This book is a thorough summary of recent welfare reform efforts in France and Germany. Mark Vail has three important points to make: first, that there has been much change in the welfare states of these two countries; second, that these changes cannot be accommodated within the currently prevailing theories of comparative political economy, as there is neither stasis nor convergence to the model of a minimal state; and, third, that after the 1973 oil crisis both countries moved through a first phase of expansion of the welfare state to accommodate other pro-market reforms (‘socialised marketisation’), to a second phase of using the state to promote the market, including in central areas such as social insurance (‘buttressed liberalisation’ or ‘managed austerity’ in Vail's terms). Opening introductory chapters are followed by a capsule history of the golden age of the French and German welfare states, the Mitterrand experiment and its inglorious end, German reunification and the incorporation of East Germany and a chapter each on labour market reform, social insurance reform, and anti-poverty policies in both countries in the 1990s. The book is based on French and German newspapers and secondary sources. Vail is best on the details of the reforms, showing that in some cases France and Germany have come close to Scandinavian style active labour market policies. He is also excellent on the surprising politics behind these reforms – it turns out that it was the French state that needed to move cautiously and negotiate carefully with unions and professional groups, and it was the German state that found itself moving aggressively and able to impose reforms upon society.

Beyond that, the book is less convincing. Vail criticises other theories of comparative political economy (the ‘varieties of capitalism’ model comes in for particular censure), but has nothing to offer in their place. As he summarises, ‘this book demonstrates that economic adjustment is driven by shifting political dynamics, coalitions, and bargaining structures that vary from one political-economic context to another’ (p. 162). Important in these changes are incentives, interpretations and the new power relations that emerge during crises (p. 162). This is all surely true, but not particularly enlightening. When pressed to identify a lesson from the histories, Vail makes tautological arguments, e.g. that success in welfare reform is a result of ‘authorities’ ability to negotiate the opportunities and constraints’ open to them (p. 131).

Another problem is definitional. Vail asserts again and again that the French and German welfare states have changed greatly, but there is no discussion of what should count as change. Many of these reforms preserve the French and German welfare states at current, expansive levels by reducing the upward trajectory of their growth through neoliberal reforms. Is that change or absence of change? Vail gives only vague adjectives (the models are now ‘fundamentally different’ (p. 7), there has been ‘utter transformation’ (pp. 8–9), France's dirigisme has been ‘completely dismantled’ (p. 9), etc.) in place of analytical precision. This leaves room for an adherent of the varieties of capitalism perspective to see in the changes the preservation of distinct models of capitalism, and rightly so, whereas a neoclassical economist could point out that ultimately the problems are caused for neoliberal reasons (Vail joins such economists in seeing the taxation required by an expansive welfare state as killing jobs) and are leading to a pattern of increasingly neoliberal changes. What was really needed here was a precise definition of the features of the welfare state that we are interested in (for example, the elements that reduce poverty and inequality), and a mapping of whether the two states have been able to preserve those essential features.

Perhaps because of this definitional ambiguity, Vail exaggerates the difference between the pre-1973 and post-1973 versions of French and German welfare capitalism. The French and German states have never been opponents of the market – state interventions in these two countries have always been used to create and sustain the market, and to overcome resistance to the market. French nationalisation, for example, was one of the French left's most bitter disappointments, as the nationalised industries were not used in the interest of workers –rather, they were used to modernise the French economy and to serve as the leading edge of capitalism. The current round of marketising reforms proceeds in a direct line from that earlier period, and any of the phrases – ‘socialised marketisation’, ‘buttressed liberalisation’ – could apply for the whole of the post-war period. And choosing France and Germany as the comparison cases is not particularly revealing. If, as Vail wants to claim, the welfare state is an ‘integral part’ of capitalism (p. 172) – not something opposed to it – then why do welfare states look so different in comparative context, and why are they so much smaller in some countries than others? In the last analysis, choosing two cases that are more similar to each other than to other countries limits the insights.

Despite these weaknesses, Vail's work is a solid and workmanlike investigation into an important issue. Vail powerfully argues that the French and German reform attempts have sustained the unique brand of welfare capitalism born in Europe, and that this recipe may prove successful in the long run. What we really want to know from a book like this is: can the European welfare states survive their decades-long crisis? And on that main question the book offers thoughtful details, showing how the French and German welfare states are managing to implement reforms that have, so far, allowed them to survive – not in their pre-crisis form, but in a form that may still be allowing them to reduce poverty and inequality in their societies. The book is a must-read for any graduate student working on the French or German welfare state, or on French and German political economy more broadly.