A growing consensus among many observers of Western European politics has developed in recent years that, in certain countries, national level, consensus‐based political bargaining arrangements involving representatives of organized capital, trade unions, and the state are giving way to more sectorally‐based, conflictual forms of relations. These developments suggest an overall decline in the efficacy of national‐level corporatist institutional structures in the liberal democracies of Western Europe. This article contends that neither of the two general theoretical approaches to the study of corporatism ‐ the liberal model of the “neocorporatist state” (which fails to acknowledge the potential for serious system‐threatening instability within corporatism) nor the Marxist model of corporatist “political structures” (which incorrectly predicts labor‐generated corporatist instability due to inevitable rank‐and‐file discontent with the policy outputs of corporatist forms) ‐ can account for this current wave of macro‐corporatist instability and decline. In response to this theoretical impasse, this article develops a capitalist‐centered explanation for the declining significance of corporatist forms. Business interests, it is maintained, may no longer be viewing corporatist arrangements as beneficial due to certain domestic structural economic changes and to transformations in