Within the macro-economic field there is this idea that essentially all economies are the same. This is because the abstraction in the field has led to ignore the underlying structures of economies. A good example of this is the classical Keynesian theory that deals only with macro variables (investment, consumption, government spending etc.). There is no mentioning of how these variables are related to essential economic structures (e.g. companies, markets, government policies etc.)in an economy. My fear is that this line of thought has persisted in mainstream macro-economics.
However, there is are alternative ways of looking at economies. One of these I will discuss shortly here: the theory of institutional complementarities (from Hall and Gingerich). According this theory institutions (laws, politics, taxes, unions, corporate structures, decision making structures etc. etc.) support each other and create a stable economical system. This means that, in theory, there are different well-functioning economical systems possible. In practise this is precisely what is observed; through different histories different countries have developed different systems.
Two distinct economical systems have developed in the western world: the Anglo-Saxon Liberal Market Economy (LME) and the North-European Coordinated Market Economy (CME). (There is also a Southern-European variant but I don't agree with the descriptions given to it so far) The reason for the divergence is quite simply put: history. Where the UK and the US championed liberty and individual responsibility, European countries opted for cooperation and the welfare state.
The LME and the CME are quite different, even though they are both definite forms of capitalism. Within the LME there is in general a lot of fluidity: liberal labor laws make that employees can get easily fired and easily rehired. The focus on shareholders makes that one can easily opt out of an agreement by selling stock. There is a lot more to describe, but in general the LME is focused on rapid change and individuality in most sectors.
The CME model is quite different: it focuses more on stability. More strict labor laws prevent employers from easily firing employees. The stake holder model gives more structural connections within the economy. This makes it hard to walk away from undesirable agreements and more incentives to improve them. Again this is a short description but the CME is generally focused more on stability and cooperation.
What I am not arguing here is that one model is per definition better than the other. What I am arguing here is that a policy that may work in a LME could be disastrous in a CME and vice versa. Therefore a 'one size fits all aproach' should not be used when macro-economic policy is discussed.
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