The Political Economy of Crisis Recovery

The aftermath of the global financial crisis marked another stress test for welfare states and varieties of capitalism. More than ever before, governments were forced to consider substantial reforms to welfare provision and enact flexibility-enhancing measures in order to improve financial solvency and economic performance. The crash, however, was not only a regionally uneven process in its origins but also led to makeshift or uneven policy responses. As a result, the socio-economic effects of the downturn and political reactions to it varied considerably among countries. Nevertheless, there have been some common trends in outcome measures. These have served to blur the dividing lines between different welfare states and production systems, so vividly captured in the mainstream political economy literature.