This chapter defends two related theses. The first is that, if certain institutional conditions are absent, economic policies will follow an unanticipated path, with consequences for employment, wages, and social policies that will contradict the interests of the government and its initial support coalition. To quote Scharpf (1991: 161), “To be successful, an economic strategy must satisfy two requirements. It must be appropriate to the (constantly changing) economic conditions that actually obtain, and it must also be feasible under existing (but equally changeable) institutional arrangements.” There are no universal blueprints that can produce similar effects whatever the institutional setting; and it is obvious that governments can hardly implement policies under conditions of their own choosing. Unexpected outcomes and goals that turn out to be contradictory will force governments to make difficult choices. One of the lessons of the Spanish experience is that, besides the general difficulties faced by social democracy, specific conditions made it particularly difficult to successfully combine wages, jobs, and redistribution.

Our second thesis is that if unemployment is high, perhaps as the unintended consequence of the economic policies of the government, then traditional policies of income maintenance and passive protection, focused on the main household provider, will not be easily replaced by alternative ones. In these circumstances, proposals for welfare policy reform will be incompatible with the demands of crucial social democratic constituencies, and governments of such orientation will have no incentives to carry them through, even at the cost of other preferences.