Conclusion: the Contingencies of Policy Innovation Domestic welfare reform throughout the 1990s marks distinctive, and sometimes successful, responses to the massive policy challenges ahead, and we would expect the momentum to continue. In contrast to the view of Europe as»sclerotic«, we are witnessing a dynamic and distinctly»Eu­ropean« type of reform process. It is a process that continues to adhere to deep-seated commitments to equity and solidarity, to the belief that so­cial protection enhances efficiency, and to institutional preferences for ne­gotiated rather than imposed change. It is striking how many domestic reforms have been enacted in the past decade and how little they followed the textbook neo-liberal prescrip­tions. Nonetheless, recent eu initiatives have all been couched in terms of the idea of»social protection as a productive factor«. Looking back on past policy experience, one can easily detect a significant shift from a nor­mative to a cognitive discourse in legitimizing the welfare state, from a social justice and decommodification perspective to one of emphasizing the productive double bind between social cohesion and economic com­petitiveness. The European reform experiments are replete with contingencies, pol­icy failures, coordination and implementation problems and, obviously, shifts in the balance of political and economic power. The trial-and-error nature of European social reform means that attempts to solve problems in one particular policy area may, through a dynamic of spill-over effects, create problems in neighboring policy areas. New problems trigger yet another search for new solutions, both horizontally(across policy areas) and vertically(between different layers of governance). Since the mid­1970s, macroeconomic instability stimulated a learning process through which the hard currency emu was established. The imperatives of mone­tary integration put pressure on systems of industrial relations, leading to new adaptations in wage bargaining. New bargaining procedures, in turn, encouraged a search for more active labor market policies, as well as»activating« social security provisions. And with the rise of services and female employment occurred a reorientation of policy. Last but not least, steps are being taken to make pension systems fair and sustainable in the face of population ageing. Politically, most of these sequential stages of bounded policy innovation were outcomes of lengthy processes of(re-) negotiation between political parties, governments and often also the so­cial partners. ipg 4/2002 Hemerijck, European Social Model(s) 63