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CHAPTER SEVEN
National Systems of Political Economy

ANY PROFESSIONAL economists and scholars of international
M political economy (IPE), including myself, have given insuffi-
cient attention to the importance of domestic economies to the ways
in which the world economy functions. Economists regard national
economies as dimensionless points, while scholars of IPE have fo-
cused almost exclusively on the international political and economic
system. While it was never justifiable to neglect the role of domestic
factors in the study of international political economy, it has become
increasingly obvious that the role of domestic economies and the dif-
ferences among those economies have become significant determi-
nants of international economic affairs. Thus, study of the different
types of national economies or “national systems of political econ-
omy” and their significance for the global economy has become an
important aspect of the study of international political economy. 1
Several developments in the 1980s increased awareness of the im-
portance of the differences among national political economies. The
miserable economic performance of the socialist economies and of
most less developed countries led many observers to appreciate the
superiority of the market system. The extraordinary economic success
of Japan and of the industrializing economies of Pacific Asia prior to
the 1997 financial crisis led revisionist scholars to declare and others
to worry that the capitalist developmental state model provided the
best route to economic success. International economic conflicts in-
tensified and led to charges that one country or another was not
“playing fair,” and the increasing integration of various national
economies with others possessing differing economic structures and
business practices increased awareness of the significance of these dif-

1
The writings on comparative political economy are quite extensive. Examples in-
clude Peter A. Hall, Governing the Economy: The Politics of State Intervention in
Britain and France (New York: Oxford University Press, 1986); and Gunter Heiduk,
ed., Technological Competition and Interdependence: The Search for Policy in the
United States, West Germany, and Japan (Seattle: University of Washington Press,
1990). A polemical but interesting work is Michel Albert, Capitalism vs. Capitalism:
How America’s Obsession with Individual Achievement and Short-term Profit Has
Led It to the Brink of Collapse (New York: Four Walls Eight Windows, 1993).
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