This is a multilevel book that deals with a multilayered topic. It operates on three levels, the national, the European, and the global, and has three distinct (albeit related) objectives. The first objective is to chart the courses that the three main types of European capitalism (liberal, state, and managed) have taken since the 1970s, and then to detail the pressures that have pushed these “national capitalisms” along these different paths. The second objective is to bring the European Union back into discussions of the European political economy. This may seem a surprising objective given the vast amount of ink spilled on the EU in general, but Vivien Schmidt attempts to disaggregate the effects of “Europeanization” from those of “Globalization” and thus give a more nuanced account of the pressures facing European states. The third objective is to “bring discourse back in,” thereby giving greater analytic specificity to our understandings of institutional change and economic adjustment. This is a big and bold book.

The Futures of European Capitalism is divided into three parts, each comprised of two chapters. The first two chapters deal with how the pressures of globalization and Europeanization have effected change in liberal capitalist states (exemplified by UK), managed capitalist states (exemplified by Germany), and state capitalist states (exemplified by France) since the economic downturn of the 1970s. For Schmidt, globalization refers to the “expansion of financial markets … and the exponential growth of international trade” (p. 16). Europeanization, meanwhile, refers to “the domestic impact of EU decisionmaking” and institution building (p. 4). Her claims here are complex and nuanced. In contrast to hyper-globalists who see an inevitable convergence on a single best-practice (U.S./UK) model of capitalism, and globalization critics who see persistence of existing models, Schmidt sees globalization and Europeanization as causing profound changes in all three models of capitalism, but sees no pressure towards any single model. Rather, through an investigation of “what has been lost” under globalization, and comparing this to “what has been gained” through Europeanization, she convincingly argues that while each state-type has indeed changed, it has changed within its own limits. The liberal capitalist UK has indeed become even more open, global, and market conforming, more liberal in fact, but this does not mean that state capitalist France has had to follow suit. Instead, France's statist tradition has, with the increasing independence of business from the state, become more “state enhanced,” rather than state directed (p. 141). Similarly, rather than undergoing a neoliberal conversion, Germany's managed capitalism has adopted some liberal elements, but has not converged on the liberal model. Instead, Germany is evolving into a “competitive managed capitalism” where domestic and EU institutions still trump pressures for convergence, but such pressures nonetheless have created adaptations of the original form (pp. 141–45).

Chapter 2 puts more empirical meat on the theoretical bones of this argument by discussing how states adjust and examining the sequencing of reforms. Here, Schmidt's major contribution is to demonstrate how five distinct factors (economic vulnerability, institutional capacity, policy legacies, policy preferences, and discourse) interact within these different national capitalisms (pp. 62–104). The author argues that the timing and sequence of reforms is best explained by examining how these five factors interfere with global and EU pressures. This is achieved through a historical examination of actual policy adjustments undertaken in these three states since the 1970s. In particular, the precise nature of different pathways of adjustment is considered in Chapter 3 as part of a wider discussion of the comparative advantages and disadvantages of each model under conditions of globalization and Europeanization (pp. 134–46).

Given the tight-fitting nature of the first three chapters, Chapter 4 sits rather oddly with the foregoing. Taken together, the first three chapters give an excellent summary of the effects of globalization and Europeanization on European political economies and situates this within the broader parameters of the “varieties of capitalism” debate. Thus, Chapter 4, which deals with the dynamics of adjustment in each of these states, tracks back to the discussions of Chapter 2, albeit with more historical detail. Yet there is a logic in doing so, for this chapter serves as a bridge to the final two chapters of the book that deal with the politics of ideas or, as Schmidt puts it, “discourse.” In Chapter 4 she brings the differences in policy adjustment dynamics across these states to the fore by making a distinction between adjustment dynamics in single-actor systems, such as the UK, and multiactor systems, such as Germany. Stressing this distinction, and combining it with an analysis of the causal properties of discourse, gives real value-added to the analysis at this juncture.

In Chapters 5 and 6, Schmidt usefully argues that in single-actor systems, governments typically engage in a “communicative discourse.” Given the hierarchical institutional configuration of single-actor systems, the object of policy discourse is to convince agents that a particular program is necessary and legitimate. In such a system, policy is formulated at an elite level by political actors and communicated to the wider public. In contrast, in multiactor systems, policy is formulated by a multiplicity of policy actors. Consequently, a coordinative discourse that seeks to make agreement among a variety of policy actors possible so that reform can take place becomes more important. Though each system needs both coordinative and communicative discourses to make reform happen, the differing institutional configurations of multi- and single-actor systems “select” for different discursive frameworks to both legitimize and make the case for reform (pp. 231–39). For Schmidt, discourses are not post hoc rationalizations; they are instead the very essence of making policy reform, and wider institutional change, possible.

The payoff to making such a distinction is that it allows us to understand why, in multiactor systems such as Germany, early and radical reform is so difficult. Constructing a reformist coordinative discourse that can satisfy numerous policy actors is difficult since it must attempt to encompass, even challenge, a number of different interests and prevailing discourses. The resulting communicative discourse is likely to be less elaborate and, therefore, less persuasive. In contrast, in single-actor systems where the concentration of power is high and policy is formulated at an elite level, the communicative discourse is likely to be elaborate and thus more functional for pursuing radical reforms (pp. 239–43). Chapter 6 substantiates these claims through an examination of the economic reform discourses of the UK, France, and Germany, and goes a long way in explaining the different timing of reforms and the degrees of success each of these states has exhibited over the past 20 or more years.

This is an ambitious book. Read one way, it is an excellent compliment to Peter A. Hall's Governing the Economy (1986). It charts the different paths taken by these states since the period covered by Hall and brings the effects of globalization and Europeanization into the analysis. Read another way, it complements later ideational studies of political economy by developing a “discursive institutionalism” that sees discourse—“whatever policy actors say to one another and to the public … about a given policy program” (p. 6) as an integral part of policy and institutional reform.

If there is a tension in the work, it lies in the depth of its constructivism. Sometimes discourse is seen as transformative of interests and institutions. Yet at other times it plays a distant second fiddle to more “brute material” factors. How Schmidt treats globalization is illustrative in this regard. At points, she makes the case that globalization is an instrument used by politicians to effect change—a “rationale” (p. 13) that seems to suggest that the real sources of policy change lie elsewhere. Similarly, the role of states in authorizing globalization is acknowledged (p. 21). Yet in other places globalization is seen as an “out-there” material force that states simply have to adapt to (even if the numbers provided are sometimes a little underwhelming—see, for example, p. 120, Table 3.3, Inward FDI flows). Globalization, in this voice, is a material crisis that states have to deal with—period.

But such a position sits awkwardly with the main thrust of the argument: how discourse is absolutely essential, not just to make reform happen but to narrate a particular set of economic circumstances as constituting a crisis worthy of reform in the first place. For example, the British economic crisis of the late 1970s was narrated by the governing Conservative Party as a crisis of employment when in 1979 unemployment topped 500,000. By 1983, unemployment neared 4 million and yet this was singularly not seen as a crisis precisely because of the power of the Conservatives' communicative discourse to reframe the same “fact” of unemployment. Schmidt's analytic framework, as elaborated in Chapter 5, is fully capable of recognizing such a “deep constructivism” and indeed does so in its discussion of the failures of neoliberal reforms in France. Yet more often than not, the author chooses not to take this next step, with the consequence that economic forces are given a materiality that the text itself often contests. Given the complexity of these issues and the sheer scope covered, such tensions are probably unavoidable and in no way detract from the many contributions contained therein. The Futures of European Capitalism is an excellent contribution both to comparative political economy and the burgeoning literature on ideas and political change. It is sure to become a standard reference for scholars working in both areas.