Comprehensive and sustainable policymaking based on the global methodologies
7th The Role of State in Varieties of Capitalism (SVOC): The changing repertoire of state intervention to promote development in an unfolding new world order
Daniel Hinšt and Marko Perić from the Centre for Public Policy and Economic Analysis (CEA) participated at the international scientific conference organized by the Institute of World Economics of the Centre for Economic and Regional Studies and Democracy Institute of Central European University.
Varieties of Capitalism – Comprehensive and sustainable policymaking based on the global methodologies
Different global methodologies provide insights into policy risks and guidance for reforms as they measure the levels of economic freedom, competitiveness and democracy, which are all necessary for distinguishing capitalist systems from other political-economic systems. Countries with best performing global rankings belong to several political-economic models, which represent varieties of capitalism. The levels of economic freedom show only a limited geopolitical scope of global capitalism, and the limited global scope of democratic institutions stands behind global capitalism. The geopolitical and institutional framework of the best-ranked democratic capitalist countries is predominantly limited to Western policy models and some of their geopolitical allies. Max Weber’s thesis concerning capitalism remains relatively important considering predominantly Protestant societal backgrounds of many best-ranked countries. Particular country rankings may go beyond the existing political-economic models. Therefore, countries should rather be judged based on policy-by-policy approach toward state interventionism, which exists in all capitalist models. Hence, the main question is not whether state interventionism is necessary during the crisis but how to provide proportionate policy limits. Accordingly, state interventionism during a crisis may not necessarily hinder economic freedom, according to its methodology, if new subsidies are temporary and targeted; if public investments do not squeeze out private investments; if government consumption is moderate and frugal in the mid-run; and if regulatory policies and other market reforms provide sufficient compensations. In the same way, green policies may not necessarily hinder economic freedom if new green taxes, subsidies and regulations stimulate compensatory cuts under one in, one out policy. Furthermore, regardless of the varieties of capitalism, democratic capitalist countries, including the EU member states, have reached a consensus on the green transition. That way, practical implications will go along with the EU green priorities provided by a holistic approach to the UN’s 2030 sustainable development agenda. This agenda could speed up the joint interest of the EU member states by finding opportunities through all seventeen sustainable development goals until 2030. These supranational goals reflect the need for intensified recovery efforts required by the SDGs, especially in light of the COVID-19 pandemic. Moreover, indicators of sustainable development goals might become more comprehensive by offering opportunities for new policies while advancing and incentivizing partnerships, peer-to-peer learning and exchange of experiences between countries, regions and cities.
Keywords: global methodologies, economic freedom, global capitalism, state interventionism, EU priorities, green transition, sustainable development goals