The Adaptive Capacity of the Continental Welfare State

Is the welfare state fit for the 21st century? This question has haunted European policy-makers and researchers for over a decade. Sluggish growth and weak job creation around the turn of the new millennium has not only given way to a fierce ideological battle between different socio-economic ‘models’, triggering political strife and separating antagonistic advocacy coalitions – but also contributed to a strand of analytical literature pointing out the structural impediments to ‘modernize ‘ Continental European and Mediterranean welfare states and make them both more employment friendly and sustainable (see e.g. Scharpf and Schmidt 2000). The Bismarckian version of the European social model was pitted against a false stereotype of the ‘Anglo-Saxon ‘ model of capitalism , allegedly a ‘free market without a safety net’, producing high levels of poverty and inequality, but also against Scandinavian welfare states with universal benefits and strong public services in education, childcare and active labor market policies .

Rather than extrapolating policy recipes from recent economic performance, urging European OECD members to recast their social market economies along the lines of American capitalism , a more illuminating way to understand recent reform dynamics is to contextualize existing social policy repertoires and reform dynamics in the face of the changing economic and technological challenges and evolving social and demographic structures. As shown in the various chapters of this book, the striking intensity and the comprehensive character of social and economic policy reform across the majority of the so-called Bismarckian welfare regimes , including the six founding EU member states of Germany , France , Italy and the Benelux countries, together with the later entrants Spain and Austria as well as the Visegrad countries (the Czech Republic , Slova kia , Hungary and Poland ) and Switzerland , since the mid-1990s, is very much at odds with a prevalent image of a ‘frozen welfare landscape’ in the academic literature. Most important, the substantive extent of welfare redirection across a large number of member states of the European Union (EU ) adds up to the momentum of substantive policy change and goes far beyond the popular concepts of ‘retrenchment ‘ and ‘roll-back’.