Open systemness and contested reference frames and change. A reformulation of the varieties of capitalism theory *

The theory of Varieties of Capitalism is conceived as a systems theory. Without using systems theoretical language, different varieties are constructed as entities whose parts are complementary. Critics argue that this thwarts understanding of institutional change. While joining in this criticism I will argue that a systems perspective, more precisely a perspective of open and relatively loosely ordered social entities revealing systemness , is appropriate for analyzing politico-economic development. For human survival, political economies need this systemness. A political economy cannot be competitive without a considerable degree of functionality. But a functionalist logic automatically leading to systemness does not exist,. As the parts of political economies (firms, stock markets, state departments) are relatively autonomous, the relevant actors often do not know what is functional, and reference frames , consisting of economic, social and environmental goals, are contested. Moreover, there are equi-functional ways to bring about identical results. These aspects of openness are the basis for institutional change that is kept in check by forces of path inertia.