Synergy, Conflict and Institutional Complementarities

- In biology, the evolution of species is influenced by two types of complementarities. One type is mostly related to the synergies among and within organisms, while the other is the outcome of conflicts among different species and among members of the same species. In both conflictual and synergetic complementarities, the traits selected in one domain affect the traits selected in the other domain, and both complementarities involve the co-evolution of certain traits. However, synergies and conflicts involve different mechanisms and interact with each other to generate complex dynamics. Social and economic systems are characterized by a similar range of interacting complementarities. Whereas technology and property rights tend to have synergistic complementarities, workers' and capitalists’ organizations are mostly characterized by conflictual complementarities. The evolution of the different varieties of capitalism, as well as of different patterns of technological specialization across countries, can be better understood in terms of both types of complementarities and by their interactions. The comparative history of the American and the European economies is used to illustrate how models of capitalism can diverge, building different types of institutional complementarities over time. Economic policies can have different, and sometimes opposite consequences, in these different contexts.