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This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages) This article relies largely or entirely on a single source. Relevant discussion may be found on the talk page. Please help improve this article by introducing citations to additional sources. Find sources: "Coordinated market economy" – news · newspapers · books · scholar · JSTOR (October 2012) The topic of this article may not meet Misplaced Pages's general notability guideline. Please help to demonstrate the notability of the topic by citing reliable secondary sources that are independent of the topic and provide significant coverage of it beyond a mere trivial mention. If notability cannot be shown, the article is likely to be merged, redirected, or deleted. Find sources: "Coordinated market economy" – news · newspapers · books · scholar · JSTOR (October 2012) (Learn how and when to remove this message) (Learn how and when to remove this message)

It has been suggested that this article be merged into Varieties of Capitalism. (Discuss) Proposed since September 2015.

According to the book Varieties of Capitalism, there are many different ways of organizing a capitalist economy. There seems to be two extremes in the Coordinated Market Economy (CME) models, which capture certain salient features of northern Europe (in particular in Denmark, Finland, Norway, Sweden, Austria, Belgium, Netherlands, Germany, Switzerland), and the Liberal Market Economy (LME) models. These are similar to the US style economy and others also partially present in UK, Canada, Australia, New Zealand, and Ireland.

Capitalist firms typically face coordination problems in their productive operations. While firms in LMEs turn to market institutions to solve these problems, firms in CMEs turn to non-market institutions. The term 'coordinated' is thus stated with respect to the strategic interaction between capitalist firms and non-market institutions. For instance, firms in CMEs typically coordinate with labour unions to bargain wages at the industry or national level, rather than at the firm or plant level as is typical in LMEs. There is also stronger inter-firm relations in CMEs, with dense networks of interaction (for example, through employer associations) and greater inter-firm collaboration (e.g. greater collaborative research and development). Additionally, CMEs generally have specific skills regimes, as opposed to general skills regimes of their LME counterparts - as a result of a greater emphasis on vocational education and training (and complementary state social policy targeted at facilitating individual investment in specific skills). For CMEs, employee relations are more oriented towards long-term employment contracting, as opposed to the high degrees of labour 'flexibility' associated with LMEs that enable employers to fire workers more easily than in CMEs. Lastly, the corporate governance structure in CMEs is different to that of LMEs. While LME firms rely more on equity-financing (and thus LMEs have relatively larger stock markets in proportion to their economies) which is associated with more focus on current firm profitability and shorter-term expectations, CME firms rely more on credit-financing through dense professional and business networks with strong trust levels that have a more long-term focus. This enables CME firms to be able to keep labour costs stable during economic shocks by sacrificing some profitability; whereas LME firms tend to suppress labour costs to maintain current profitability so as not to lose finance from short-term focused financiers.

In general, firms in coordinated market economies rely on strategic interaction to solve coordination problems - from labour unions to employer organizations, to the state.

1. Ben Ross Schneider and David Soskice: Inequality in developed countries and Latin America: coordinated, liberal and hierarchical systems. Economy and Society Volume 38 Number 1 February 2009: 17-52
2. Hall, P.A. & Soskice, D. (2003). Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Oxford: Oxford Scholarship Online

• Articles to be merged from September 2015
• Capitalist systems