.

4. Robert Boyer (b. 1943)

5. Capitalist dynamics • Capitalism as a mode of production based on two fundamental relations : the exchange relation and the wage-labour nexus (labor/capital relationship) • Absence of ineluctable laws (like Marx’s tendency of falling profit rate) • Different historical accumulation regimes based on historic configurations of the two fundamental relations

6. The five institutional forms in a national capitalist economy • 1. Forms of monetary constraint (monetary and financial regime) • 2. Configurations of the wage-labour nexus (organisation of work, skills hierarchy, mobilization and attachment of workers to the firm, formation of direct and indirect wage income, workers’ way of life) • 3. Forms of competition (e.g., competitive, monopolistic, administered competition regimes) • 4. Modalities of insertion into the international regime • 5. Forms of the State (e.g., limited State, embedded State) Sources: [Boyer, Saillard, 2002], [Billaudot, 2001], [Boyer, 2004a]

7. Comparing historical forms • Giving a stylised representation of the forms taken by economic relations in a given country, in a given middle-term historical period • Identifying the accumulation regime and the mode of regulation • Comparing various national historical experiences, and their changing patterns

8. Capital accumulation and economic régulation • The accumulation regime corresponds to a pattern of regular growth • The mode of regulation represents the procedures and social behaviour that ‘support and steer’ such a regime and ‘ensure the compatibility over time of a set of decentralized decisions, without the economic actors themselves having to internalize the adjustment principles governing the overall system’. (Boyer, 1990)

9. Régulation • A concept different of the « regulation » edicted by an authority or the state • … borrowed from system analysis and cybernetics • … meaning the process of maintaining through time the relative stability of a contradictory system through fluctuations and negative feedbacks

10. The « Fordist » accumulation regime • Prevailed in the exceptional period of high and relatively stable growth in the capitalist countries between 1950 and the early 1970s • Was based on a constellation of particular institutional forms that were nationally self-centered: • a monetary regime based on credit • a wage-labour regime marked by a post-Taylorian organization of work, sharing of productivity gains and expansion of mass consumption • oligopolistic forms of competition • an ‘embedded State’ involving an extension of the Welfare State

11. The nature of institutions • ‘Institutionalized compromises’ between social groups in conflict (Delorme, André, 1983) • The emergence of new institutions often follows crises, conflicts or wars • It takes place mainly in the framework of the nation state, as the political sphere remains the essential setting for the formation and legitimization (or contestation) of the social compromises • Imitated or imported institutions are generally transformed in the process : hybridization

12. Diversity of capitalisms • A comparative agenda for institutional analyses, developed in the 1990s • Diversity or variety of types of capitalist national economies in the context of globalization • Is there a process of convergence to « one best way » in institutional matters, as the mainstream maintains that competition implies?

13. Typologies of capitalism • Albert (1991) : Anglo-saxon and Rhenish types • Hall and Soskice (2001) : liberal market economies and coordinated market economies (a firm-centered approach, focusing on coordination) • Amable (2003) : five types • Market-based capitalism • Social democratic capitalism • Asian capitalism • Continental European capitalism • South European capitalism

14. An analysis of five domains • Product markets competition • The wage-labour nexus • Employment protection, industrial policy, employment policy) • Financial and corporate governance systems • Social protection and the Welfare state • Education sector

15. Hierarchy and complementarity of institutions • Hierarchy of institutional forms (eg dominance of the wage-labour nexus in Fordism, dominance of the monetary and financial regime in contemporary neo-liberal capitalisms) • Complementarity : ‘the existence or the particular form taken by an institution in one area reinforces the presence, functioning, or efficiency of another institution in another area.’ (Amable, 2003)

16. Crises in capitalism • Heuristic role of economic crises : their analysis helps to understand more stabilized periods of evolution • A typology of crises : minor crises in the framework of a given mode of regulation, which tend to be resolved endogenously, major or structural crises that cannot be resolved without significant changes in institutional forms • By order of severity: cyclical crises within a given mode of regulation, crises of the mode of regulation, crises of the accumulation regime, crises of the mode of production (Boyer, 1990)

17. Crises : examples • Crisis of the Fordist mode of regulation (1970s) • Crisis of the accumulation regime : the Great depression, the contemporary crisis of the financialized capitalism • Crisis of the mode of production : the end of the Soviet Union

18. Recursive causality between the institutional framework and the modalities of economic growth • This approach has ‘shown how institutionalized compromises had shaped accumulation regimes, initially mainly extensive and later mainly intensive, and finally intensive with mass consumption, i.e. Fordism. The reverse relation merits study: economic transformations shape institutions. Structural crises are commonly overcome through the restructuring of institutional forms, under the dual constraint of reducing prior imbalances and responding to the social conflicts that such imbalances have induced.’ (Boyer, 2004)

19. ‘Viability’ of an institutional configuration • Is adressed, rather than simple « performance » (i.e. growth, stressed by North) • Viability refers to the capacity to surmount endogenous crises • Such viability is inevitably limited to a particular historic period and is likely to be called into question sooner or later by a structural crisis • Endometabolism or ‘transformation of a development mode resulting from its own internal dynamics’, is an essential source of institutional change: ‘it becomes all the more manifest as the time scale being observed lengthens’ (Boyer, 2004)