The SSA includes political and cultural institutions as well as economic ones. The institutions comprising an SSA include both domestic and international arrangements. The domestic institutions may include the state of labor- management relations; the organization of the work process; the character of industrial organization; the role of money and banking and their relation to industry; the role of the state in the economy; the line-up of political parties; the state of race and gender relations; and the character of the dominant culture and ideology. The international institutions may concern the trade, investment, monetary-financial, and political environments.
The development of the SSA approach was motivated by at least three analytical concerns: historical, comparative, and programmatic. An historical concern suggests that individual capitalist economic systems, and the world system of which each is a part, go through periodic booms and periodic times of trouble. These alternating periods have been called "long swings." These long swings appear to be associated with the bunching of institutional changes, which take place in a discontinuous manner. Such patterns require an explanation.
The SSA approach is not directed only at the problem of uneven economic expansion and discontinuous institutional change over time. It is also concerned with differences between the economic systems of various capitalist nations. The comparative concern suggests that, contrary to the view of traditional neoclassical economics, institutions and social structure make a difference to the functioning of economic systems. While Japan, Germany, the United States, Sweden and South Africa are all market-oriented capitalist economies, their structures and performances also differ considerably from one another. To explain these different outcomes, we need a theory that incorporates the institutional differences among the capitalist countries.
A programmatic policy concern asks how new institutions develop and are consolidated. Why do some attempts to reform and transform the economy and social structure meet considerable success, while others have only a limited impact, and still others fail completely? We need a theory that can help answer these questions.
The SSA approach frames our understanding of many contemporary debates. Does Europe suffer from a rigidity sometimes called "Eurosclerosis," which compares unfavorably to a "flexible" US capitalism? Has Japan developed a style of business management that is superior to that of other industrialized capitalist economies? Can a nation make a choice between a low-wage, low- skill development path and a high-wage, high-skill one? Did Thatcherism in Britain and Reaganomics in the US resolve the problems that had been plaguing the British and American economies, creating the basis for sustained and healthy economic growth - or, on the contrary, are Britain and America still awaiting the creation of an effective institutional framework for economic expansion?
In the late 1960s and early 1970s, severe economic problems returned both to the United States and to international capitalism, after nearly twenty-five years of rapid and stable postwar economic growth. High unemployment, rapid inflation, and international monetary instability undermined the complacent belief that capitalism had outgrown its crisis-ridden youth. As the 1970s wore on, the failure of Keynesian interventionist techniques to bring back prosperity grew increasingly obvious. The ground was prepared for the development of new theories seeking to explain the alternation of long periods of prosperity of stagnation and instability.
In 1978, a year of surging inflation and chaos in world currency markets, David Gordon (1978) introduced the idea of an SSA explanation of economic crisis. He argued that capital accumulation must be based upon certain institutional requirements. The SSA is the "full set of integrated institutions ... necessary for individual capitalist accumulation to continue"(p.27). Expanding his argument two years later, Gordon (1980) criticized other theories of the rhythm of capital accumulation as attempting "to account for alternating periods of economic prosperity and stagnation without properly considering the connections between the structure and contradictions of the social relations conditioning capital accumulation and the "purely" economic dynamics through which long cycles appear to manifest themselves"(p.10). The key to these alternating periods is to be found in the successive creation, and construction anew of SSAs.
The SSA approach achieved its definitive form with Gordon, Edwards, and Reich's Segmented Work, Divided Workers (1982). This volume had several advantages over the earlier articles. It was more easily accessible to a broad readership. It applied the SSA framework to the analysis of a century and a half of the development of capital-labor relations in the US, demonstrating the utility and analytical power of the framework. It broadened the concern of the SSA approach beyond the initial focus on uneven economic growth to encompass the analysis of institutional innovation, consolidation, and decay.
In Gordon et al. (1982) the dynamics behind the successive periods of growth and stagnation are located squarely in the construction and breakdown of the SSA. In Gordon's earlier work, both traditional Marxian crisis tendencies and the echo effects of infrastructure investment booms (an idea found in Kondratieff) play a role in the termination of a period of prosperous expansion. Gordon et al. (1982) are still concerned with developing a largely endogenous theory of crisis. However, they do this, not by focusing exclusively on economic factors that normally underlie endogenous crisis theories, but by expanding their analysis to encompass political and idealogical institutions alongside the economic. Thus, the SSA framework brings politics, ideology, and culture into the heart of the theory of economic growth and crisis.
Several intellectual traditions have been influential in the development of the SSA approach. A number of central concepts come from the Marxian tradition, particularly from the Marxian theories of historical materialism, exploitation and surplus, and economic crisis. These include the interdependence of the economic, political, and ideological aspects of a society; the idea that the development of a system tends over time to undermine that system; a stress on class conflict and the exercise of class power as key determinants of social and economic development of capitalist society. However, the SSA approach differs from much of the Marxian literature, in the formers's emphasis on the importance of non-economic factors, the absence of any inevitable tendency for capitalism to be superseded by socialism, and the rejection of any single mechanistic cause of economic crises.
Keynesian thought also influenced the SSA approach. The basic conception of the relation between the SSA and the investment decision draws upon the Keynesian concept of the uncertainty attendant upon investment decisions in a capitalist economy. An SSA encourages investment by creating greater stability and predictability. However, the SSA approach rejects the traditional Keynesian focus on demand problems to the exclusion of supply problems. In fact, most analyses of the recent problems of capitalism utilizing the SSA approach emphasize problems of cost and supply rather than demand.
Another influence has been the institutionalist tradition in American economics, descended from the work of Thorstein Veblen and John R. Commons early in the twentieth century. As the name suggests, institutionalists emphasize careful study of institutions and their relation to economic behavior. Shunning a priori theorizing, institutionalists expect the specific features of an economy, and the character of typical economic behavior, to differ across time and place. They study the historical evolution of economic systems over time. All of these features of traditional institutionalism are found in the SSA approach. However, the SSA school differs from traditional institutionalism in its greater openness to broad generalizations about economic development.
The long-wave theories pioneered by Kondratieff(1935) and Schumpeter (1939) influenced the development of SSA theory, particularly in Gordon's early work. The concept of an SSA first emerged out of the effort to account for long swings in macroeconomic activity, and both Gordon, in his early work, and Gordon et al. felt it necessary to make a case for the existence of such long swings. However, over time the work of the SSA school has placed less stress on explaining the recurrence of relatively regular long-term macroeconomic fluctuations, and it has not accepted the economic and technological determinism associated with the long-wave theoretical tradition.
The unifying theme of the SSA approach is the importance of institutions in the economic process. Yet it must be emphasized that the precise form that institutions take in particular countries is not specified by the general SSA approach. While SSA theorists have written about the particular institutions that have made up the SSAs of the United States (for example, peaceful collective bargaining and a welfare state in the postwar era), it does not follow that the same institutions make up the SSAs of postwar Japan or South Africa. Any mechanical transfer of the SSA approach from the United States to another country and period is bound to be inadequate. A specific analytical and historical undertaking is required in order to theorize the particular insititutions comprising the SSA of a specific country and period.