Two paths of industrial adjustment to shifting patterns of international competition--the political economy of flexible specialization and mass production in British textiles

Political economists differ on what kinds of political and economic institutions can best promote successful industrial adjustment in a rapidly changing global environment. Neo-mercantilist, liberal and corporatist approaches focus on different sources of institutional capacities for flexible industrial adjustment and suggest different countries as their paradigmatic models of success. None of these standard approaches adequately account for patterns of success and failure in the adjustment strategies of textile industries in the advanced countries. Instead, a fourth approach--the political economy of industrial organization--is found to have the greatest explanatory power in accounting for variations in the capacity of advanced country textile industries to successfully adjust to new forms of international competition.;This material provides strong evidence for a critique of standard political economy explanations of Britain's remarkable industrial decline and offers substantial support for a significantly revised theoretical approach.;In Britain the competitive performances of two regionally distinct systems of mass production and flexible specialization in neighbouring Lancashire and Yorkshire lend support to the claims of the industrial organization approach. An analysis of the emergence of mass production and flexible specialization in Lancashire and Yorkshire highlights the critical importance of political variables in shaping the strategic and organizational responses of firms to changing economic conditions. These cases suggest a critical link between government economic policy (international trade policy, industrial strategy, regional policy and competition policy), the availability of politically secured market outlets (through protection of domestic markets of "free trade" access to a trading bloc) and the choice between mass production and flexible specialization. Similarly, the political organization of small- and medium-size firms and their ability to defend their prerogatives in both legislative and bureaucratic forums played an important part in conditioning the choice between mass production and flexible specialization.