Theoretical Foundations of Comparative Political Economy

Chapter 2 presents the most important theoretical perspectives of comparative political economy in their historical context. The chapter starts from a definition of capitalism as a geographically and historically specific order. After early political economy-oriented comparisons of societies, it was only in the second half of the last century that comparative political economy finally established itself as an independent research program. It attempted to explain the different growth paths and reactions to crises of the high-income economies of the USA, Western Europe, and Japan on the basis of institutional and economic policy variables. In this context, comparative capitalism research emerged around the turn of the millennium, the most prominent variant of which is the Varieties of Capitalism approach. The chapter discusses in detail the foundations of this theoretical perspective and its main points of criticism. Finally, the chapter discusses the most recent theoretical perspective in comparative political economy, the growth models approach, which focuses on the demand side of the economy and political variables instead of supply-side institutions and companies.