The Political Origins of Coordinated Capitalism: Business Organizations, Party Systems, and State Structure in the Age of Innocence

Abstract

This paper investigates the political determinants of corporatist and pluralist employers' associations and reflects on the origins of the varieties of capitalism in the early decades of the 20th century. We hypothesize that proportional, multiparty systems tend to enable employers' associations to develop into social corporatist organizations, whereas nonproportional, two-party systems are conducive to the formation of pluralist associations. Moreover, we suggest that federalism tends to reinforce incentives for pluralist organization. We assess our hypotheses through quantitative analysis of data from 1900 to the 1930s from 16 nations and case studies of the origins of peak employers' associations in Denmark and the United States. Our statistical analysis suggests that proportional, multiparty systems foster, and federalism works against, social corporatist business organization; employers' organization is also greater where the mobilization of labor, traditions of coordination, and economic development are higher. These factors also largely explain pre-World War II patterns of national coordination of capitalism. Case histories of the origins of employers' associations in Denmark and the United States further confirm the causal importance of political factors. Although Danish and American employers had similar interests in creating cooperative national industrial policies, trajectories of associational development were constrained by the structure of party competition, as well as by preindustrial traditions for coordination.