A BICS-VARIETY
OF CAPITALISM?
THE EMERGENCE OF STATE-PERMEATED
MARKET ECONOMIES IN LARGE EMERGING COUNTRIES
Objective
The project ‘A BICS-Variety of Capitalism? The Emergence of State-permeated Market Economies in large Emerging Countries’ compares basic socio-economic institutions in Brazil, India, China and South Africa (BICS). It is funded by the German Research Foundation (DFG, GZ: NO 855/3-1) during 2012 to 2014. The project attempts
to come to grips with the causes and effects of the economic rise of large emerging
countries. In this research, we review theoretical models for the varieties of socioeconomic development in emerging markets and select the model of ‘statepermeated market economies’ to study the large emerging economies of Brazil,
India, China and South Africa. By employing a broader, socioeconomic perspective,
we do not only point towards the "success" of this type of capitalism, but also towards the gross inequalities that (still) exist.
Research perspective
On the one hand, this project covers conventional fields of the comparative political
economy literature to identify the determinants of economic development and efficiency in the BICS – such as corporate governance, industrial relations, transfer of
innovations and technology, vocational training and education. To be able to analyze
the specific institutional complementarities of the BICS, on the other hand, we add a
‘Global Political Economy’ perspective to the ‘Comparative Capitalism’ (CC) approach. We thus integrate forms of international economic embedding, state steering capacities as well as the development of the domestic market.
Our approach focuses on the comparison of the institutional architecture in the BICS
economies. Hence, this project is broadly located within the realm of Comparative
Capitalism, where institutional approaches are widespread. Yet, CC concentrated on
the countries of the OECD, juxtaposing liberal market economies (LME) – illustrated
with the case of the US – and coordinated market economies (CME) – illustrated with
the case of Germany. This project extends the CC perspective to Brazil, India, China
and South Africa. Particularly in the context of the rise of the ‘BRICs’, the question of
the nature of capitalism in these countries has gained considerable importance, also
for the development of the world economy as a whole. The core question is whether
these economies develop into a similar direction as those of the triad or diverge in
fundamentally different ways.
We will try to give a preliminary answer to this question,
by developing a rough sketch of a “BICS” model of
capitalism. On the one hand, the focus is on the
classical questions of CC, i.e. the determinants of economic development. On the other hand the focus is on
differences to alternative types of capitalism. In contrast
to the dominant school, which focuses on explaining
business practices by means of models derived from
institutional economics, this project takes the historical
and politico-economic development of large emerging
countries seriously and adds insights from sociology,
social theory and global political economy to
established approaches. Furthermore, we put more
emphasis on previously neglected institutions such as
the state, domestic markets and international
integration. Unlike the well-known approaches, our
project analyses institutions not solely with respect to
their functional efficiency but also to their distributional
effects in society.
Central analytical concepts
Institutions and institutional spheres
Institutions are classical units of analysis in the CC
approach. Usually, institutions constitute complex
figurations that can be understood as institutional
"domains", "dimensions" or "spheres". The basic
assumption of this theoretical programme is that
specific institutional complementarities inherent to
each variety are able to explain the divergent
development patterns of the leading sectors within
liberal and coordinated market economies.
Project Team
Prof. Andreas Nölke
Principal Investigator,
Professor for Political
Science with focus on
International Relations
and International Political Economy, GoetheUniversity Frankfurt/Main
Dr. habil. Tobias
ten Brink
Contemporary research focused on five institutional
spheres:
 Corporate governance
 Financing of investments
 Industrial relations
 Regimes of education and training
 Transfer of innovation within and among enterprises
We extend this scheme by adding the role of (large)
domestic markets as well as the particular form of
international embeddedness of these economies, in
particular the role of foreign direct investments.
We assume that these institutions develop complementarities which bring about comparative advantages for
Researcher at the Institute for Political Science, Goethe-University
Frankfurt/Main
BICS economies. This contribution will thus enlarge the
spatial confines of comparative capitalism, ask for the
existence of additional basic types beyond LME and
CME, analyze the role of transnational influences (in
particular of multinational enterprises) and highlight the
role of the state for the establishment of particular
types of capitalism outside of the triad.
State-permeated market economies
Until now, research on comparative capitalism has been
concentrated on the OECD countries. Accordingly, two
ideal-types have been constructed: liberal and coordinated market economies. An extension has come about
through the identification of dependent market
economies (for many Central and East European
countries) and hierarchical market economies (for Latin
American capitalisms). We claim the existence of a
distinct BICS-variety of capitalism that can be labeled
as ‘State-permeated Market Economy (SMEs). SMEs are
dominated by a particularly close co-operation
between public and business actors that is at least
indirectly based on informal personal relations –
partially even family ties – supported by common
values and a shared social background. This is, we
assume, the central coordinating mechanism that
pervades all institutional spheres in SMEs. A close
cooperation between public authorities and companies
can also be found within other modes of capitalism, but
in no case this is equally predominant, and strongly
based on personal relations and common values (but
rather on formal contracts or laws).
A particular focus is on the role of the state – a state
that is cooperating closely with national elites and does
not have to give in to the demands of multinational
enterprises, but is able to impose certain conditions
onto the latter. State permeation does not necessarily
entail the existence of a “strong”, centralized state, a
dominance of public enterprises and centralized
economic planning, but rather an omnipresence of
public authorities that may also follow their particular
concerns. At the same time, these authorities – and
their cooperating companies that are tempted to
pursue rent-seeking activities – are largely kept in
balance by a relatively autonomous role of private
capital, thereby preventing the comprehensive capture
of public policies by private interests as witnessed in
patrimonial regimes.
Project Team
Simone Claar
Researcher at the Institute for Political Science, Goethe-University
Frankfurt/Main
Christian May
Researcher at the Institute for Political Science, Goethe-University
Frankfurt/Main
Methods and Data
In order to analyse central socio-economic institutions in the BICS, their commonalities and differences, we will combine qualwitative research methods (e.g. interviews
with experts in the respective disciplines of sociology, political science, economics
and relevant enterprises) with in-depth statistical research (with a focus on the years
2000 until 2011). We identify a number of indicators for the respective institutional
dimensions and these will be evaluated and compared by way of multiple statistical
databases. Furthermore we will conduct empirical case studies in Brazil, India, China
and South Africa to test and broaden our instruments. They will also help us to identify typical forms of enterprises and bureaucracies.
The focus is on the modern sectors of the economy, in particular on large enterprises. To be sure, there is internal variation within SMEs, given the strong fragmentation between, e.g., urban and rural areas. Moreover, the historical evolution of
capitalism in these economies was very different. Still, we can highlight some obvious
parallels by using the model developed above. The focus clearly is on depicting
commonalities between the economies in question, not on their differences.
Detailed information as well as a selection of publications on the BICS can be found
on the project website: http://www.bics.uni-frankfurt.de
Contact:
Andreas Nölke
Goethe-University Frankfurt am Main
Institute for Political Science
PEG G 3.186
Grüneburgplatz 1
60323 Frankfurt am Main
Tel.: 069/798 - 22075 (direct)
Tel.: 069/798 - 22877 (Secretary)
Fax: 069/798 - 28460
[email protected]
Tobias ten Brink
Goethe-University Frankfurt am Main
Institute for Political Science
PEG G 3.175
Grüneburgplatz 1
60323 Frankfurt am Main
Tel.: 069/798 - 36505 (direct)
Tel.: 069/798 - 22877 (Secretary)
Fax: 069/798 - 28460
tobias.ten.brink(at)em.uni-frankfurt.de
Simone Claar
Goethe-University Frankfurt am Main
Institute for Political Science
PEG G 3.176
Grüneburgplatz 1
60323 Frankfurt am Main
Tel.: 069/798 - 36504 (direct)
Tel.: 069/798 - 22877 (Secretary)
Fax: 069/798 - 28460
[email protected]
Christian May
Goethe-University Frankfurt am Main
Institute for Political Science
PEG G 3.177
Grüneburgplatz 1
60323 Frankfurt am Main
Tel.: 069/798 - 36503 (direct)
Tel.: 069/798 - 22877 (Secretary)
Fax: 069/798 - 28460
[email protected]