Different Varieties of Capitalism? British and Italian Policies in Response to the Sub-prime Crisis

The paper explores the variation between British and Italian policies adopted in response to the sub-prime crisis. Specifically, the paper focuses on the variation within the recapitalization policies adopted in the late 2008. In contrast to partisan politics and regulatory competition expectations, the paper finds that the difference between the British and the Italian recapitalization policy was shaped by distinctive national models of financial capitalism. Those models shaped both governments’ understanding of their role in the economy and domestic financial firms’ support to government policies. Thus, the British government sought policies that relied on market mechanisms to adjust the domestic financial system to the shock caused by the global crisis. The Italian government, in contrast, sought policies conducive to the bank-based model of financial capitalism where government intervenes to help domestic economic actors to adjust their activities to an economic shock. In line with the literature on comparative capitalisms, the article thereby emphasizes the long-standing importance of distinct national models to explain the practical aspects of policy outputs. However, in light of the variegated responses to the crisis, the article also raises the question about the persistence of distinct models of capitalism