The Anglo-American capitalist model (AACM) encompasses a set of theories and policies that advance the classical objectives of individual autonomy, wealth acquisition, and economic growth. In the twentieth century, the neoclassical goal of short-run Pareto efficiency was added yet remains in possible tension with these other aims. The AACM generally upholds the primacy of markets as the means for achieving its normative ideals through private, decentralized actions, with some exceptions. In the modern political arena this ideology is associated with the Reagan-Thatcher revolution of the 1980s and provides a framework for many who oppose statist solutions to social problems (Steger and Roy 2010). The AACM has come under attack from a variety of perspectives because of its assumptions of perfectly rational traders, competitive markets, incentive compatibilities, low transaction costs, informational symmetries, and no externalities (Stiglitz 2007; Kay 2004). This paper examines a different critique arising from the a-historical and a-institutional manner in which the AACM has been adopted by some neoclassical policy makers. This criticism, incidentally, also applies to statist models adopted in the 1950s that likewise ignored institutional constraints and path dependency issues.
Copyright © 2011, Routledge. This article first appeared in Adam Smith Review 6 (2011), 309-326.
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Wight, Jonathan. "Institutional Divergence in Economic Development." The Adam Smith Review 6 (2011): 309-26.