The great unsung hero of the global economic and financial crisis was the welfare state. This is the premise for Anton Hemerijck and Robin Huguenot-Noel's book. Using a wealth of data for macroeconomic performance and labour market participation, they underline how important social programmes were in underpinning economic resilience. This positive contribution of the welfare state explains not only why many northern European countries did better than their southern neighbours but also why parts of Europe – despite the travails of that continent's sovereign debt crisis – outperformed the United States. And, if the welfare state underpinned economic resilience during the economic and financial crisis, it played an even more important role in stabilizing economic performance during the Covid-19 pandemic. The conclusion to draw from this experience is not that everyone should embrace a European-style welfare state but that they should at least give fresh consideration to what the welfare state represents.

This premise is only the start of the argument. What follows is a subtle enquiry into the enduring significance of traditional claims about the trade-offs politicians must face between equity and efficiency, the longer-term financial viability of social safety nets, the rigidity of welfare state institutions and the interaction between different “worlds of welfare” – as Gosta Esping-Andersen famously characterized them – and the macroeconomic paradigms in which they are embedded. Along the way, Hemerijck and Huguenot-Noel make three fundamental observations.

Their first is that the rules of thumb that politicians use when talking about welfare states have remained much the same over the past three to four decades but the institutions themselves have changed in important ways – and so have the societies in which they operate. The potential for cognitive dissonance in this context is manifest.

The second observation is that the family resemblances between different countries that Esping-Andersen captured so effectively in the early 1990s have not survived this recalibration; some similarities remain between some countries – such as Italy and France, for example – but many have faded away. Here, again, it is hard to see how the old rules of thumb make sense.