Beckert 327 showing the role of expectations in their operations.In their historical development, capitalist societies succeeded increasingly in the development of institutional and cultural capacities that allowed for the unfolding of expectational structures condu- cive to the expansion of the four Cs of capitalism.At the same time,the economy also became more fragile because of enlarged interdependencies in an increasingly global economic system and the associated expansion of cognitive demands.Crises can be understood as the sudden shift of prevailing expectations.23 In the conclusion,I will argue that the perspective developed provides the basis for a microfoundation for understanding the dynamics of capitalist economies,which offers an alternative to rational actor theory and behavioral economics. The Four Cs of Capitalism What is capitalism?Capitalism can be defined as an endemically dynamic economic system in which the production of goods and services is motivated by expected profits, materializing in market exchange.What distinguishes capitalism from all other eco- nomic systems is its need to grow-it can stabilize itself only by continuously under- mining its own historical forms in the relentless search for new profit opportunities. By growth,I refer to the increase of the value of goods exchanged in the market sphere.The need to grow emerges on the actor level from the goal of profit maximiza- tion,on the firm level from economies of scale,on the level of the economic system from the credit-based financing of investments,and on the societal level from order producing effects of wealth increases.Because of its inherent need to grow,the capi- talist economy can never be in equilibrium,but remains always in a"dynamic disequi- librium."24 Explaining this restlessness is the key to understanding capitalism. Historically,the dynamics of capitalist growth first became visible in the accelerated economic growth rates starting in the late eighteenth century.Karl Polanyi25 has named this period the "great transformation."While the dynamics of capitalism can be addressed in highly abstract form by analyzing the processes of capital accumulation, the sociologically more telling matters for examination are found on a less abstract level:Through what practical processes does capitalism produce its continuous dynam- ics,which led to unprecedented growth over the past 200 years but also recurrently to sharp economic crises?To address this question I take up-and amend-a categoriza- tion recently introduced by Wolfgang Streeck,26 which distinguishes between four core activities underlying the expansiveness of capitalism:creativity (innovation),credit, commodification,and competition.27 I call these elements the four Cs of capitalism. The four Cs of capitalism are institutionally anchored practical processes constitut- ing the dynamics of the capitalist system.28 Bringing the four Cs to the forefront of an analysis of capitalism does not imply that they would appear only in capitalism or even only in contemporary capitalism.Rather we can understand capitalism as a system that unfolds through the expansion of the four elements.29 Making the four Cs of capitalism the cornerstone of analysis mirrors approaches in political economy analyzing innovation systems,the financial system,processes of "land grabbing,"and competition regimes.However,unlike the macro-oriented Downloaded from pas.sagepub.com at Shanghai Jiaotong University on February 4.2015Beckert 327 showing the role of expectations in their operations. In their historical development, capitalist societies succeeded increasingly in the development of institutional and cultural capacities that allowed for the unfolding of expectational structures condu￾cive to the expansion of the four Cs of capitalism. At the same time, the economy also became more fragile because of enlarged interdependencies in an increasingly global economic system and the associated expansion of cognitive demands. Crises can be understood as the sudden shift of prevailing expectations.23 In the conclusion, I will argue that the perspective developed provides the basis for a microfoundation for understanding the dynamics of capitalist economies, which offers an alternative to rational actor theory and behavioral economics. The Four Cs of Capitalism What is capitalism? Capitalism can be defined as an endemically dynamic economic system in which the production of goods and services is motivated by expected profits, materializing in market exchange. What distinguishes capitalism from all other eco￾nomic systems is its need to grow—it can stabilize itself only by continuously under￾mining its own historical forms in the relentless search for new profit opportunities. By growth, I refer to the increase of the value of goods exchanged in the market sphere. The need to grow emerges on the actor level from the goal of profit maximiza￾tion, on the firm level from economies of scale, on the level of the economic system from the credit-based financing of investments, and on the societal level from order producing effects of wealth increases. Because of its inherent need to grow, the capi￾talist economy can never be in equilibrium, but remains always in a “dynamic disequi￾librium.”24 Explaining this restlessness is the key to understanding capitalism. Historically, the dynamics of capitalist growth first became visible in the accelerated economic growth rates starting in the late eighteenth century. Karl Polanyi25 has named this period the “great transformation.” While the dynamics of capitalism can be addressed in highly abstract form by analyzing the processes of capital accumulation, the sociologically more telling matters for examination are found on a less abstract level: Through what practical processes does capitalism produce its continuous dynam￾ics, which led to unprecedented growth over the past 200 years but also recurrently to sharp economic crises? To address this question I take up—and amend—a categoriza￾tion recently introduced by Wolfgang Streeck,26 which distinguishes between four core activities underlying the expansiveness of capitalism: creativity (innovation), credit, commodification, and competition.27 I call these elements the four Cs of capitalism. The four Cs of capitalism are institutionally anchored practical processes constitut￾ing the dynamics of the capitalist system.28 Bringing the four Cs to the forefront of an analysis of capitalism does not imply that they would appear only in capitalism or even only in contemporary capitalism. Rather we can understand capitalism as a system that unfolds through the expansion of the four elements.29 Making the four Cs of capitalism the cornerstone of analysis mirrors approaches in political economy analyzing innovation systems, the financial system, processes of “land grabbing,” and competition regimes. However, unlike the macro-oriented Downloaded from pas.sagepub.com at Shanghai Jiaotong University on February 4, 2015