Anglo-Saxon model

The Anglo-Saxon model or Anglo-Saxon capitalism (so called because it is practiced in English-speaking countries such as the United Kingdom, the United States, Canada, New Zealand, Australia[1] and Ireland)[2] is a capitalist model that emerged in the 1970s based on the Chicago school of economics. However, its origins date to the 18th century in the United Kingdom under the ideas of the classical economist Adam Smith.

Characteristics of this model include low levels of regulation and taxes and the public sector providing very few services. It can also mean strong private property rights, contract enforcement, and overall ease of doing business as well as low barriers to free trade.

Disagreements over meaning

Proponents of the term "Anglo-Saxon economy" argue that the economies of these countries currently are so closely related in their liberalist and free market orientation that they can be regarded as sharing a specific macroeconomic model. However, those who disagree with the use of the term claim that the economies of these countries differ as much from each other as they do from the so-called "welfare capitalist" economies of northern and continental Europe.

The Anglo-Saxon model of capitalism is usually contrasted with the Continental model of capitalism, known as Rhine capitalism, the social market economy or the German model, but it is also contrasted with Northern-European models of capitalism found in the Nordic countries, called the Nordic model. The major difference between these economies from Anglo-Saxon economies is the scope of collective bargaining rights and corporatist policies. Differences between Anglo-Saxon economies are illustrated by taxation and the welfare state. The United Kingdom has a significantly higher level of taxation than the United States.[3] Moreover, the United Kingdom spends far more than the United States on the welfare state as a percentage of GDP and also spends more than Spain, Portugal, or the Netherlands.[4] This spending figure is still considerably lower than that of France or Germany.

In northern continental Europe, most countries use mixed economy models, called Rhine capitalism[5][6] (a current term used especially for the macroeconomics of Germany, France, Belgium and the Netherlands), or its close relative the Nordic model (which refers to the macroeconomics of Denmark, Iceland, Norway, Sweden and Finland).

The debate amongst economists as to which economic model is better, circles around perspectives involving poverty, job insecurity, social services and inequality. Generally speaking, advocates of Anglo-Saxon capitalism argue that more liberalised economies produce greater overall prosperity[7][8] while defenders of continental models counter that they produce lesser inequality and lesser poverty at the lowest margins.[9][10]

The rise of China has brought into focus the relevance of an alternate economic model which has helped propel the economy of China for thirty years since its opening up in 1978. The socialist market economy or a system based on what is called "socialism with Chinese characteristics".[11] A confident China is increasingly offering it as an alternate development model to the Anglo-Saxon model to emerging economies in Africa and Asia.[12]

See also


  1. Mitchell 2006, p.116. Mitchell groups all the preceding countries under a heading "Anglo-Saxon model or liberalist-individualistic model".
  2. Sapir 2006, p.375
  3. Tax as fraction of GDP, UK: 37%; US: 26.8%. From List of countries by tax revenue as percentage of GDP
  4. The UK spends 21.8% of GDP on the welfare state as compared to the US, which spends 14.8%. Data from the article: Welfare state
  5. Richter, Eberhard; Fuchs, Ruth (2003-11-15). "Rhine Capitalism, Anglo-Saxon Capitalism and Redistribution" (Excerpt, English translation of German original). The Future of Social Security Systems (Conference). Indymedia UK. Retrieved 2008-07-04.
  6. The term was coined by Michel Albert, although can be applied specifically to Germany. See Joerges et al. 2005, p.30.
  7. Dale, 1999
  8. Reinhoudt, 2007
  9. Richter, 2003
  10. Schifferes, 2005
  11. Socialism with Chinese characteristics


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