Book Review: Cornelia Woll, The Power of Inaction: Bank Bailouts in Comparison
| Author | Liam Stanley |
| DOI | 10.1177/1478929916666787 |
| Published date | 01 February 2017 |
| Date | 01 February 2017 |
| Subject Matter | Book ReviewsComparative Politics |
Book Reviews 117
succeeds marvellously in the first. The book
offers a welcome review of the recent literature
on the political and institutional drivers of wel-
fare reform. The later chapters, for instance,
specifically highlight the original insights –
many of them first proposed by Vis herself –
which the Kahneman/Tversky prospect theory/
loss aversion framework can bring to the
explanation of political actors’ reactions and
attitudes.
The book’s unifying theoretical lens, or
organising logic, is the thesis that reform and
change, not stasis punctuated by the occasional
shock, have always been the true state of nature
of welfare states in capitalist societies. Reform
is the rule, not the exception. And the best way
to analyse it is with what the authors call an
‘open functional approach’. This essentially
boils down to the plausible and refreshingly
positivist idea that ‘objective’ (not perceived or
constructed) pressures force policymakers to act
– but mental models determine how they act.
Functional pressures are thus seen as pri-
mary drivers of welfare reform politics.
Whether exogenous (economic shocks, glo-
balisation) or endogenous (population ageing,
family and life pattern changes, post-industrial
risks), they force powerholders to do some-
thing or risk seeing the welfare architecture
disintegrate. But what they do then depends on
the ideas that happen to be hegemonic: these
function as selective filters for reform choices.
Using this loose framework, the authors
competently walk the reader through the vari-
ous drivers, actors, institutions and modes of
welfare politics. Van Kersbergen and Vis dis-
tinguish five main modes of welfare reform
(retrenchment, adaptation, recalibration,
restructuring or dismantling, and policy drift)
and four main welfare state logics (modernisa-
tion, state building, need satisfaction and risk
reapportioning, class compromises and redis-
tribution). They formulate comparative
answers to the big theoretical questions of why
there are different welfare state regimes and
what welfare states actually do. And they
survey the main external and endogenous
pressures on welfare states.
All in all, this is a masterfully written text
on comparative welfare state politics. It is an
ideal choice for graduate courses as well as an
accessible starting point for researchers from
other fields looking for a state-of-the-art work
on comparative welfare state politics.
Pieter Vanhuysse
(University of Southern Denmark)
© The Author(s) 2016
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DOI: 10.1177/1478929916676745
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The Power of Inaction: Bank Bailouts in
Comparison by Cornelia Woll. New York:
Cornell University Press, 2014. 224pp., £19.95
(h/b), ISBN 9780801452352
The collapse of Lehman Brothers in 2008 was
a pivotal event. For many political scientists, it
marked the moment in which a crash in US
subprime mortgage markets transformed into a
global financial crisis. For some, Lehman
Brothers had to fall in order to send signals to
the financial industry and avoid creating a
moral hazard. Yet within months of the col-
lapse, and owing in part to the global implica-
tions of Lehman’s fall, a whole host of states
had created bailout plans for their financial
industries. These bailout plans varied consider-
ably in size, type, success and function. In The
Power of Inaction, Cornelia Woll asks a simple
question: why was there so much variation?
Woll argues that, as a form of financial cri-
sis management, bank bailouts can be likened
to a game of chicken: both the state and the
financial industry have the wherewithal to bail
out troubled entities, but given the incredible
costs in doing so, neither party wishes to yield
first. And in certain situations, like Lehman’s,
this can lead to disaster in which both actors
essentially lose. But, for a game of chicken to
even work, you need two coherent sets of
actors. The most unbalanced and finance-
friendly bailouts, Woll demonstrates, therefore
emerged in those situations where the finance
industry was capable of refusing to participate.
Generally speaking, the financial industry’s
‘power of inaction’, that is, an unwillingness or
inability to collectively organise, meant that
the state was left to pick up the bill for these
important interventions.
This argument is unpacked and demon-
strated through a series of three dual case
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