The crisis of the real economy that started in 2008 could be one of the rare open windows of opportunity for welfare state reform. Did government use the crisis for major changes with regard to the size and the structure of the welfare state? Comparing the democracies of EU and OECD, the paper finds little evidence that the crisis of 2008/2009 triggered major policy innovations such as the crisis at the end of the 19th century and the crisis of the 1930’s. There is also little evidence that crisis reactions varied by domestic political power distributions or institutions. There is strong evidence that after two years of demand management governments converged towards austerity with muddling through as the basic procedural idea underlying policy design. There is also little evidence that in the course of incremental reform emphasis shifted from ‘old’ to ‘new’ social risk policies. I argue that this was a bad crisis that could not be used for policy innovation since alternative policy-options did not exist due to lack of resources and lack of alternative policy ideas.
