The author examines the means used to address this loss of capacity at the EU institutional level, identifying an ‘institutionalized jagged balance’ between supranational ‘negative integration’ measures and a far weaker and predominantly intergovernmentally based ‘positive’ (‘market correcting’ system of EU level regulation) attempts at integration in the social and environmental policy area. Scharpf concludes that a ‘positive’ strengthening of EU level institutions and policy capacity to deal with issues of the welfare state and loss of policy capacity is currently an unrealistic path. Instead, Scharpf envisages an improvement in states’ problem-solving capacity as well as political legitimacy, which must be based on an improved combination of the choices and roles left to be played by the national welfare states. At the same time, attempts must continue to rebalance the EU’s competition policy and market- building capacity with concerns for the preservation of welfare state functions.

Perhaps inconsistently, Scharpf envisages a surprisingly large potential for an expanded role for the European Court of Justice and the European Commission which appears to be at some odds with the need also identified to expand democratic legitimacy to political processes and public policy-making.

The book is well written and argued, analytic as well as policy relevant. For those familiar with Scharpf’s previous work, the book confirms his analytical strengths and features various ideas from his recent publications, such as his approach to the economic analysis of labour markets and his ideas on competition among regulatory systems, as well as the application of his ‘actor-centred institutionalist’ model.

Overall, the book is an important contribution to the literature on governance in Europe as it accounts for conditional changes faced by states when formulating welfare policies and accepts the need to consider far-reaching changes in public policy-making.