Welfare State Research Paper

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The welfare state is a set of government programs aimed at ensuring citizens’ welfare in the face of the contingencies of life in modern, individualized, industrialized society. All welfare states provide direct state assistance to the poor in cash (e.g., social assistance) and in kind (e.g., housing and social services), as well as social insurance against the financial consequences of certain biological risks (illness, incapacity to work, childbirth, child-rearing, old age) and occupational risks (unemployment, accident, or injury). Whereas social assistance—in the United States popularly termed welfare—entails redistribution from the non-poor to the poor, social insurance rarely does so and instead can be understood primarily as redistribution across the individual life course, from periods of employment to periods of inability to work. (Prominent exceptions would be the U.S. public pension system, Social Security, and the German social health insurance scheme, both of which are moderately redistributive across classes.) Usually, this latter type of social protection is available only to persons who have been employed and hence contributed to the relevant social insurance scheme.

In most welfare states, substantial efforts are also made to mitigate socioeconomic inequalities in primary income distribution through secondary redistribution, that is, government spending on social programs funded by progressive income taxation together with tax expenditures (tax deductions for social-insurance or charity contributions, as well as negative income taxation for the working poor). Historically, such reductions in socioeconomic inequality have been pursued to achieve four objectives: (1) to reduce the costs of production for employers, especially through unemployment, health, and pension schemes; (2) to maintain social peace, that is, to forestall both radical unionism within the factory, primarily via accident insurance, as well as threats to private property from leftist or rightist political radicalism in society as a whole; (3) to secure equality of economic opportunity, seen as conducive both to social peace and to economic growth; and (4) to enrich the status of citizenship beyond civil and political equality by including a social dimension, as articulated by T. H. Marshall in 1950. Countries pursuing this goal of social citizenship—with the exception of the United States, virtually all members of the Organization for Economic Cooperation and Development (OECD)—consider equally funded and free public education to be an essential component of their pursuit of equality of opportunity and hence of their welfare state in a broader sense.

Welfare Regimes

Beyond these shared traits, welfare states differ in many dimensions. Early classification schemes of the 1960s and 1970s, such as that of Harold Wilensky, ranked welfare states in linear fashion according to their “generosity” measured in only one dimension, aggregate spending levels. In 1990 G0sta Esping-Andersen’s groundbreaking book The Three Worlds of Welfare Capitalism proposed a new typology based on essential differences among welfare states that are not quantitative but qualitative. He preferred the term welfare regime, which focuses the analysis on the patterns of interaction of institutions governing primary and secondary distribution in the context of a nation’s historically rooted political economy, to the term welfare state, which is typically viewed as working against or independent of market forces. First, welfare regimes differ according to their degree of “decommodification,” or “the degree to which individuals and families can uphold a socially acceptable standard of living independently of market participation” (p. 37); this dimension includes not only the benefit levels but also the eligibility terms and coverage levels of a country’s social welfare schemes. Second, welfare regimes differ in terms of their impact on social stratification, that is, their degree of redistribution, poverty reduction, and income equalization. Finally, they differ based on the priority given to the role of the state, market, and family respectively in protecting against welfare risks. Esping-Andersen’s widely accepted typology distinguishes among three types of welfare regimes: liberal (e.g., the United Kingdom, the United States, Australia), social-democratic (e.g., Sweden, Norway, the Netherlands), or corporatist (e.g., Germany, Austria, Italy). Not only Esping-Andersen but also subsequent research on the “varieties of capitalism” by Peter Hall and David Soskice (2001) have demonstrated that a country’s system of social protection forms an integral part of its political economy; thus a leading field of contemporary welfare research takes this holistic regime perspective, looking for institutional elective affinities between a country’s variety of capitalism (“liberal,” “coordinated,” etc. [Hall and Soskice 2001]) and variety of welfare regime (e.g., Ebbinghaus and Manow 2001).

Liberal Regimes Of the three types of welfare regime, the liberal regimes redistributes income the least. Countries of this type provide minimum benefits to the poor and devote most of their expenditure to social-insurance schemes focused on the middle classes. The public schemes are not intended to be the beneficiaries’ sole source of income in time of need, but instead to be a “safety net,” or one pillar beside the second and third pillars of occupational plans and individual savings. In the liberal welfare world, individual performance in the market is considered to be the primary source of welfare, hence generous tax expenditures subsidize employee benefits and individual savings accounts in the pension and health areas. Citizens’ welfare is commodified: they have weak or no constitutionally inscribed social rights, and high levels of socioeconomic inequality are tolerated. Citizens’ welfare is best guaranteed, in the liberal world-view, through economic growth and opportunity rather than state provision; this is best achieved when minimal state taxation of private wealth fosters maximum investment and when minimal state benefits foster maximum self-reliance. Particularly in the United States, the more generous welfare states of Western Europe are viewed more as hammocks than safety nets, whereas the U.S. social net is seen by most Europeans as a sieve.

Conservative Regimes Conservative welfare regimes redistribute moderately, having as their main goals the preservation of social status achieved in the labor market and the realization of social citizenship rights. They provide equally funded and free public education, moderate benefits to the poor, and generous social-insurance schemes for employed persons, in which benefits are linked to contributions and both are linked to the income level attained. In the conservative welfare world, the family is considered to be the primary source of welfare. Hence both the tax system and social-insurance benefits are designed to support the family breadwinner.

Social-Democratic Regimes Social-democratic welfare regimes redistribute extensively and are by far the most successful in achieving long-term reductions in socioeconomic inequality, particularly across generations, as Walter Korpi and Joakim Palme demonstrate in their 1998 study. These regimes integrate antipoverty and social insurance programs in schemes open to all citizens. The schemes are designed to achieve decommodification, that is, to grant social citizenship—the right of meaningful participation in social life—independent of employment status. The state is responsible for achieving a considerable degree of distributional equality.

Although Esping-Andersen’s typology still prevails in welfare state (or welfare regime) research, it has been criticized for overlooking certain dimensions. First, Ilona Ostner and Jane Lewis (1995) have pointed out that this hegemonic typology fails to account for gender discrimination in welfare states, most of which were based on the now-outdated male breadwinner model. Ann Orloff (1993) has developed a new welfare state typology based on the criterion of whether welfare states reinforce the traditional family system and women’s inferior labor-force position or promote new, equal roles for both sexes. Second, in comparing Esping-Andersen’s ideal-types to specific national experiences, many scholars have found the typology to be based too narrowly on the experiences of Britain, Germany, and Sweden and only partially applicable to other countries. In addition to ongoing debates about the classification of individual countries such as France, Ireland, or the Netherlands within Esping-Andersen’s scheme, scholars have proposed supplementary ideal-types: Francis Castles and Castles and Deborah Mitchell (1993) distinguish an “antipodean” “wage-earners” welfare regime in Australia and New Zealand characterized by minimum wage legislation, compulsory arbitration and a protectionist consensus; Maurizio Ferrera (1996) and Giuliano Bonoli (1997) contend that a distinct Latin rim welfare regime (resembling the conservative one) exists in Italy, Spain, and Greece, where family and informal networks are important suppliers of welfare; Bob Deacon (2000), Nick Manning (2004), and Jolanta Aidukaite (2004) have documented the emergence of a postsocialist welfare regime (resembling the liberal one) in eastern Europe; and finally, some, such as Catherine Jones (1993) and Elmar Rieger and Stephan Leibfried (2003), have investigated and posited the existence of East Asian welfare regimes, based on “Confucian” values.

Historical Origins

As the “logic of industrialization” school correctly observes, the historical origins of welfare state development lie in the consequences of the Industrial Revolution and attendant societal modernization—specifically, urbanization, industrialization, and economic liberalization—in the mid- to late nineteenth century. As Ferdinand Tonnies (2001) explains, these developments uprooted western Europe’s inhabitants from premodern, static communities that had provided for mutualist social protection through the family, community, parish, feudal lord or guild, and thrust them into an individualized, comparatively anonymous urban society in which the satisfaction of basic needs was commodified, that is, had to be purchased with wages from employment. In the early decades of this societal modernization (from the late nineteenth century through World War I [1914-1918]), social unrest, epidemics, slum formation, violent labor conflicts, and radical political movements were rampant. Initially, bourgeois philanthropic associations attempted to mitigate this malaise but within a few decades realized they were overwhelmed. At the same time, the working classes’ sacrifice and service to their states as soldiers in the two world wars earned them sociopolitical recognition and rights in many European countries.

As Walter Korpi (1983, 1993) among others have noted, three factors converged to move political coalitions of bourgeois and working-class parties across Europe to grant workers social and political rights and institute generous welfare-state programs during the period 1918-1949: (1) workers’ newly won political power, organized in Social-Democratic and Labor parties and in some places accompanied by popular uprisings; (2) bourgeois elites’ fear of the political radicalization of impoverished workers as had occurred in the revolutions in Russia (the Soviet Revolution of 1917) and Germany (Adolph Hitler’s ascent to power in 1933)—a fear exacerbated by the Great Depression of 1929 to 1939 and by the witnessing of Hitler’s destruction of the Continent during the five years thereafter; and (3) strong national identities in newly unified nation states, forged and strengthened in the two world wars. Benjamin Veghte (2004) notes that in the United States, where the first two factors were largely absent, the working-class movement was much weaker and unable to achieve social citizenship rights for a variety of reasons. An ambitious welfare state (the New Deal) was introduced during this period, in 1935, but not based on social rights; rather, it largely excluded most of the poor population, such as agricultural workers and southern African Americans. Theda Skocpol’s research (1990) has revealed that the New Deal welfare state was not completely new, but rather followed in the footsteps of a generous Civil War pensions scheme that served millions of beneficiaries (Skocpol 1996). In Britain the Beveridge Report of 1942 highlighted the need for a welfare state to avoid the breakdown of society in the postwar period, and this became the blueprint for the welfare state introduced in postwar Britain.

Public-Private Mix

As noted above, prior to the formation of the modern nation-state, most types of social welfare were provided by collective, private forms of provision such as those offered by feudal hierarchies, guilds, and the church. In the course of urbanization, societal modernization, and the ascendance of liberal political and economic ideology since the late eighteenth century, free-market individualism under-minded these traditional collectivist forms of private welfare provision, creating the modern “social question.” After the mid-nineteenth century, modern collectivist private welfare solutions such as solidaristic union/professional initiatives as well as bourgeois or church-based charitable ventures filled the vacuum, followed by welfare state initiatives from the 1880s in Germany, Belgium, and—since World War I—in most other western nations. In most Western countries, then, since the mid-twentieth century the welfare state has been the primary instrument of welfare provision.

This has not been the case in many non-Western countries, however, nor in several liberal welfare regimes, most notably the United States. Interestingly, most countries with weak welfare states evince high rates of religiosity and associated church-based welfare provision and religiously inspired philanthropy. As Leibfried and Mau note,The history of religiosity in European and other countries which developed strong welfare states shows that the need for religious reassurance in one’s social existence has become less pressing when greater security is provided by the secular institutions of public policy. In other parts of the world, however, where state power has remained weak, the social institutions of religions—for example Islamic charities in Arabic countries, Hinduist castes in India and familial networks in East and Southeast Asia—remained the main provider of social security. (2007, p. xxv)

Secular welfare states may thus be viewed as functional alternatives to religiously inspired and/or organized private welfare provision. Empirically, as Pippa Norris and Ronald Inglehart (2004), and Elmar Rieger (2005) have observed, the revival of evangelical Protestantism in recent decades strongly correlates with the erosion of social security guarantees through the welfare state.

Non-profit, religiously inspired forms of welfare provision are not the only form of private provision to survive and thrive complementarily to and in tension with the modern welfare state. Profit-oriented, market-based provision has done so as well, most strongly in the liberal welfare regimes of Great Britain, Switzerland, the United States, and Australia. These countries were pioneers in private, insurance-based provision, both for individuals and employees. Such welfare provision differs markedly from public provision in both its distributive dynamics (redistributing not across income classes but across the individual life course from economically self-sufficient to risky/dependent life phases) and its financial logic (calculated on actuarial rather than solidarity principles). This realm of social provision, much of which is subsidized by the government in the form of tax deductions (from the government’s perspective: “tax expenditures”), was overlooked in comparative welfare state research until the appearance of Martin Rein and Lee Rainwater’s (1986) pathbreaking analysis of the interplay of public and private welfare provision in OECD countries. Still today, however, most comparative research does not interpret the state-subsidized employee and individual benefits sphere, even though—as Willem Adema (1999, p. 30) and Jacob Hacker (2002, p. 338) have documented—in some countries such as the United States it makes up one-third of (public and private) social spending. Even Esping-Andersen’s (1990) research on the liberal welfare regime type, which theorizes the interaction between the state and the market, overlooks the magnitude and significance of private provision, thus misconstruing the U.S. system as “residual” and “means-tested.” Adema (1998, 1999, 2005) and Hacker (2002) have corrected this misinterpretation, pointing out that if U.S. employee and individual benefits are included in social spending data, the U.S. welfare system evinces a share of GDP roughly equal to the OECD average. The key difference between public (direct) and private (tax expenditure) welfare state expenditure is that the former tends to be redistributive and focus on alleviating poverty, whereas the latter focuses on helping the middle classes provide for their own economically precarious life episodes.

Theories Of Development

In the 1960s and early 1970s, the best comparative work on the welfare state found a country’s prevailing political culture—often termed national values—to be causally significant in shaping its welfare state institutions and their degree of generosity (e.g., Rimlinger 1966, 1971). This ideational approach was displaced in the 1970s by functionalist and modernization theories, most prominently that of a “logic of industrialization” (Wilensky 1975). In light of the universal dissolution of pre-modern mechanisms of social protection—namely, the family, church, feudal hierarchy, guild and local community—all industrializing countries faced similar social problems, and hence developed similar modern instruments to secure a healthy and productive workforce. In this view, differences in welfare state spending levels are attributable not to political-cultural or other qualitative cross-national differences, but to a country’s level of economic development as well as the age structure of its population and degree of maturation of its welfare state. Ultimately, the school claimed, all countries would converge toward an institutionally similar, generous welfare state. Since the 1980s, power-resources as well as polity-centered (and closely related new-institutionalise explanations have proven more convincing. The power-resources approach, articulated by Korpi (1983) and Evelyne Huber and John Stephens (2001), argues that the social and political balance of power between labor and capital has determined the level of spending and in particular the degree of redistributiveness of welfare states. Research on the correlation between the partisan composition of governments and their levels of welfare state expenditure has largely corroborated the power-resources interpretation: Manfred G. Schmidt (1982, 1996), Castles and Herbert Obinger (2007), and indeed recently also Wilensky (2002) himself have found strong statistical evidence that where left-of-center (“social democratic,” “labor” or “democratic”) parties have ruled, levels of government social spending and redistribution have been much higher on average than in cases where right-of-center, free-market-liberal (“liberal,” “conservative,” or “republican”) parties have reigned. This “parties matter” explanation enriches the power-resources interpretation, moreover, by showing that the left-right dichotomy does not explain partisan influence fully: Christian-democratic and center parties, historically common in continental Europe, correlate with moderate social spending, that is, more generous than the free-market-liberal parties and less generous than the leftist parties.

Willem Adema and Maxime Ladaique (2005) have demonstrated that when the tax system and private benefits are also taken into consideration, liberal welfare regime expenditure approximates that of the other two regime types. This suggests that Wilensky’s “logic of industrialization” explanation of welfare state growth was correct, according to which a high level of economic development has driven all Western countries to converge toward a uniform, generous welfare state. Castles and Obinger (2007) rebut Adema and Ladaique, however, arguing that while the much greater private welfare spending of liberal welfare regimes often puts them on a par with conservative and social-democratic welfare regime expenditure, the latter are far more redistributive across income categories, making for a fundamentally different type of welfare state. Regarding the causes of welfare state development, they find that while the levels of economic development and economic growth best explain the increase in overall (public cum private) welfare spending, power resources—measured in terms of partisan incumbency—best explains the growth in the more redistributive, direct state welfare spending.

The polity-centered and new-institutionalist approaches adamantly dispute the explanatory power of class. They attribute the scale and type of welfare state expansion and retrenchment to state-structural factors such as the nature of the party system and civil service and the influence of policy intellectuals and reformist associations on these, as in the work of Skocpol (1985); Margaret Weir, Orloff, and Skocpol (1988); and Dietrich Rueschemeyer and Skocpol (1996); the lack of constitutional “veto points,” as in the work of Ellen Immergut (1989) and George Tsebelis (2002); and “feedback effects” of (pre-)existing institutions and policies, as in the work of Paul Pierson (1993).

Both theory and comparative data on public opinion on the welfare state have improved since the 1990s, giving ideational approaches an empirical basis and rendering them worthy of causal reconsideration alongside the power-resources and new-institutionalist explanatory approaches. Indeed, Clem Brooks and Jeff Manza (2006) have found that national social policy preferences exert a strong and measurable influence on welfare state spending as well as on cross-national variation therein, after controlling for other factors such as institutional feedback effects. Mau and Veghte (2007) find strong relationships between welfare regimes and social policy attitudes across OECD countries. Further, Veghte, Greg M. Shaw, and Robert Y. Shapiro (2007) have revealed that social policy preferences and issue prioritizations themselves are contingent and malleable in response to issue framing—for example, of military over social security—by political elites. Given the availability of new transnational datasets on both public opinion and party platforms, more research into public opinion on welfare state issues and its relation to the aforementioned causal factors, and incorporation of this dimension into welfare state theory, can be expected.

Source Of Funding

Scholars used to distinguish between contribution-based (the Bismarckian, German model) and tax-based (the Beveridge, English model) funding of welfare state programs, but in practice these two models have converged, as most social-insurance schemes are funded by a mixture of employer/employee contributions and subsidies from general state revenues. Contribution-based schemes, which are funded and administered independent of the government budget and in which members have vested benefits, have historically tended to be more generous and less susceptible to retrenchment than tax-funded schemes, which legislators can cut back when tax revenues are scarce or an antiwelfare state party comes to power.

Welfare State Critique And Reform

After expanding steadily during the “Golden Age” of welfare-state development in the 1960s and early 1970s, most Euro-American welfare states suffered a critical shock from the oil crises and recession of the mid-1970s and the deindustrialization and high unemployment rates that followed. Not only did these factors deprive the welfare state of its financial bases in both tax revenues and employer/employee contributions, the welfare state itself was widely considered to have contributed to the economic collapse by draining the economy of investment income and burdening it with bureaucratic regulations, as well as undermining individual initiative and the will to work through excessive benefits that fostered dependency. Further, the decline in industrial and the rise in service sector employment, as well as increasing individualization, disintegrated the working classes, which historically had directly or indirectly been the main driving force and constituency of welfare state development in all OECD countries except the United States. Overall, the rapid and sharp rise in the absolute and relative amount of government spending devoted to the welfare state, together with the declining popular support for the latter, led many observers by the mid- to late 1970s to perceive a “crisis of the welfare state” (Flora 1981; Offe 1984). If some degree of retrenchment were not implemented, the welfare state threatened to bring Western economies to a standstill. Conservatives won national elections in Britain (Margaret Thatcher), the United States (Ronald Reagan), and West Germany (Helmut Kohl), in the early 1980s and were reelected in the mid-1980s, all running on anti-welfare-state platforms. Ever since, conservatives in most other OECD countries have tried to scale back welfare-state benefits as well as restrict eligibility to those “truly in need.” This has proven extremely difficult, given that in democratic systems, once citizens and/or interest groups have acquired benefits, they mobilize strongly to retain them. As Pierson observes, “Retrenchment is generally an exercise in blame avoidance rather than ‘credit claiming.’ First, the costs of retrenchment are concentrated, whereas the benefits are not. Second, there is considerable evidence that voters exhibit a ‘negativity bias,’ remembering losses more than gains. As a result, retrenchment initiatives are extremely treacherous” (1994, p. 18). Due to this “conservative welfare function” (Rieger and Leibfried 2003), benefits in most welfare states (with the exceptions of New Zealand and Switzerland) have been scaled back very little in OECD countries despite extended periods of neoliberal governance.

What welfare state reformers have been able to achieve is a tightening of eligibility criteria, moving away from the model of the welfare state as provider of benefits to persons unable to work and toward an activating welfare state that provides an incentive to work by targeting benefits (and/or providing more generous benefits) to persons working or actively seeking employment, while further decreasing the number of inactive citizens by scaling back employment and wage regulation and postponing the retirement age.

Many scholars have also criticized the welfare state for its focus on the male breadwinner and the attendant discriminating effects on social groups long denied equal opportunity in the labor market, such as women, ethnic minorities, and the disabled. Feminist scholars have called attention to the fact that such welfare-state subsidizing of the higher earner (breadwinner) in a family, particularly pronounced in conservative welfare states, reinforces the gendered division of labor within the family. Others have criticized citizenship requirements in many welfare state programs for their discriminatory effects on noncitizens, who are in most cases ethnic minorities.

Trends In The Early Twenty-First Century

The most important developments affecting welfare states are not their internal dynamics but changes in their fiscal, economic, and societal environments. Over the past quarter century, deindustrialization has brought about a dramatic and enduring decline in the proportion of skilled middle-class workers, transforming many of them from employees who pay into the system into long-term unemployment beneficiaries—especially in the conservative welfare regimes of continental Europe, with their generous unemployment schemes.

At the same time as these costs have risen, since the 1990s economic globalization has given new credibility to threats by the owners of capital to leave countries that tax corporations and/or wealthy individuals excessively (Genschel 2005), placing strong external restrictions on the national welfare states to finance themselves through taxation. Further, as Jef van Langendonck (1997), Esping-Andersen (1999), and Peter Taylor-Gooby (2004) have shown, the demographic challenges of population aging and a vast increase in single-parent families have created new social risks which the traditional welfare state—based on the male breadwinner—was not designed to handle. As a result of these developments, most welfare states have experienced a decline in contributions and an increase in demand for benefits, posing a formidable challenge to their sustainability and suggesting the need for welfare state reforms to adapt to these new social conditions.

The main response to this second crisis of the welfare state since the late twentieth century has been privatization. Such privatization entails three principle shifts: first, from publicly guaranteed outcomes to defined contributions; second, from mandatory to voluntary provision against future risks; and third, from the group solidarity to the individual actuarial principle. Such privatization promises to lessen the fiscal burdens incurred by public social insurance schemes for the health and pension needs of the imminently retiring baby boom generation by increasing copayments and restricting eligibility and benefits, while simultaneously offering all individuals the opportunity to save individually for their future security needs via tax-deductible contributions to publicly regulated, individual private pension plans. This should also lessen the burden on corporations posed by the non-wage labor costs entailed in employer and employee contributions to public social-insurance schemes, increasing the international economic competitiveness of Western economies in the era of globalization. The biggest disadvantage of such privatization is that it necessarily entails a shift from universal to partial coverage of the population in need, with a tendency to exclude precisely those who need social protection the most, because they lack the surplus income required to voluntarily save for their and their families’ future risks. Finally, corporations, which have long provided tax-deductible employee benefit plans to their employees, have moved from defined benefit to defined contribution plans, i.e. from occupational pension plans which guaranteed a specific payout in retirement based on a formula for years of service and salary earned, to plans which collect employer and employee contributions in interest-bearing individual retirement accounts which are transferable from one job to the next, but may or may not suffice to meet—in combination with one’s public pension—a person’s retirement needs.

A final challenge to the welfare state at the outset of the twenty-first century is posed by immigration. As Wim van Oorschot (2000), Michael Bommes and Andrew Geddes (2000), Carsten Ullrich (2002), Knut Halvorsen (2007), and van Oorschot and Wilfred Uunk (2007) have shown, national solidarity communities that long provided the normative foundation for European welfare states are now being threatened by real and/or perceived increases in ethnic/national heterogeneity, as evidenced by political debates throughout western Europe in the first decade of the century. Regarding the United States, Korpi (1983), Martin Gilens (1999), and Veghte (2004) have argued that racial, ethnic and religious heterogeneity have always limited development of a solidarity community and hence a redistributive welfare state. Now, scholars such as Alberto Alesina and Edward L. Glaeser (2004) are asking if, as citizens increasingly tend to distinguish between “we” and “they,” the welfare consensus and commitment to publicly institutionalized solidarity in western Europe is still sustainable. Keith Banting and Will Kymlicka (2004) have determined, however, that clear evidence of a negative association between the influx of migrants and support for the welfare state is lacking. The structure of countries’ political institutions mediates and conditions the effects of immigration on welfare state development, and at the cross-national level other factors are likely more decisive. Nevertheless, as Leibfried and Mau (2007) observe, politicians may use ethnic and sociocultural divisions within a society to position themselves in public debates about distributional conflicts, leading to restrictive effects on welfare state policies.

While the threats from increasing immigration seem formidable, most welfare states are showing signs of successful adaptation to the challenges posed by economic globalization. Comparative research by Fritz Scharpf and Vivien Schmidt (2000) on the effects of globalization on Western welfare state development has revealed that welfare regimes differ in their capacity to adjust to the fiscal and competitiveness constraints constituted by increasing global product and capital market integration. Social-Democratic and liberal welfare regimes in Scandinavian and Anglo-American countries respectively, though fundamentally different, have proven better suited to successful adaptation to the challenges of economic globalization than have the conservative welfare regimes of continental Europe.

Moreover, Elmar Rieger and Stephan Leibfried (2003) argue convincingly that strong welfare states will not only survive the era of globalization, but have themselves historically paved the way for it. Since World War II (1939-1945) and continuing under conditions of intensified economic globalization since the 1990s, strong welfare states have provided political leverage in capitalist democracies such as Germany for leaders to embrace exposure to the risks of international competition in foreign economic policy, whereas countries with weak welfare states such as the United States have tended toward protectionism. As Sven Steinmo (2002) has shown, the Swedish case in particular demonstrates that a generous welfare state, with some recalibration over the past decade, can co-exist over the long term with a thriving, open and internationally competitive national economy.

A half century ago, one of the fathers of modern social policy, the Swedish Nobel prize-winning economist Gunnar Myrdal (1898-1987) argued that a transition from the welfare state to a “welfare world” would eventually transpire. Today, a budding field of welfare state research—pioneered by Deacon, Michelle Hulse, and Paul Stubbs (1997); Nicola Yeates (2002); Lutz Leisering (2004); and John Meyer (2004); and pursued in the journal, Global Social Policy (launched in 2001)—traces the emergence of “global social policies” emanating from supranational and global nongovernmental organizations and governmental institutions such as the ILO, World Bank, World Trade Organization, or United Nations. At the crossroads of the “world society,” international relations, welfare state and area studies literatures, this research examines how welfare concepts, programs, and models are becoming globalized.

Many eminent welfare state scholars, however, such as Abram de Swaan (1997), Claus Offe (2003), Fritz Scharpf (1999, 2002), and Wolfgang Streeck (1995, 2000), are skeptical concerning the prospects of transnational social policy. Historically, as Stein Rokkan elaborated in his seminal 1974 essay, welfare states have developed in the wake of processes of state-building, nation-building, and democratization, that is, in democratic nation-states. This process took several centuries to evolve and was a rocky road paved by multiple wars and, in many countries, revolutions. Transnational social policy is unlikely to develop until something equivalent to the public sphere and solidarity community of the nation-state evolves on the transnational level, that is, a shared willingness to redistribute income across national boundaries.

The closest thing to such a transnational polity and solidarity community on the horizon is the European Union, formerly the European Community. For the first four decades of its existence, the European Community pursued economic integration without political or social integration. Since the last decade of the twentieth century, however, the European Union is slowly but discernibly moving toward such political and social integration, yet, as Franz-Xaver Kaufmann (2001) has noted, continues to evince a strong reticence with regard to all issues of interpersonal income redistribution. Leibfried (2005) and Obinger, Leibfried, and Castles (2005) observe that rather than employing centrally administered, mandatory, redistributive “hard” social policies, as national welfare states had done, the European Union has relied thus far on courts and markets and on “soft policy,” that is, governance measures with which compliance is not enforced by legal sanctions, but simply encouraged through the “open method of coordination.” As Leibfried and Mau (2007) have observed, beyond its borders Europe is the leading advocate of transnational social policy as propagated by global institutions such as the WTO, the WHO, and ILO, and may one day serve as an organizational model inspiring for example the NAFTA, MERCOSUR and ASEAN countries to pursue transnational social policies in their respective regions. The debates on the evolution of European social policy can be followed above all in the Journal of European Social Policy (since 1991) and increasingly in the Journal of European Public Policy (since 1994), which explores the interaction between central and nation-state social policy in the European Union.


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