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Capitalism and Socialism

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Capitalism and Socialism
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Varieties of capitalism arise from a number of institutional characteristics that prevail in the developed economies of the globe. Such institutional characteristics include; education and vocational training, industrial relations, inter-firm relations, corporate governance and intra-firm coordination (Soskice & Hall 23). These characteristics differentiate two forms of capitalism, coordinated market economies- CME’s and liberal market economies- LME’s. Aside from differing in their institutional characteristics, these two forms of capitalism differ in certain macroeconomic aspects especially industrial specialization and comparative advantage. The table below pinpoints the differences between the forms of capitalism based on the institutional characteristics; Institutional characteristic | Liberalized markets (LME’S) | Coordinated markets (CME’s) | Education and training | Formal learning from high schools and colleges | Apprenticeship, bestowing industry specific skills | Inter-firm relations | Competitive | Coordinated/collaborative | Industrial regulations | Deregulated, anti-tax, tax breaks | Motivates information sharing and coordination among firms | Comparative advantage/specialization | High-tech and service | Manufacturing | Income distribution | Largely unequal | Generally evenly distributed | Mechanism | Competitive market arrangements | Non-market relations |

An example of a ‘humane’ capitalist country is Germany. Such capitalist countries get referred to as ‘humane’ due to the characteristic of their institutional set up. As much as their capitalist economies get based on profit making, accumulation, and direct competition; these economies value their human population through their institutional set up (Soskice & Hall 65). ‘Humane’ capitalist economy setup…...

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