^a2625 Wynonah Drive, Auburn, PA 17922, USA. E-mail: richardcarney@postinbox.com

Abstract

Can capitalist systems rapidly change from type to another? According to the varieties of capitalism literature, a broad set of complementary institutional practices make it very difficult for extensive changes to occur quickly. So how did France make a secular change from the market-dominated finance characteristic of liberal market economies prior to WWII to banking-dominated finance characteristic of coordinated market economies immediately following the war? I argue that the newfound political power of labor and farmers caused the switch to banking-dominance following the war, with political institutions enabling and cementing these new practices. Accordingly, this paper documents that capitalist systems can rapidly change from one type to another, and illustrates how it can occur.