Making Markets in the Welfare State; The Politics of Welfare State Reform in Continental Europe


Making Markets in the Welfare State Jane Gingrich Cambridge : Cambridge University Press ( 2011 ), 288 p ., ISBN 978-1-107-00462-7

The Politics of Welfare State Reform in Continental Europe Silja Häusermann Cambridge : Cambridge University Press ( 2010 ), 296 p ., ISBN 978-0-521-18368-0

Welfare state reform continues to fascinate scholars. How is it possible that such a popular thing as the welfare state can undergo such comparably dramatic changes as have materialized the past decades? The historical institutionalist approach of Pierson, Thelen, and Hacker, among many others, suggests that slow-moving alterations at the margin may eventually sum up to substantial policy shifts over the long run. ‘Cumulative, but transformative change’ is the catch-phrase of the past ten years in much of the academic community.

More recently a dawning realization is emerging that the intense focus on institutions and ever so gradual change may be too much. For one thing, there is a definite lack of agency as the institutionalist approach currently stands; or rather, a lack of a theory of agency since, of course, the hundreds of institutionalist case studies, which have seen the light of day the past two decades, all include descriptions of what different actors have done and said. Related to this, there has been an unfortunate tendency to mess up different explanatory factors since making institutions endogenous to the analysis very often ends up turning both the interests of actors as well as their ideas into aspects of these institutions. Institutions determine both interests and ideas – and vice versa in a process of positive feedback. Some might say that this is how the world looks like and it is artificial to simplify it; others will argue that it is the task of the researcher to reduce complexity in order to achieve any real insights at all. If you belong to the latter category, as I do, you will find that the institutionalist approach in its present form is now at a dead end.

The two new books by Gingrich and Häusermann help bring the literature forward by not least tackling the first issue, the one of agency. Both books are well-written and highly recommendable – and I am sure they will find a wide audience; certainly they deserve to do so. Gingrich analyses the politics of market initiatives with regard to education, health, and elderly care in England, Sweden and the Netherlands. Hers is a classic in-depth case study approach with a well-spring of empirical details, which will interests everybody engaged with these policy areas or countries. Häusermann studies pension reform in France, Germany, and Switzerland. She relies on a novel methodological approach where the policy positions of the political actors have been coded in order to facilitate quantitative analysis of coalitional dynamics. Learning about this new approach is in its own right a reason to read the book.

Häusermann’s take on the issue of agency is to posit that the macro-economic and demographic changes the past few decades have altered the structural basis of the key political actors – mainly parties, unions, and employers’ associations – in a way that opens up an avenue for new coalitions to form. Coalition formation is further aided by the multidimensionality of welfare reforms in the current day and age. Since reforms come as packages, i.e., dealing with multiple issues simultaneously, there may potentially be something for everyone.

Let me highlight the most important issue where I am a little critical of the book, namely the issue of power. The book assumes, but does barely discuss, that the social partners are important for the policy process. The claim is that without a big or powerful enough coalition, reforms will not be enacted. But why is the consent of the social partners relevant? And when is there enough support from the social partners and/or parties to warrant the conclusion that a coalition has been formed with enough muscle to force through reforms in the face of vocal opposition? How can the argument be falsified? Häusermann does in my reading not provide a theoretical yardstick independent of the empirics presented. There is therefore a constant risk (and feeling) in the analysis of post-hoc reasoning: a coalition was successful because any given number of actors supported a reform that ended up being passed by parliament.

Gingrich spends much time deriving explicit hypotheses about what different parties are expected to do. The theory is highly elaborate. Gingrich argues that the Left will implement market reforms in order to protect the legitimacy of the welfare state, whereas the Right will implement market reforms to undercut the welfare state. She also presents an impressive discussion of different market forms, which should inspire many welfare state researchers, and relates it to the preferences of the parties. It is especially in the combination of market types with partisan preferences that Gingrich breaks new ground since some of the points about the partisan preferences have also been made by other authors (Michael Baggesen Klitgaard in particular, but also Fiona Ross and myself). The book is analytically more daring than Häusermann’s in the sense that it is easier to test on other cases. I hope that either Gingrich herself or other scholars will do just this in the future as the argument certainly deserves it.

Clearly, I cannot do justice to all the many details in the two books, but I hope to have made evident that I am a fan. They both provide something that is needed in the welfare state literature: a focus on actors and a downplaying of institutions, not least those related to individual policy programs. The institutionalist approach needs to reinvent itself by paying much more theoretical attention to actors. Häusermann and Gingrich understand this and have shown two different and highly interesting ways of doing so.