The Two Forms of Modern Capitalism: Liberal and Illiberal States

A Criticism of the Varieties of Capitalism Paradigm

In: Comparative Sociology
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  • 1 Professor of Macroeconomics, Central European University, Corvinus University of Budapest, Budapest, Hungary
  • 2 William Graham Sumner Emeritus Professor of Sociology and Political Science, Yale University, Max Weber Emeritus Professor of Social Sciences, New York University Abu Dhabi, Oakland, California, USA

Abstract

What is the relationship between liberalism, illiberalism and despotic forms of dictatorship – this is the central question of this paper. From the 1970’s and especially after 1989-91 it appeared that the rise of global capitalism and liberal democracy was unstoppable. Since 2005 this trend seems to be reversed. The number of countries classified as “non-free,” “undemocratic” or “illiberal” has been increasing. The bottom line of this paper is that illiberal regimes (even if they tend to be dictatorial in some ways) as long as they offer a minimal legal guarantee to capitalist businesses, can accommodate a capitalist system. Under despotic-dictatorial systems this is unimaginable. In the second part of the paper the authors make an attempt to re-conceptualize capitalism with a new theory of rent.

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