National Liberalisms and Economic Crisis: The Politics of Adjustment in Contemporary France and Germany

In distinctive but parallel fashions, France and Germany have both been held up as exemplars of the European social model, which privileges social solidarity and provides workers with robust buffers against the vagaries of the market. In each country, however, the past two decades have witnessed significant labor-market liberalization, even as they have preserved the cores of their vaunted welfare states. That said, the character of reforms in each country has differed significantly, with France accompanying deregulation with an expansion of income-support policies and Germany imposing the distributional burden of reform on labor-market outsiders even as they have shielded insiders from the costs of adjustment. This paper argues that these differences stem from distinctive national conceptions of liberalism, entailing divergent notions of the appropriate scope of state intervention in the labor market and attendant differences in the political role and economic importance of unions and employers' associations. It develops this claim through an analysis of French and German policy responses to the labor-market crisis of the turn of the 21st century and to the post-2007 financial and economic crisis. It concludes that both countries’ responses have been strongly influenced by their distinctive liberal traditions, which have yielded policy trajectories that conventional models of French and German policy making would fail to predict and be unable fully to explain.