Blackwell Reference Online

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The concept of capitalism refers to the idea that societies should allow economic actors to rationally organize the social and financial capital at their disposal in pursuit of perpetually renewed profits ( Weber 1989 : 17ff). The particular organizational forms with which actors have chosen to organize economic transactions vary considerably, but an oft-used classification distinguishes between formal organizations, markets for the exchange of commodities and capital goods, and organization-market “hybrids” like interorganizational networks and alliances. As these organizational forms represent the core engines of production and exchange of consumer and capital goods in capitalist societies, these three discrete structural alternatives are typically referred to as the economic institutions of capitalism ( Williamson 1985 ). But though economic institutions are necessary ingredients of capitalist societies, they are not in and of themselves sufficient conditions to support the maintenance of a capitalist system of production. The success of economic institutions is wholly contingent on the presence of a number of fundamental background conditions, notably (1) some form of social peace, (2) individual freedom, (3) transferable property rights, and (4) enforceable contracts. These four characteristics are upheld by a separately distinguishable set of institutions: the social institutions ... log in or subscribe to read full text