Governing Capitalist Economies.

• Author: Brady, Gordon L.

Edited by J. R. Hollingsworth, R C. Schmitter, and W. Streeck. New York and Oxford: Oxford University Press, 1994. Pp. 316. $45.00.

The objective of this book is to compare the effects of industrial "governance" in North America, Japan, and Western Europe. The book is premised on the notion that economic action is a special case of social action and, therefore, needs to be coordinated or governed by institutional arrangements [p. 4]. The editors (two sociologists and a political scientist) also wrote papers for the volume as well as organized the conference entitled "Comparing Capitalist Economies: Variations in the Governance of Sectors," upon which the book is based.

The papers in this book challenge neo-classical economic assumptions about the effect of social, legal, and economic factors on economic performance. The editors attempt to demonstrate that government intervention in the form of regulation and coordination enhanced the performance of industrial sectors, i.e., automobiles, chemicals, consumer electronics, steel, dairy, and securities. Specifically they argue that highly regulated sectors outperform their less-regulated counterparts in the world economy. In their words: "Coordination is accomplished through a set of institutions that together form the economy's system of governance." It is the aim of the editors of the book to focus discussion on a consistent definition of "governance" as a process of coordination and regulation of transactions which may be affected by the cultural traditions and value preferences which form the basis for social institutions such as individual trust and social cohesiveness. Furthermore, "governance" is defined broadly to include the nongovernment and nonmarket modes of social coordination that may emerge through family and tribe. This is in addition to such traditional forms of government intervention as constraints on vertical integration. They define a "governance system" as the totality of institutional arrangements--including differing social, legal and economic institutions--that regulate transactions inside and across the boundaries of an economic system.(1) But it has to be noted that at least for economists, the term "governance" is misleading in that it evokes the notion of government management and should be carefully distinguished from the objectives of the authors.

Given the length of this review it is not possible to discuss each of the case studies in detail The book is tightly...