A comparative analysis of six social democratic governments, Social Democracy in Power has two central theoretical ambitions. Firstly, it offers a typology of social democratic adaptation to recent socioeconomic changes in advanced industrialized countries. Secondly, it reveals the existence of some fundamental policy trade-offs inherent to such adaptation.

Drawing on Peter Hall's distinction between programmatic objectives and policy instruments (“Policy Paradigms, Social Learning, and the State: The Case of Economic Policymaking in Britain,” Comparative Politics 25 [April 1993]: 275–96), the authors define three levels of intensity in social democratic reform: traditional (Germany and France), modernized (Sweden and Denmark), and liberalized (the Netherlands and the United Kingdom). In the modernized cases, social democrats used new policy instruments to implement traditional ideologies and were relatively successful in policy outcomes, ranging from employment and equality to fiscal health. The liberalized social democrats went further by abandoning old social democratic goals, with mixed outcomes. Finally, the traditional cases stuck to both old policy instruments and programmatic ideals, and they emerged with the worst performance both economically and socially (pp. 227–33).

On the basis of this mixture of successes and failures across cases, the authors argue that there are inherent conflicts among a trio of objectives: fiscal prudence, tax competition, and redistribution. Similar trade-offs exist among poverty reduction, job creation, and tax competition. While modernized social democrats fare worse in tax competition, they are more successful in eliminating social misery and creating employment. By comparison, both the liberalized and traditional cases are more internationally competitive in taxation, but are less successful in social protection and employment, respectively (pp. 234–36).

In revealing the presence of these fundamental value trade-offs, the book has made a major contribution to theories of social democratic governance. By emphasizing the logical incompatibility of economic and social objectives, the book opens up intriguing questions about the goals that center-left parties will choose to keep or abandon, and under what conditions. These are theoretical proposals with enormous potential because they directly extend the influential logic of “trilemma” in the service economies (Torben Iversen and Anne Wren, “Equality, Employment, and Budgetary Restraint: The Trilemma of the Service Economy,” World Politics 50 [July 1998]: 507–46). The original trilemma focuses strictly on trade-offs in the labor market, among wage, equality, employment, and fiscal soundness. From this theoretical perspective, it is an important step forward for the book to show that a combination of job creation and balanced budget creates difficulties not only for achieving wage equality per se but also for any attempt to reduce income inequality through postwage strategies, such as taxes and social security transfers. Even a straightforward reduction of poverty, which can be achieved without major effect in reducing inequality, becomes unfeasible unless governments are willing to abandon either job creation or some aspects of fiscal conservatism.

With these policy trade-offs proposed, however, the authors face the inevitable burden of further explaining why different social democratic governments made differing choices under the constraint of such trade-offs. They argue that social democratic strategic choices are strongly conditional on the party's general reformist orientation (traditional, modernized, or liberalized). In turn, the nature of such reformist orientation is determined by what the authors refer to as “opportunity structures” (pp. 23–39) in the given country. In justifying such arguments, they encounter more serious difficulties.

The traditional, modernized, and liberalized categories of social democratic reformism appear to overlap with, respectively, the contribution-based, tax-financed universal, and means-tested welfare regime typologies developed by Gøsta Esping-Andersen (The Three Worlds of Welfare Capitalism, 1990). As Paul Pierson (“Coping with Permanent Austerity: Welfare State Retrenchment in Affluent Democracies,” in Paul Pierson, ed., New Politics of the Welfare State, 2001) pointed out, difficulty for welfare retrenchment increases as the constituency of benefit programs broadens and interests become more entrenched. Since the constituency for means-tested programs is narrowest, it is unsurprising that governments in means-testing welfare regimes (such as the UK) implemented drastic reforms. By contrast, contribution-based social programs are available for most of the working-age population and, being funded out of payroll tax, are treated as deferred wages. Cutting such programs triggers the strongest resistance, and naturally governments in contribution-based regimes (such as Germany and France) are most constrained in their options. Finally, the Scandinavian cases have universal programs, but the income-tax-based financing structure weakens beneficiary's proprietary claims on entitlement, and so the extent of welfare reform is intermediate. In short, the typology proposed by the book does not advance entirely new theoretical insight, and furthermore, somewhat suffers from the lack of a causal mechanism (based on program constituency) as elegant as that present in the original Esping-Andersen typology.

The authors suggest that differences among the three reformist orientations can be traced back to differences in opportunity structures, which include the centralization of party organization, strength of relationship between unions and social democrats, the nature of party competition, presence of veto points, and finally the historical legacy faced by social democrats upon entering power (pp. 237–51). This concept of opportunity structure is very broadly defined, to the extent that it is difficult to determine what factors can be excluded from consideration. This, in other words, is conceptual stretching (Giovanni Sartori, “Concept Misformation in Comparative Politics,” American Political Science Review 64 [December 1970]: 1033–53), which increases the difficulty for empirical measurement and verification. Consequently, while this thesis of opportunity structure is purported to be the book's core causal explanation, it leaves the reader unsure about which institutional or strategic factors are more, or less, important in conditioning social democratic choices.

Among the panoply of elements incorporated under opportunity structure, some are long established in the literature, such as veto points, welfare regime types, and party organization, where the book primarily reiterates existing arguments. Two other elements have major potential for theoretical innovation: party–union ties and party competition, but here the book's arguments are somewhat partially developed. While it is undoubtedly true that social democrats can be constrained in their actions by strong ties to the unions, the encompassing nature of unions is even more important. When union federations cover a sufficiently broad segment of the labor movement, they internalize much of the cost of unproductive behavior, and hence will rationally refrain from exploiting their leverage over social democratic parties (Mancur Olson, The Logic of Collective Action: Public Goods and the Theory of Groups, 1965). The book does mention this logic in passing, and it would have made its case much stronger by offering a deeper theoretical and empirical treatment of this issue. Similarly, as competition in the party system intensifies, parties move away from their core constituency toward the median voter (Ian Budge and Dennis Farlie, “Party Competition: Selective Emphasis or Direct Confrontation?” in Hans Daalder and Peter Mair, eds., Western European Party Systems: Continuity and Change, 1983). Therefore, social democrats are expected to have greater leeway for reform in more competitive party systems. The authors could have spelled out this theoretical principle more clearly, and their empirical cases on party competition do not seem to fit this general prediction very well.