Recasting Welfare Capitalism: Economic Adjustment in Contemporary France and Germany (review)

It is one type of challenge to maintain the welfare state in a good economy, but it is quite another to do so in a bad one. In Recasting Welfare Capitalism, Mark I. Vail describes how welfare states make the transition from times of prosperity to dealing with the blows of economic downturns. To explore this occurrence, Vail employs two case studies of an unlikely pair: France and Germany. On its face, one would not normally think of using these welfare states in a discussion of economic austerity, except perhaps, as a cautionary tale to discuss how other countries can prevent having a welfare state like France or Germany.

Conventional wisdom holds that the political economies of these two countries are bloated, sclerotic, and utterly incapable of adapting to an economy that is no longer amenable towards a "welfare without work" culture. Vail, however, says that this perception is misleading, and does a convincing job of explaining why. The problem, he notes, is that too often scholars take a too narrow view in their analysis. "Existing analyses of national models of welfare capitalism are not only overly static; many are relatively myopic, focusing on developments in particular policy and institutional areas without explicating how they relate to shifts in other domains" (p. 6).

In that statement lays Vail's contribution: in contrast, he treats the economic and welfare state changes from prosperity to austerity as varied and dynamic. His explanatory power lies in two concepts: one, by broadening the concept of analysis to welfare capitalism (as he defines it) such that it incorporates more than a single policy or institution. This allows him to expand his argument to both an examination of the French and German welfare state and political economy. Second, Vail examines the impact of austerity on the political process; how different political actors increasingly have more or less influence based upon the economic climate.

The specific time period of analysis is post-1970s, although he does a particularly nice job of providing the historical context leading up to that point (trente glorieuses, Wirtchaftswunder, May 1968, etc.). Overall, Vail finds that the transition to economic austerity in France has translated into what Vail terms "competitive interventionism" where the nonstate actors (corporations, unions) have increasingly played a role in policy reform. In Germany, there has been "conflictual corporatism," where the state has had a stronger role in policy reform. In both cases, he shows that the two countries have, despite perceptions, created a series of reforms.

The attention Vail pays to the political constraints and limitations, and the influence of different administrations on economic and welfare reform is persuasive. In particular, the juxtaposition of the welfare reform styles of Prime Minister Edouard Balladur and Alain Juppé provides a useful illustration of how administrations interact with corporations, unions, opposition parties, and public opinion. These illustrations go a long way in clarifying that the transition from prosperity to managed austerity was a dynamic series of experiments, with the changing hands of government each trying out new ways to revitalize the economy while maintaining social protections.

There is, however, one glaring oversight in Vail's work: the influence of immigration on both countries. This is particularly noticeable as both countries have a sizable immigrant population. While France and Germany brought in foreign employment to re-build postwar and contribute to the development of the welfare state, there is no discussion of guest workers (and later, immigrants) in either country. (To be fair, Vail makes one fleeting reference to immigration (p. 149), but only in addressing disaffected whites and the threat of the right-wing National Front.) This oversight is particularly problematic given that "the architects of the postwar French welfare state tended to equate citizens with workers, they assumed that a system aimed at protecting the latter would ipso facto benefit the former" (p. 39). In Germany, he notes that the state provides additional benefits for citizens...