The three books under review cover, in rich historical detail, the political construction of markets. They range from the constitution and varying effects of markets for welfare state services (by Jane Gingrich), to the domestic and multilateral determinants of industrial reconstruction (by Orfeo Fioretos), and the transitional market building in Eastern Europe (by Dorothee Bohle and Béla Greskovits). Although they differ in case selection and theoretical starting points, they share a conviction that markets are at their core social and political constructions, and that the way in which markets are set up affects distributional outcomes, growth, and power differentials among social actors.

In Making Markets in the Welfare State, Gingrich sets out to correct the misconception that marketization of welfare state services means one and the same thing across contexts. By comparing marketization in health care, education, and elder care in Britain, the Netherlands, and Sweden, she shows that the rules of the new markets differ widely from one context to the other. She discerns two basic dimensions in which welfare markets differ: One is the allocation dimension (how is access to services organized?); the other is the production dimension (who has effective control over the supply?). By cross-cutting these two dimensions, Gingrich arrives at no less than six different types of welfare markets, which vary in their setup, driving forces, and distributional effects.

Why have different markets emerged in different policy contexts? Gingrich argues that this depends on two factors. One is the preexisting access rules of welfare services: Are they organized as uniform systems or as more fragmented and stratified ones? The other is the preferences of political actors when they try to further their constituencies' interests. The author shows that left versus right politics has a great impact, even in marketization processes. The designs of these markets are, to a large extent, an effect of the way in which political actors on the left and the right have been able to mold them according to their constituencies' interests. But they always do this in a policy context where preexisting access rules differ, which means that variations across policy domains within the same polity are just as large as the ones found between different polities. Political actors are often forced to choose “second-best” options as they maneuver the institutional terrain. The conceptualization of welfare regimes is of little help in trying to understand these processes. Gingrich maintains. Instead, she finds a much more complex interaction between policy contexts and political actors.

Although I am largely convinced by Gingrich's arguments and impressed by her meticulous groundwork, I do not think she actually shows the reader how and if these different markets differ in their distributional effects. Access rules are one thing, but the ability to make productive use of such rules differs widely across social strata. What the actual outcomes are, and how they differ from nonmarket allocation, is something that is extremely hard to judge. The author is to be excused for not making any real attempt to do so. But the end result is perhaps a too-benign view of what marketization of welfare services entails. Markets—no matter how they are designed—tend to produce inequality alongside growth and flexibility. I do not believe that the Left will ever be able to design markets that do not produce inequality, although I am convinced after reading Gingrich's book that the extent of such inequality must surely be affected by the construction of particular markets.

Fioretos's Creative Reconstructions takes on industrial reconstruction in post-war Europe, focusing on the three largest economies: Britain, France, and Germany. There are two key respects in which his analysis differs from previous scholarship on the issues. The first is that he takes his starting point in behavioral economics, rather than in rational choice or historical institutionalism. Fioretos argues that while analyses grounded in rational choice theories tend to exaggerate the malleability of institutional configurations, historical institutionalism tends to underestimate it. Behavioral institutionalism constitutes a middle ground, in which institutions are seen as highly malleable, but under conditions inherited from the past. Not least are actors' understandings of the present highly influenced by the institutional histories in question.

The second way in which Fioretos's analysis breaks new ground is his consistent focus on the multilateral aspects of institutional change. He argues that the interplay between domestic and international factors has most often been misunderstood as simply international and global constraints on domestic policymaking. This is far too simplistic, he maintains. National actors try to shape, or at least influence, multilateral agreements and frameworks to their own advantage. Sometimes they succeed, and then multilateralism shores up domestic arrangements. Sometimes they fail, and then multilateralism often becomes a factor in the unraveling of existing arrangements. Institutional change is a multilayered game in which the constraints on policymaking are themselves shaped by politics.

Thus equipped, Fioretos takes the reader on a grand tour of industrial reconstruction in three major European economies from 1950 up to (but not including) the present crisis. It follows successful and botched attempts by various governments to shape the multi-lateral framework in which their economies are embedded. The stories are too rich in detail to be summarized here, but if there is a “master trend” that underlies all of the variety, it would still be something like piecemeal liberalization. However, this liberalization takes different forms across countries and time periods, shaped both by domestic concerns and multilateralism.

Fioretos is quite critical of the influential “varieties of capitalism” (VoC) school, which he sees as too preoccupied with stability and institutional complementarity. Hybrid economies, which contain seemingly contradictory institutional elements, can in fact be both stable and successful, he argues with rich examples from the three national economies at hand.

Fioretos shares VoC's preoccupation with the firm and business at the expense of other social interests, however. “Trade unions” do not even have an index entry, and labor markets and industrial relations are more generally downplayed in the analytical narratives. I think that this is an unfortunate narrowing of focus. Surely the history Fioretos conveys cannot be properly understood without taking into account how mass unemployment broke the backbone of European unions; surely varieties between the three economies are still, to some extent, an effect of the relative power resources of organized labor. It is indeed an interesting sign of the times when a serious analyst like Fioretos feels safe to more or less ignore labor relations as a factor in comparative political economy.

More generally, I think the book's focus on policy learning, adaptive preferences, and strategic adjustments leaves too little room for power differences and distributional struggle. The institutional organization of national economies is not only complex puzzle solving; it is also a brute conflict of interest. The enormously rich and dense analysis provided by the author still leaves room for amendments and improvements.

While the first two books are concentrated on a selection of West European countries, Capitalist Diversity on Europe's Periphery focuses on post-1990 East-Central Europe. Bohle and Greskovits take their starting point in a revised and extended Polanyian framework. Here, the political and social embedding, disembedding, and reembedding of markets are key aspects of societal transformations. The authors share Fioretos's misgivings about the VoC framework and Gingrich's skepticism about the usefulness of the welfare regime classification. Hence, they see little value in trying to discern “liberal” and “coordinated market economies” or new “worlds of welfare” in East-Central Europe. Instead, they launch a multifaceted explanatory framework, where market conditions interact with pretransition economic structures, current state capacities, different forms of nation building, and (perceived) threats against nationhood. The result is an absolutely masterful analysis, sharply argued and beautifully written. I believe it is set to become a classic in the field of transition studies.

Bohle and Greskovits discern two distinct groups of countries, and a third more heterogeneous assembly. The first group consists of the Baltic countries, which have chosen a distinctly neoliberal path, focused on financialized capitalism, on ruthless public austerity, and on (anti-Russian) national identity building. Although the countries differ among themselves, with Estonia as the leader and prime example, they share a development model that is hailed in some quarters as the paragon of market virtue, but which the authors see as highly problematic. The hardship imposed on large sections of the population, especially the elderly, the exclusionary practices against the Russian population, and the fragility of a finance-based economy (fully expressed in the current crisis) are some elements of the not-so-brilliant path of the Baltic region. A party system that seems unable to produce viable political alternatives to current policies and directions adds to the malaise.

The Visegrad countries (Poland, the Czech Republic, Slovakia, and Hungary) have instead emerged into “embedded neoliberalism.” Here, advanced industrial production know-how, a legacy from the communist era that was largely absent in the Baltic countries, has allowed these countries to become integrated into European industrial production chains. They have also all kept a modicum of social protection intact for their citizens, even if this social protection is patchy and geared toward core constituencies—such as retired people—at the expense of the marginalized minorities. All these countries experienced short-lived attempts to build social partnerships, but these efforts eventually floundered and left a modified neoliberalism in place.

Turning to southeastern Europe, Slovenia comes out as the socially most progressive of all the surveyed countries. Only here was it possible to establish a broad neocorporatist, negotiated agreement between key social interests. The result has been a more egalitarian distribution of resources and life chances than in other places, and generally a more inclusionary society. Lately, this accord has unraveled under pressure from both domestic and international factors, and in the financial crisis post-2008 it seems difficult to reestablish corporatist agreements.

The other countries at the southeastern rim have fared less well. Bulgaria, Croatia, and Romania have all been plagued by weak state capacities, which have precluded any concerted action and resulted in a drift into neoliberalism (rather than the determined embrace found in the Baltic countries). Corruption and nepotism have been endemic, and prospects look none too bright. The difference between the former Yugoslav republics of Slovenia and Croatia is instructive of the way in which breaking versus making with the past may have dramatic consequences. The determination to break with all former Yugoslav traditions and the tendency to fill the state apparatus with political appointees have left Croatia with severely limited reform capacities compared to those in Slovenia.

In general, the authors emphasize—in accordance with their Polanyian framework—that a pure market economy is unable to sustain itself. The market always and everywhere needs embedding in institutions and policies in order to avoid becoming self-destructive. They find two broad ways in which policymakers in East-Central Europe have tried to embed market liberalization. One, predominant in the Baltic countries and Croatia, has been to emphasize national identity building in clearly distancing themselves from an imperial past. The other, characterizing Slovenia and the Visegrad countries, has been the provision of social protection from market vicissitudes during the transition. Now, both of these embedding strategies seem largely depleted. The financial crisis has hit all these countries hard, making it difficult to uphold social protection. At the same time, the nation-building legitimation loses force as memories of the imperial past recede and are replaced with pressing concerns about daily sustenance and future prospects.

Current legitimation takes its most perverted form in Hungary, where an openly racist and exclusionary government has caused such democratic infringements, Bohle and Greskovits argue, that in this case “democratic breakdown has become a real option” (p. 258). But in all countries of East-Central Europe, legitimation crises loom large as the shock waves of the financial crisis hit economies and societies that are less than well equipped to deal with the economic and financial ordeal. At the same time, the authors emphasize the often impressive flexibility displayed by many of the countries in question, which may cushion the social consequences of the crisis.

Capitalist Diversity is the only one of the three books under review that was published late enough to take the current crisis into account. This crisis has brutally underlined what is perhaps not emphasized enough by any of the authors, namely, that some markets are more important than others. As pointed out long ago by Fritz Scharpf (in his magisterial Crisis and Choice in European Social Democracy, 1987), markets follow a distinct hierarchy: Financial markets highly affect the conditions for production and labor markets, which in turn create conditions for consumption markets. As a financial tidal wave has swept the European economies, Europeans have been forcefully reminded that finance is at the core of capitalism and that capitalism is a deeply crisis-ridden system. While the fallout from the current crisis will offer social and political science rich opportunities for comparative analysis, as European citizens we would be well advised to hold firmly onto the rail. How European economies and societies are able to deal with the current crisis will differ, and will be affected both by their historical legacies and by their current policy choices. In understanding the former and judging the prospects for the latter, the three books under review—each in its own way—offer excellent food for thought.