As this discussion shows, model building is closely tied to a concern with thealleged connection between institutional form and policy performance. But the
way this link has been traced highlights once again the problematic role of agency.
In debates until the beginning of the 1990 sdiVerences in the roles of the state, and
of keyWnancial institutions, were systematically linked to the capacity to make
strategic investment (and disinvestment) decisions. Perhaps the high point of this
literature was a single case, Johnson’s ( 1982 ) study of the role of MITI in Japanese
economic performance. These arguments had a fatalistic tinge, resembling
an elaboration of Gerschenkron’s ( 1966 ) thesis of the economic advantages of
historical backwardness. Crudely, the conclusion from the experience of the
‘‘long boom’’ in capitalism in the thirty glorious years after 1945 seemed to be:
Don’t have the bad luck to beWrst in economic success, or you will be stuck with an
anachronistic institutional order, notably with a state unable to act strategically.
The most sophisticated formulation of this is in the work of Lazonick, in its view
that each successful institutional formation (British Industrial Revolution
‘‘proprietary’’ capitalism, American ‘‘multidivisional’’ and vertically integrated
capitalism) has inscribed within it the conditions of its very historical obsolescence
and decline (Lazonick 1991 , 12 – 19 ).
The second ‘‘long boom’’ in the United States, and to a lesser extent in other
Anglo-Saxon economies, from the early 1990 s, coupled with stagnation in Japan
and poor economic performance across much of what came to be known as the
euro-zone, has forced reappraisals of these accounts. These reappraisals turn us
back to issues of agency and institutional change—though in complicated ways.
TheWrst complication is that it is now clear that a kind of Manichean division of
models of capitalism into bad and good performers is unrealistic. The compara-
tively ‘‘good’’ performance of the Anglo-Saxon models in some areas from the
early 1990 s onwards, such as in tackling unemployment, was accompanied by
‘‘bad’’ performance—at least according to some normative stances—in others,
such as securing long-term security of employment or control over levels of
wealth inequality. (For instance, Crouch and Streeck 1997 ; Coates 2000 .) A
simple-minded constraint on agency in institutional redesign thus might be
that there are trade-oVs that have to be endured: for instance, one could so
weaken labor unions and the social forces associated with them that it was
possible to achieve highlyXexible labor markets capable of disciplining workers
in the pursuit of high productivity; but that very weakness would strengthen the
hand of corporate elites and lead to huge increases in inequality. A more complex
version of the argument occurs in Hall and Soskice, where the familiar institu-
tional building blocks—Wrms, states, unions—are held to be organized in com-
plicated, historically shaped ensembles that govern the way they strategically
interact. Intervention to reshape one of the building blocks has eVects on the
other blocks, and success in intervention depends on the contingent character of
institutional patterns in diVerent national systems (Hall and Soskice 2001 , 1 – 21 ).
economic institutions 153