The 2008 financial crisis hit few places harder than the Euro periphery. Faced with high levels of public debt, Portugal, Italy, Ireland, Greece, and Spain were each compelled to implement harsh austerity reforms. Yet despite this common policy response, the recoveries have shown significant divergence. In particular, Ireland seems to have managed to succeed economically in a way that the other peripheral countries have not. The prevailing narrative is that Ireland’s recovery from the crisis is due to “austerity” and improved “cost competitiveness.” Drawing upon theories from the study of comparative capitalism we challenge this narrative, and argue that the Irish recovery is an outcome of a state-led enterprise policy aimed at nurturing a close relationship with corporate firms from Silicon Valley. Using qualitative and quantitative investigation we find evidence that this state-led FDI growth model, rather than austerity induced competitiveness, kick-started Ireland’s recovery from crisis. As Ireland is a critical case for the “success” story of austerity in Europe, our findings represent a significant challenge to the politics of adjustment. It suggests the strategies of business-state elites, and not simply the workings of electoral coalitions, explains the politics of adjustment in advanced capitalism.