In 2008, with the rubble from Wall Street’s collapse still smoldering, pundits on both sides of the Atlantic trumpeted the death of American-style capitalism. In 2010, after the Greek debt crisis, journalists and scholars have been penning obituaries for European social democracy. Meanwhile, Republicans continue to warn that President Obama’s agenda would “Europeanize” the United States.

But what exactly does that mean? Western Europe is hardly a monolith. Taxes are low in Ireland but high in Norway, and labor markets are much more flexible in Denmark than in France. The region has innovation leaders (Switzerland, Sweden) and innovation laggards (Italy, Spain). …