¹ Hall, P and Soskice, D, ‘An Introduction to Varieties of Capitalism’ in Hall, P and Soskice, D (eds), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (Oxford, Oxford University Press, 2001)CrossRefGoogle Scholar. The present section draws primarily from this work. There are intriguing connections between varieties of capitalism and the legal origins theory set out eg in Porta, R La, Lopez-de-Silanes, F and Shleifer, A, ‘The Economic Consequences of Legal Origins’ (2008) 46 Journal of Economic Literature 285 CrossRefGoogle Scholar.

² Hancké, B, Rhodes, M and Thatcher, M, ‘Introduction: Beyond Varieties of Capitalism’ in Hancké, B, Rhodes, M and Thatcher, M (eds), Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy (Oxford, Oxford University Press, 2007) 36 CrossRefGoogle Scholar.

³ There is some debate on whether Germany can be characterised as a coordinated market economy today, given the various recent reforms. For affirmative answers, see eg, Carlin, W and Soskice, D, ‘German Economic Performance: Disentangling the Role of Supply-side Reforms, Macroeconomic Policy and Coordinated Economy Institutions’ (2009) 7 Socio-Economic Review 67 CrossRefGoogle Scholar, and P Hall, ‘The Evolution of Varieties of Capitalism in Europe’ and Hassel, A, ‘What Does Business Want? Labour Market Reform in CMEs and its Problems’, both in Hancké, B, Rhodes, M and Thatcher, M (eds), Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy (Oxford, Oxford University Press, 2007)Google Scholar.

⁴ See Goyer, M, ‘Capital Mobility, Varieties of Institutional Investors, and the Transforming Stability of Corporate Governance in France and Germany’ in Hancké, B, Rhodes, M and Thatcher, M (eds), above n 3 Google Scholar, on the differences between investors such as hedge funds and pension funds.

⁵ It should be noted that many industries associated eg with radical innovation may nevertheless contain segments where incremental innovation is more important. See Casper, S, Lehrer, M and Soskice, D, ‘Can High-Technology Industries Prosper in Germany? Institutional Frameworks and the Evolution of the German Software and Biotechnology Industries’ (1999) 6 Industry and Innovation 5 CrossRefGoogle Scholar, who cite software services and platform biotechnologies.

⁶ See Hancké, B, ‘Introducing the Debate’ in Hancké, B, Debating Varieties of Capitalism (Oxford, Oxford University Press, 2009) 5–16Google Scholar for a summary and typology of the main critiques.

⁷ See Phelps, E, ‘Understanding the Great Changes in the World: Gaining Ground and Losing Ground since World War II’ (2006) 1 Capitalism and Society CrossRefGoogle Scholar for a sophisticated account.

⁸ See eg, Schmidt, V, ‘French Capitalism Transformed, yet still a Third Variety of Capitalism’ (2003) 32 Economy and Society 526 CrossRefGoogle Scholar.

⁹ See Hall, P and Gingerich, D, ‘Varieties of Capitalism and Institutional Complementarities in the Political Economy: An Empirical Analysis’ (2009) 39 British Journal of Political Science 449 CrossRefGoogle Scholar.

¹⁰ See Kenworthy, L, ‘Institutional Coherence and Macroeconomic Performance’ (2006) 4 Socio-Economic Review 69 CrossRefGoogle Scholar.

¹¹ See eg, B Unger, ‘Older and Wiser: A Special Report on Germany’ The Economist, 13 March 2010. Streek, W, Re-Forming Capitalism: Institutional Change in the German Political Economy (Oxford, Oxford University Press, 2009) argues at 149–60Google Scholar, in a sophisticated account, that Germany is no longer an organised market economy, although it remains a coordinated one.

¹² The varieties of capitalism account of institutional change is elaborated more fully in Hall, PA and Thelen, K, ‘Institutional Change in Varieties of Capitalism’ (2009) 7 Socio-Economic Review 7 CrossRefGoogle Scholar.

¹³ See eg Hall, above n 3.

¹⁴ See eg B Groom, ‘Employment: Job Losses—The Third Phase of the Crisis’ Financial Times, 5 October 2009.

¹⁵ See Moloney, N, ‘EU Financial Market Regulation after the Global Financial Crisis: “More Europe” or More Risks?’ (2010) 47 Common Market Law Review 1317 Google Scholar for a comprehensive overview of the development of regulation in the EU.

¹⁶ COM (2009) 207.

¹⁷ See eg, S Jones, ‘EU Rules Would See Hedge Funds Go Overseas’ Financial Times, 21 September 2009.

¹⁸ See eg, Majone, G, Dilemmas of European Integration: The Ambiguities and Pitfalls of Integration by Stealth (Oxford, Oxford University Press, 2005) 107 CrossRefGoogle Scholar.

¹⁹ Deakin, S and Sarkar, P, ‘Assessing the Long-Run Economic Impact of Labour Law Systems: A Theoretical Appraisal and Analysis of New Time Series Data’ (2008) 39 Industrial Relations Journal 453 CrossRefGoogle Scholar find that employment protection laws are more likely to be efficiency enhancing for coordinated market economies.

²⁰ Callaghan, H, ‘Beyond Methodological Nationalism: How Multilevel Governance Affects the Clash of Capitalisms’ (2010) 17 Journal of European Public Policy 564, 569CrossRefGoogle Scholar labels this as ‘constrain-thy-neighbour dimension of transnational law’.

²¹ Council Directive 93/104/EC concerning certain aspects of the organization of working time [1993] OJ L307/18, now replaced by Council Directive 2003/88/EC, [2003] OJ L299/9.

²² European Parliament and Council Directive 2008/104/EC on temporary agency work [2008] OJ L327/9.

²³ See eg, A Taylor, ‘Equal Rights for Temps “Disastrous”‘ Financial Times, 20 May 2008. It is instructive to compare the strength of the rhetoric with the fairly limited content of the directive itself, described eg, in Countouris, N and Horton, R, ‘The Temporary Agency Work Directive: Another Broken Promise?’ (2009) 38 Industrial Law Journal 329 CrossRefGoogle Scholar as ‘effectively secure[ing] only minimal rights and protections for agency workers’.

²⁴ See Syrpis, P, ‘Should the EU Be Attempting to Harmonise National Systems of Labour Law?’ [2010] European Business Law Review 143, 144–53Google Scholar for a helpful discussion.

²⁵ Case C-84/94 United Kingdom v Council [1996] ECR I-5755.

²⁶ Ibid, para 46.

²⁷ Ibid, para 47.

²⁸ See eg, Case C-491/01 BAT [2002] ECR I-11453.

²⁹ See eg Wyatt, D, ‘Community Competence to Regulate the Internal Market’ in Dougan, M and Currie, S (eds), 50 Years of the European Treaties: Looking Back and Thinking Forward (Oxford, Hart Publishing, 2009)Google Scholar. For a recent example of a hands-off approach, see Case C-58/08 Vodafone [2010] ECR I-0000, annotated by Brenncke, M (2010) 47 CML Rev 1793 Google Scholar.

³⁰ Case C-217/04 UK v Parliament and Council [2006] ECR I-3771 (ENISA ).

³¹ The competence is described by Moloney, above n 15, 1341 as ‘shaky’. For another pertinent example, see Barnard, C, ‘The Shaky Legal Foundations for Institutional Action under the Employment, Lisbon and EU 2020 Strategies’ (2009–10) 12 Cambridge Yearbook of European Legal Studies 1 CrossRefGoogle Scholar.

³² See in particular, Art 16 TEU and 294 TFEU.

³³ Council Decision 2009/857/EC relating to the implementation of Article 9C(4) of the Treaty on European Union and Article 205(2) of the Treaty on the Functioning of the European Union between 1 November 2014 and 31 March 2017 on the one hand, and as from 1 April 2017 on the other [2009] OJ L314/73.

³⁴ An interesting example is the Alternative Investment Fund Managers Directive proposal COM (2009) 207, which was initially strongly criticised by the UK and the industry. Following a lengthy legislative process that involved numerous compromises, even the Alternative Investment Management Association was able to greet the ‘considerable progress’ that had been made, available at www.aima.org/en/announcements/aima-statement-on-aifmd.cfm.

³⁵ Under the ordinary legislative procedure, a majority of national parliaments can also bring the legislator to consider the issue of subsidiarity before the first reading has been concluded, at which point 55% of the members of the Council or a majority of the votes cast in the European Parliament can reject the proposal forthwith.

³⁶ See generally, Schütze, R, ‘Subsidiarity after Lisbon: Reinforcing the Safeguards of Federalism’ (2009) 68 Cambridge Law Journal 525 CrossRefGoogle Scholar.

³⁷ No federal statue was invalidated by the Supreme Court on grounds of exceeding the remit of Commerce Clause between 1937 and 1995.

³⁸ See Young, EA, ‘Protecting Member State Autonomy in the European Union: Some Cautionary Tales from American Federalism’ (2002) 77 New York University Law Review 1612 Google Scholar for a fascinating comparison. Of course, in practice the political and procedural safe guards have not in the long run prevented the development of an extensive corpus of federal legislation, although one should stress the many differences, such as regarding a common language, between the systems.

³⁹ Lisbon European Council 23 and 24 March 2000: Presidency Conclusions para 37, avail able at www.europarl.europa.eu/summits/lis1_en.htm.

⁴⁰ See also Teubner, G, ‘Legal Irritants: Good Faith in British Law or How Unifying Law Ends up in New Divergences’ (1998) 61 Modern Law Review 11 CrossRefGoogle Scholar on the difficulty of achieving actual convergence even if legislative harmonisation does take place.

⁴¹ See Höpner, M and Schäfer, A, ‘A New Phase of European Integration: Organised Capitalisms in Post-Ricardian Europe’ (2010) 33 West European Politics 344 CrossRefGoogle Scholar for an outline of many of the arguments. See also generally, Scharpf, F, Governing in Europe: Effective and Democratic? (Oxford, Oxford University Press, 1999)CrossRefGoogle Scholar.

⁴² European Parliament and Council Directive 2006/123/EC on services in the internal market [2006] OJ L376/36; European Parliament and Council Directive 2004/25/EC on takeover bids [2004] OJ L142/12.

⁴³ COM (2004) 2, Art 16. For discussion, see eg, K Nicolaïdis and Schmidt, S, ‘Mutual Recognition “On Trial”: The Long Road to Services Liberalization’ (2007) 14 Journal of European Public Policy 717 Google Scholar.

⁴⁴ COM (1995) 655, Art 8. For discussion, see eg, Edwards, V, ‘The Directive on Takeover Bids—Not Worth the Paper it’s Written on?’ (2004) 1 European Company and Financial Law Review 416 CrossRefGoogle Scholar.

⁴⁵ Art 4(2) TFEU.

⁴⁶ A somewhat similar tale could be told about the creation of Council Regulation 2157/2001/EC on the Statute for a European company (SE) [2001] OJ L294/1, where movement was only possible after sufficiently robust employee participation rules had been agreed, finally in the form of Council Directive 2001/86/EC supplementing the Statute for a European company with regard to the involvement of employees [2001] OJ L294/22. The basic model that was chosen preserves existing rights, unless the management and employees agree otherwise. See eg, Edwards, V, ‘The European Company—Essential Tool or Eviscerated Dream?’ (2003) 40 CML Rev 443 Google Scholar.

⁴⁷ For further illustrations, see eg, Johnston, A, EC Regulation of Corporate Governance (Cambridge, Cambridge University Press, 2009) 141–45CrossRefGoogle Scholar for an argument that the difficulties encountered in harmonising corporate governance can be attributed to varieties of capitalism.

⁴⁸ It is also questionable whether the Services Directive would have posed a serious threat to coordinated market economies even in its original format. Its main role would have been to encourage competition in intangible products (services), rather than regulate production.

⁴⁹ See generally eg Barnard, C, ‘Unravelling the Services Directive’ (2008) 45 CML Rev 323 Google Scholar or Snell, J, ‘Freedom to Provide Services in the Case Law and in the Services Directive: Problems, Solutions and Institutions’ in Neergaard, U, Nielsen, R and Roseberry, LM (eds), The Services Directive-Consequences for the Welfare State and the European Social Model (Copenhagen, DJOF Publishing, 2008) 171 Google Scholar.

⁵⁰ Edwards above n 44, 427. Admittedly the margin was very narrow.

⁵¹ For discussion, see eg, Papadopoulos, T, EU Law and the Harmonization of Takeovers in the Internal Market (Alphen aan den Rijn, Kluwer, 2010) 119–39Google Scholar. It has been argued that this is an example of increasing differentiation within the single market more generally. See D Howarth and Sadeh, T, ‘The Ever Incomplete Single Market: Differentiation and the Evolving Frontier of Integration’ (2010) 17 Journal of European Public Policy 922 Google Scholar.

⁵² Bulletin Quotidien Europe, 26 November 2003.

⁵³ See for discussion eg, Barnard, C, ‘Restricting Restrictions: Lessons for the EU from the US?’ (2009) 68 CLJ 575 CrossRefGoogle Scholar and Snell, J, ‘The Notion of Market access: A Concept or a Slogan?’ (2010) 47 CML Rev 437 Google Scholar.

⁵⁴ Case C-212/97 Centros [1999] ECR I-1459. See generally eg, Panayi, C, ‘Corporate Mobility in Private International Law and European Community Law: Debunking Some Myths’ (2009) 28 Yearbook of European Law 123 CrossRefGoogle Scholar.

⁵⁵ Case C-55/94 Gebhard [1995] ECR I-4165.

⁵⁶ See also Johnston, above n 47, 191–95 for a careful discussion of the arguments.

⁵⁷ See specifically from the varieties of capitalism perspective Menz, G, Varieties of Capitalism and Europeanization: National Response Strategies to the Single European Market (Oxford, Oxford University Press, 2005)Google Scholar and Menz, G, ‘Are You Being Served? Europeanizing and Reregulating the Single Market in Services’ (2010) 17 Journal of European Public Policy 971 CrossRefGoogle Scholar.

⁵⁸ See eg, Zumbansen, P and Saam, D, ‘The ECJ, Volkswagen and European Corporate Law: Reshaping the European Varieties of Capitalism’ (2007) 8 German Law Journal 1027 Google Scholar, who criticise the ruling in Case C-112/05 Commission v Germany [2007] ECR I-8995 for its failure to recognise the particular historical circumstances behind the case. See generally on the prospect of ‘quality control’ review of national company laws by the CJEU, Ringe, W, ‘Company Law and Free Movement of Capital’ (2010) 69 CLJ 378 CrossRefGoogle Scholar.

⁵⁹ See Caporaso, J and Tarrow, S, ‘Polanyi in Brussels: Supranational Institutions and the Transnational Embedding of Markets’ (2009) 63 International Organization 593 CrossRefGoogle Scholar for an optimistic assessment of the role played by the CJEU from a social science perspective.

⁶⁰ See generally eg, Snell, J, ‘European Courts and Intellectual Property: A Tale of Hercules, Zeus and Cyclops’ (2004) 29 ELRev 178 Google Scholar.

⁶¹ See eg, Barnard, C, ‘Social Dumping and the Race to the Bottom: Some Lessons for the European Union from Delaware?’ (2000) 25 ELRev 57 Google Scholar.

⁶² See also Höpner and Schäfer, above n 41, 350.

⁶³ For discussion, see Semmelmann, C, ‘The European Union’s Economic Constitution under the Lisbon Treaty: Soul-Searching Shifts the Focus to Procedure’ (2010) 35 ELRev 516 Google Scholar.

⁶⁴ See also Art 9 TFEU cross-cutting social protection clause.

⁶⁵ See The European Convention final report of Working Group XI on Social Europe CONV 516/1/03 REV 1, at para 17. See also C Joerges and F Rödl, ‘“Social Market Economy” as Europe’s Social Model?’ EUI Working Paper LAW No 2004/8 for a pessimistic account.

⁶⁶ Protocol (No 27) on the internal market and competition, which has the status of primary law by virtue of Art 51 TEU. For discussion, see eg, Whish, R, Competition Law 6th edn (Oxford, Oxford University Press, 2009) 51 Google Scholar.

⁶⁷ See generally, Hervey, T and Kenner, J (eds), Economic and Social Rights under the EU Charter of Fundamental Rights: A Legal Perspective (Oxford, Hart Publishing, 2003)Google Scholar.

⁶⁸ See Art 52(5) of the Charter.

⁶⁹ Commission Communication, Towards a Single Market Act for a highly competitive social market economy: 50 proposals for improving our work, business and exchanges with one another COM (2010) 608, 23.

⁷⁰ European Parliament and Council Directive 96/71/EC concerning the posting of workers in the framework of the provision of services [1997] OJ L18/1.

⁷¹ See generally eg, Craig, P and de Búrca, G, EU Law: Text, Cases, and Materials 4th edn (Oxford, Oxford University Press, 2008) 73–74 Google Scholar.

⁷² Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union [2007] ECR I-10779 and Case C-341/05 Laval un Partneri [2007] ECR I-11767. See on these judgments in the light of ‘social market economy’, Azoulai, L, ‘The Court of Justice and the social market economy: the emergence of an ideal and the conditions for its realization’ (2008) 45 CML Rev 1335 Google Scholar.

⁷³ M Monti, ‘A new strategy for the single market: at the service of Europe’s economy and society’ Report to the President of the European Commission (2010) 70, available at ec.europa.eu/internal_market/strategy/docs/monti_report_final_10_05_2010_en.pdf.

⁷⁴ Case C-515/08 Santos Palhota [2010] ECR I-0000 para 53. The Court did not address this argument.

⁷⁵ See generally Snell, J, ‘“European Constitutional Settlement”, an Ever Closer Union, and the Treaty of Lisbon: Democracy or Relevance?’ (2008) 33 ELRev 619 Google Scholar.

⁷⁶ Hall and Soskice, above n 1, 21–22. However, Carlin and Soskice, above n 3, and Hassel, above n 3, are more cautious.

⁷⁷ See eg Majone, G, ‘Europe’s “Democratic Deficit”: The Question of Standards’ (1998) 4 European Law Journal 5 CrossRefGoogle Scholar.

⁷⁸ See eg, in the context of the second Irish referendum on the Lisbon Treaty, L Phillips, ‘Workers’ rights hot topic in Lisbon 2 campaign’ euobserver.com, 31 August 2009.

⁷⁹ See eg, Moravcsik, A, ‘In Defence of the “Democratic Deficit”: Reassessing Legitimacy in the European Union’ (2002) 40 Journal of Common Market Studies 603 CrossRefGoogle Scholar.

⁸⁰ BVerfG, 2 BvE 2/08 of 30/06/2009, paras No (1-421), 249.

⁸¹ See Streek, above n 11, 178–79.

⁸² Hayek, F, ‘Competition as a Discovery Procedure’ (2002) 5 Quarterly Journal of Austrian Economics 9 Google Scholar.

⁸³ Hall and Gingerich, above n 9, 470–73.

⁸⁴ See also La Porta, Lopez-de-Silanes and Shleifer, above n 1, 325; and Johnston, above n 47, 141–45 in the context of corporate governance.

⁸⁵ See Shapiro, M, ‘The Success of Judicial Review and Democracy’ in Shapiro, M and A Stone Sweet, On Law, Politics, and Judicialization (Oxford, Oxford University Press, 2002) 169–70 on the advantages of case-by-case decision-makingCrossRefGoogle Scholar.

⁸⁶ See Callaghan, above n 20.

⁸⁷ See eg P Spiegel, ‘EU Presidents Draft Competitiveness Pact’ Financial Times, 27 February 2011, and G Verhofstadt, J Delors and R Prodi, ‘Europe Must Plan a Reform, Not a Pact’ Financial Times, 2 March 2011.

⁸⁸ Euro Plus Pact: Stronger Economic Policy Coordination for Competitiveness and Convergence, annexed to Conclusions of the European Council 24 and 25 March 2011, available at www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/120296.pdf. A number of non-eurozone countries have agreed to join the pact voluntarily.

⁸⁹ For example, ‘Each country will be responsible for the specific policy actions it chooses to foster competitiveness, but the following reforms will be given particular attention: (i) respecting national traditions of social dialogue and industrial relations, measures to ensure costs developments in line with productivity, such as: review the wage setting arrangements, and, where necessary, the degree of centralisation in the bargaining process, and the indexation mechanisms, while maintaining the autonomy of the social partners in the collective bargaining process.’

⁹⁰ Soskice, D, ‘Macroeconomics and Varieties of Capitalism’ in Hancké, B, Rhodes, M and Thatcher, M (eds), Beyond Varieties of Capitalism: Conflict, Contradictions, and Complementarities in the European Economy (Oxford, Oxford University Press, 2007)Google Scholar.

⁹¹ See Hall, above n 3.

⁹² As emphasised by Streek, above n 11.