Why have neoliberal labor market policies survived the 2008 financial crisis? It cannot be because of their success.

There is mounting evidence that measures like restraining European workers’ wages are not effective ways of generating stable economic growth. Likewise, converting social-democratic welfare states into “workfare” systems has inflicted large quantities of human misery, but without any real success in countering unemployment.

In a recent paper, we argue that the financialized nature of current European political economy has pushed governments to pursue policies which are hostile to workers’ interests, even when these may disrupt stability and growth. By “financialization,” we mean the increased importance of financial markets in regulating global capital flows and the growing interlinking of financial activity with the productive economy.