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European Social Models From Crisis to Crisis: Employment and Inequality in the Era of Monetary Integration

0 Comments 🕔10.Nov 2015

The crisis of the advanced capitalist world in 2008 that transformed into a sovereign debt crisis which shook the foundations of the European Monetary Union (EMU) has been the subject of many analyses exploring its causes. Remarkably little has been said about its consequences, however, and that is where this collection of essays comes in. Dølvik and Martin have assembled an impressive group of scholars who are sensitive to both the role of history and to the interaction between economics, politics, and society in shaping our current world. The result is a volume that should find a prominent place on our bookshelves and course reading lists.

The rationale for the book revolves around Okun’s famous trade-off between equality and efficiency – that more of one will yield less of the other – and concludes that there is not a lot of evidence for this hypothesis. While this is certainly an important question, it is now somewhat dated (and between finalizing the manuscript and publication of the volume, the International Monetary Fund, the Organisation for Economic Co-operation and Development, the Federal Reserve, and other important international institutions that used to toe this line have come out with considerably more nuanced views). In addition, the target audience of this volume – political scientists, social policy analysts, and heterodox economists – was probably never really taken in by this trade-off argument in the first place. Fortunately, though, Okun’s argument is not the key point of the individual contributions.

Instead, this book examines the way that social models, and in particular employment relations, have fared in the large economies of Western Europe and in some of the more interesting smaller ones. The range is impressive: Germany, France, the United Kingdom, Italy, Spain, Switzerland, the Netherlands, and the Nordic countries. Two comparative studies on the relation between inequality, politics, and the welfare state follow the (often explicitly or implicitly comparative) case studies of countries, and a magisterial roundup concludes the book. All chapters offer a detailed look back to the emergence and underlying logic of the different social models in Europe, to the particular translation of the crisis in those political economies, and to how the effects reflected and changed the prior socio-economic models. In addition, the more analytical comparative chapters by Iversen and Soskice and by Barth and Moene raise a series of important issues on how deep changes in the economy are influencing representative politics and vice versa. The comparative review by Dølvik and Martin is excellent: it can usefully be read first, followed by the relevant country chapters, as part of a seminar exercise, for example. That said, this book also raises two important questions.

European Social Models from Crisis to Crisis is limited to what used to be called (in capitals) Western Europe, and twenty-five years after the fall of the Berlin Wall, that is surprising. There are good reasons to concentrate on the wealthier economies in Europe, of course; but Central Europe’s social model(s) are equally relevant, if only because the new member states started from a different point (and can therefore teach us something about the effect of those legacies in the crisis), and are only marginally smaller, in terms of population, than the old member states. One or two chapter(s) on the crisis and its effects on the dependent economies in Central Europe, with their underdeveloped but often relatively expensive social models against the background of volatile party systems, would have been a useful addition to the west-centric analysis of the book. Perhaps this is an obvious spin-off for a related group of researchers?

In addition, the book’s setup reflects a deep and unresolved tension in contemporary political economy. While the challenges that advanced economies face are increasingly the result of interdependent economic structures, more or less binding common institutions, and the need for more cooperation – namely, EMU as the case in point – both this book and our field of study in general is still dominated by a methodological nationalism in which the nation-state is the default unit of analysis. Again, this makes sense in many ways: the book analyzes social policy, an area which is, even in the highly integrated EU, only marginally influenced by what “Brussels” does (although Dølvik and Martin correctly point out that the Commission’s power grab in response to the crisis implies that social policy has de facto but surreptitiously become part of its competencies). But there is a problem. With the exception of the second, stage-setting chapter, EMU rarely shows up in the analyses; however, if the conclusion of the book is correct – supply-side institutions have very little negative influence on economic performance – the implication must be that macro political-economic regimes matter tremendously in determining the degrees of freedom for individual countries. The Brussels-Frankfurt consensus, which is also a constraint for them, is an integral part of the story, and we need better frameworks for integrating national polices and international policy frameworks. That might well be the second spin-off project that this volume could legitimately spawn.

In sum, this is an impressive volume that intelligently raises and answers a multitude of questions, and which has yet to find robust competition. The book is a must for the library of every political economist, comparative social policy scholar, and historically attuned economist.

Reviewed by Robert Hancké, London School of Economics

European Social Models From Crisis to Crisis: Employment and Inequality in the Era of Monetary Integration
edited by Jon Erik Dølvik and Andrew Martin
Oxford University Press
Hardback  / 464 pages  2014
ISBN: 978-0-19-871796-6

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