MODULE III
THE WELFARE STATE
READINGS
PART I, 2-3; V
6/6 – 12
1
SESSION 3: THE WELFARE STATE (WS)
• The totality of social welfare programs in a given national setting.
• Most elaborate in the most advanced countries---W. Europe, N.A.,
and Australia/New Zealand.
• W. European WSs tend towards the “mature” or “cradle to
grave” type, whereas the US WS is usually classified as
“immature”and characteristic of our national “exceptionality.”
• American domestic politics is principally about two sets of issues--1) the so-called “social questions,” like abortion and family
“values”; 2) the contents of and eligibility for WS benefits.
• All these issues are linked: the “immaturity” of our welfare state
reflects our politics, which in turn reflects the “exceptionality” of
American circumstances, as variously interpreted.
• Each of the above points will be addressed in this session.
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SESSION 3 TABLE OF CONTENTS
• Conflicting political perspectives on the WS.
• Types of WSs.
• Reasons for US “exceptionality.”
• Globalization and the Future of the WS.
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CONFLICTING PERSPECTIVES ON THE WELFARE STATE
VS.
4
A LIBERAL PERSPECTIVE
“I’m often asked if I’m a liberal, and I say, ‘Well, if
Jack Kennedy was a liberal or… Franklin
Roosevelt was a liberal, then I’m a liberal.’ This is
not 1960, and it’s not 1932. We’re in a completely
different world than then. But I believe in
opportunity, and I believe in…fairness. The only
way this country prospers is if everybody is sharing
in the prosperity. I think my party has uniquely
stood for that…,where government can be an active
partner with the private sector in moving the
country forward….”
RICHARD GEPHARDT
DEMOCRATIC LEADER,
5
US HOUSE OF REPRESENATIVES.
THE LIBERAL PERSPECTIVE EXPLAINED
• Liberals support a moderately high level of social services, but tend to favor
equality of opportunity more than equality of social condition. They do believe
that society has a duty to help the poor and oppressed, and to make
appropriate arrangements for the young and elderly, but they would not go as
far as social democrats and other radicals in the pursuit of these goals.
• Many liberals also believe that the educated elite should lead society and that
the power of rational persuasion (“ideas” again) are sufficient to convince
voters of the moral correctness of their aims; they are thus “idealists” in the
strictly philosophical sense of the term.
• The dominant political ideology during certain periods of 20th century
American history, classic reform liberalism reached its high tide during the
Johnson years (1963 - 68). While still strongly supported by minorities,
intellectuals, femininists, and various other groups, liberalism has essentially
been on the defensive ever since. Indeed, the “L” word is now often shunned
even by liberals themselves (although obviously not by Gephardt), who are
afraid of alienating voters. Many liberals accordingly now prefer to be called
“progressives.” That has not increased their electoral popularity, however.
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A RADICAL PERSPECTIVE
“THE CENTRAL QUESTION…IS
WHETHER AND UNDER WHAT
CIRCUMSTANCES THE CLASS
DIVISIONS AND SOCIAL
INEQUALITIES PRODUCED BY
CAPITALISM CAN BE UNDONE
BY [LEGISLATIVE]
DEMOCRACY.”
GOSTA ESPING-ANDERSEN
RADICAL WELFARE STATE
ANALYST
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A RADICAL PERSPECTIVE:
THE “BALANCE OF CONTENDING FORCES”
• To understand the WS, radicals contend you must first understand the relative
political strength of the principal classes (“forces”) in capitalist society:---on the
one hand, the asset-owning rich (“capitalists”) and the top managers who work
directly for them; on the other, ordinary wage - dependent workers in potential
political alliance with the “new middle class” of technical/professional workers.
• As we saw in Module 2, distinct social classes can have distinctly different
perceptions of their interests and, hence, different attitudes towards swps and
the WS. Blue-collar workers may well look to the WS for socially – financed
protections against the uncertainties of life under capitalism, whereas owners
see the WS as blocking their quest for a “free market” system in which worker
resistance & government intervention are minimized. (See the following section
on “conservative perspectives” for more on this last point.)
• Radicals thus view politics largely in terms of coalition-building, since failure
to form such alliances means that, as in the US, the WS is likely to be limited.
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A RADICAL PERSPECTIVE: THE ROAD TO SOMEWHERE?
• The very existence of the WS is evidence of class conflict: each side seeks to
control the size of the WS in order to gain leverage in its struggle with the
other. Thus, capitalist political dominance (“hegemony” is the term used by
radical intellectuals) is reflected in the extent to which WS programs are
means-tested and modest in scale. By the same token, working class political
muscle is on display if those same programs are generously funded and offer
benefits to all citizens under the “universality” principle.
• But is a generous WS itself enough to satisfy working class needs? Or is it
necessary for workers to take a fateful step further and seek direct control of
the nation’s productive wealth (“capital”) in order to assure its rational use for
the benefit of all? The more radical radicals have at least until recently argued
that such control is indeed indispensable and can only be secured via overthrow
of “bourgeois” democracy; the more moderate, that a humane social order can
be attained through gradual evolution from the existing WS base towards a
more egalitarian society. As we’ll see in the discussion of globalization, later in
this session, this longstanding controversy has recently been superseded by a
more immediate question: Can the WS itself survive at all given recent changes
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in the overall “balance of contending forces.”
A CONSERVATIVE PERSPECTIVE
“MY CONCLUSION IS …[THAT] IN
ADDITION TO ITS STRONG MORAL
BASE IN PERSONAL FREEDOM,
CAPITALISM AND COMPETITIVE
MARKETS WORK TO DELIVER
SUBSTANTIAL ECONOMIC
PROGRESS;…BUREAUCRATIC
WELFARE STATE[S] DO NOT
WORK. THEY SAP INDIVIDUAL
INCENTIVE, INITIATIVE AND
CREATIVITY AND ULTIMATELY
CANNOT DELIVER SUFFICIENTLY
RISING STANDARDS OF LIVING TO
MEET THE EXPECTATIONS OF
THEIR CITIZENS….”
MICHAEL BOSKIN
CHAIRMAN OF THE COUNCIL OF
ECONOMIC ADVISERS DURING
THE BUSH ADMINISTRATION
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AN CONSERVATIVE PERSPECTIVE:
A DRAG ON THE MARKET
• Conservatives argue that, especially in its more advanced
European forms, the WS has become a dangerous anachronism.
By requiring high taxes, the WS deprives society of needed
investment resources and saddles employers with workers who
feel that the are “owed” a living---by the state if not by the boss!
• Conservatives concede that the WS may once have been fiscally
tolerable (if never politically or economically desirable) but argue
that it should now be dismantled because its extravagances are
unsustainable in our age of intensified global competition. Indeed
advanced nations that continue to adhere to old-style “welfarism”
risk permanent inferiority within the emerging postindustrial
division of labor.
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A CONSERVATIVE PERSPECTIVE:
“AN IDEA WHOSE TIME HAS GONE”
• As we have just seen, conservatives view the WS as dangerously
obsolescent. It represents the past, whereas the unimpeded “free
market” is said to represent the future.
• More specifically, conservative intellectuals assert that the WS is a
product of the so-called “Fordist” period, when huge corporate
bureaucracies (e.g., as in the auto industry) employed hordes of
manual and administrative workers. Government developed
similarly insofar as it consisted of cumbersome bureaucracies
seeking to expand their regulatory “turf.”
• Workers today, however, are necessarily far more self-reliant.
Like their employers, they realize that they must be flexible and
intensely competitive. The old-style “Fordist” WS has thus
become an anachronism incompatible with postindustrial society.
Conservatives claim that most Americans recognize this, which is
12 WS.
why voters now regularly reject liberal attempts to revive the
A CONSERVATIVE PERSPECTIVE:
“AN IDEA WHOSE TIME HAS GONE”
CLICK HERE FOR
EDU-RAMA!
This 4 minute discussion features professors Samuel Bowles and
Milton Friedman, respectively, leading social democratic and
conservative welfare state analysts. Although fragmentary the
segment is worth watching for discussion of the so-called “Third
Way,” which is the name often given to the Swedish WS
experiment, and intended to distinguish it from the US and
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Soviet communist models.
WHAT DO YOU THINK?
Which of the just reviewed perspective makes the
most sense to you? (Doing the readings may help you
make up your mind!)
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U.S. AND EUROPEAN WS MODELS COMPARED
• As we shall see in the following section, U.S. and
European wss are organized on very different
assumptions, expectations, and principles.
• Our task will be to summarize what those difference are
and what accounts for them.
• On the latter point, we’ll look particularly at the issue of
“American exceptionalism”---i.e. why the U.S. welfare
state is so different from its European counterparts.
• Finally, we’ll briefly survey the issue of globalization,
most particularly, the impact that that phenomenon is
having on all welfare states regardless of their operating
assumptions.
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Mature and Immature Welfare States (1)
• US
Relatively modest social insurance programs + very
limited means-tested protections against hardship or
destitution.
EUROPE
Extensive social insurance + other publicly funded
non-means tested benefits and services designed to
reduce relative inequalities and assure economic
security for all citizens (i.e., “universalistic”). These
radical or social democratic objectives are
characteristic of the most advanced European social
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welfare legislation, notably in Scandinavia.
Mainstream
•
•
•
•
•
•
US & SWEDEN (2)
Social security
Unemployment insurance (ui)
Medicare/Medicaid
Public housing
Education through h.s
Limited maternity leave
Social Democratic
• Social security
• Extended ui and job
retraining
• Health care for all
• Housing allowance
• Free education
• Family allowances
• Generous maternity leave
• Pensions for all
• Paid vacations
• Public child care
• Extensive recreation facilities
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US WS MODEL: A “MARKET FIRST” APPROACH
THE “MARKET FIRST” BIAS IS THE KEY TO UNDERSTANDING SPECIFIC
COMPONENTS OF THE AMERICAN WS.
THE MARKET
THE KEY U.S. INSTITUTION, WITH WS
PROGRAMS ESSENTIALLY SUBSIDIARY TO AND
SUPPORTIVE OF IT. PREVAILING ASSUMPTION IS THAT
VIRTUALLY EVERY NEED CAN AND SHOULD BE MET THROUGH THE
MARKET SYSTEM, EXCEPT AS NOTED BELOW.
SOCIAL INSURANCE
SOCIAL SECURITY
MEDICARE
ENACTED BECAUSE OF “MARKET FAILURE,”
I.E., INABILITY OF MARKET TO PROVIDE
FOR BASIC NEEDS IN CERTAIN SITUATIONS
MEANS-TESTED PROGRAMS
TANF (welfare)
SSI
ASSISTANCE TO INDIVIDUALS
IF DEEMED “DESERVING” DUE TO
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TEMPORARY OR PERMANENT
INABILITY TO COMPETE IN JOB MARKETS.
THE UNDERLYING LOGIC OF THE US WS
•
•
1)
2)
The dominant presumption in American society, especially strongly held
among conservatives, is that all human needs can and should be met through
the market, and that those unable to pay for commodities (i.e., goods and
services purchased on the market) simply must forgo them.
However, two exceptions to this rule are sometimes recognized:
Certain goods and services cannot be adequately provided exclusively
through the market because of their very nature. For example, left to itself
the market has been able of provide adequate health insurance only to those
old people who are both rich and in reasonably good health---clearly a
minority. At the very least, then, publicly organized, regulated, and partly
subsidized health care social insurance is indispensable to ensure if the
majority of old people are to be covered----hence, Medicare.
Those who are destitute or near-destitute, and unable to work by definition
cannot and do not participate in the market economy. Unless subsidized by
the government, they might well starve, which (presumably) still remains
morally unacceptable in a civilized society---hence, public assistance (TANF)
and Supplemental Security Income (SSI) for those able to meet their 19
stringent eligibility criteria.
NEVERTHELESS…
as the preeminent American institution, the market is constantly encroaching, in
various ways, on ws programs. Thus:
1) the American WS is in many respects a “partnership” between the public and
private sectors: the government buys WS goods and services from the private
sector, because: a) that’s the only place they can be purchased; b) of the political
pressure exerted by vendors; c) of the assumption that the private sector can
provide such services more efficiently (i.e., at less cost) than the public sector.
2) the private sector is dynamic and accordingly constantly seeks to expand into
public sector territory if profitable opportunities exist there. Hence the
“privatization” movement of recent years, in which various publicly funded
programs---e.g., welfare assistance and health services---are increasingly provided
by private vendors working under government contract.
3) perhaps most importantly, there are prominent and even disastrous “market
failures” that are not adequately rectified because of corporate political clout,
which seeks to prevent government from “trespassing,” or even potentially
usurping, existing profitable markets. The profit-driven health care system,
despite its “market failure” to provide adequate coverage to millions, comes20most
readily to mind in this regard.
SWEDEN AND “DECOMMODIFICATION”
• The Swedish WS, widely regarded as the world standard, is based
on a radical---and hence markedly different---conception of what
government can and should provide to its citizens.
• Most dramatically, the Swedes have sought to “decommodify” a
wide variety of goods and services (see earlier comparative slide),
i.e. to remove them from the market and instead make them
readily available to all as a right of citizenship---what American
social policy analysts call “entitlements.”
• In doing so, the Swedish social democratic government hoped to
promote equality of results rather than simply equality of
opportunity, on grounds people must have a wide variety of goods
and services if they are to lead a decent life.
• The next few slides take a closer look at the Swedish model. 21
THE SWEDISH WELFARE STATE: A
MULTIDIMENSIONAL MODEL
• Remember this figure? It first appeared
in Module 2 to illustrate the different
levels at which policy is formulated.
PUBLIC POLICIES
• The distinguishing characteristic in the
Swedish case, however, is the high
SOCIAL POLICIES
degree of planned integration among
these three policy levels. That is, the key
SOCIAL
WELFARE
to Swedish success lay in assuring that
POLICIES
each level operated so as to reinforce the
other two.
• The next slide provides an example of
how this social democratic strategy
works in practice.
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THE SWEDISH MODEL IN THEORY
Common Policy Objective
Creation of a what Swedes call a “people’s home:”
humane, egalitarian, yet also economically dynamic
PUBLIC POLICIES
• State tax and other
support for new housing
& corporate investment
• Tight control over
capital exports
• Low interest rates
SOCIAL POLICIES
• Heavy investment
in education and
job training/retraining
•Strict prohibitions
against gender
discrimination
SOCIAL WELFARE
POLICIES
•Generous unemployment,
old age, and child
care benefits
• Excellent health care &
recreational facilities
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THE SWEDISH MODEL IN PRACTICE: THUS…
PUBLIC POLICIES
HELPS RESULTS IN:
State tax and other
supports for new
investment
Rapid job creation
& low
unemployment
WHICH IN TURN
MAKES
POSSIBLE:
Generous
unemployment
benefits & job
retraining
ALL ELEMENTS INTHE
SWEDISH MODEL ARE DESIGNED TO
BALANCE AND REINFORCE ONE ANOTHER
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WHY THE DIFFERENCE?
THE ISSUE OF AMERICAN “EXCEPTIONALISM”
Lack of a politically significant radical political movement, and the
consequent backwardness of the American welfare state, are often
cited as proof that the U.S. is an “exceptional” country---not
necessarily in a positive sense (although most mainstreamers
certainly see it that way), but in its stark divergence from the
European pattern of relatively generous and extensive WS benefits.
The following American traits are also sometimes cited as further
manifestations of our “exceptionality:”
fear of and resistance to taxes and government
willingness to resort to capital punishment
lack of knowledge about other societies
 tightfistedness in dealing with the poor
degree of racial prejudice
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self-righteous moralism
WHAT ACCOUNTS FOR EXCEPTIONALISM?
THE MAINSTREAM VIEW
There is no single mainstream interpretation of “exceptionalism,”
but there are certain common themes that mainstreamers have
identified over the years. As one would expect, these tend to
emphasize ideas and institutions, rather than social class relations.
Following are several of these explanations:
• America fought a war of independence precisely to guarantee that
government be limited, and subsequent national experience has only
further deepened our rightful suspicion of centralized power. The
nation’s commitment to local control and a “checks and balance”
constitutional system are expressions of this same outlook.
• Americans still adhere to the individualistic ethos. They expect to
participate in competitive markets, and likewise once expected that
those who failed competitively would try their luck elsewhere. But
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that was before the welfare state.
WHAT ACCOUNTS FOR EXCEPTIONALISM?
THE RADICAL VIEW
Radicals have sometimes seemed near – obsessed with the “exceptionalism” question,
perhaps because their failure to achieve a significant role in American life has indeed been a
defining feature of “exceptionalism.” Here, then, are some radical interpretations:
•American historical experience is significantly different from Europe’s, where a relatively
homogeneous mass populations shared a common medieval past and a common working
class way of life. For their part, the European ruling classes long sought to maintain an
almost caste-like distance from the masses, and indeed democratic ideas did not really
triumph in Europe until late in the 19th century---in some places, not even then. America, in
contrast, was almost from the beginning a land of INDIVIDUAL opportunity that drew a
heterogeneous immigrant population. The odds against forming an American radical
political movement were thus formidable, and were made even more so by expansive
prosperity that reinforced the individualistic ethos.
• Throughout American history the political agents of the ruling classes have persecuted
radicals under the bogus banner of “Americanism,” so that those holding dissenting views
have frequently been ostracized as “un-American.” This has been a devastatingly effective
tactic in repressing radical dissent. Intra-working class racial divisions has been yet another
factor in the “exceptionalist” political equation.
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INDIVIDUALISM: A COMMON THREAD
As we have seen, both radicals and mainstreamers lay
stress on individualism as a deep – seated American trait
at odds with the collectivist logic of the WS. Yet here the
similarity ends. Whereas radicals view individualism as an
essentially negative factor, obstructing the unity needed to
promote a more egalitarian society, conservatives regard
individualism as the central defining element in American
life---the thing that made this country great.
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THE IMPACT OF GLOBALIZATION
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THE WELFARE STATE: ADVANCE (1)
• The welfare state is the product of many generations of popular
struggle against injustice and oppression.
• Its “golden age” (1945-70) was thought by many to mark a
fundamental turning point in human history: henceforth the
benefits of industrial civilization would be distributed more
equitably thanks to increased productivity, popular political
pressure, and the need to maintain a high standard of
consumption if capitalism itself were going to survive.
• No one wanted to go back to the “bad old days,” when poverty
was common and material insecurity the fate of most people.
• In short, optimism about the future, specifically the future of the
welfare state, was fairly pervasive.
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WELFARE STATE: ADVANCE (2)
• The positive mood of this period was exemplified
by the so-called Marshallian theory of the welfare
state that posited the following 3 stage historical
evolutionary progression:
• Social Rights (the ws/economic security)
• Political Rights (parliament/the vote)
• Legal Rights (courts/due process)
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Welfare State: Decline
OR
The Professors Confounded
• Political support and state funding have
everywhere been declining around 1970.
• As we have seen, some now retrospectively claim
that the welfare state was simply an industrial
age phenomenon anachronistic in the postindustrial era of specialist labor and individual
initiative.
• Globalization is, however, the most immediate
causal factor in welfare state decline.
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WHAT IS GLOBALIZATION, ANYWAY?
• Globalization involves the rapid diffusion of investment and
speculative capital, and, more generally, of the market economy,
throughout the world. These processes are spearheaded by
transnational corporations (“industrial capital”), seeking low cost
labor and profitable markets regardless of national boundaries;
and investment banks and other agents of “finance capital,”
looking for comparable speculative or investment opportunities
with comparable indifference to old-style state boundaries.
• Some governments in the larger capitalist states, notably that of
the U.S., have actively partnered with the private sector and such
institutions as the World Bank and World Trade Organization to
“make the world safe for capital” by removing all national-level
obstructions to the free flow of capital, thus weakening the nationstate’s ability to regulate its own territory and, more particularly,
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sustain a high level of welfare state services.
GLOBALIZATION: THE MASTER THEME OF OUR TIME
It has promoted the:
IT’S ALL
MINE!
Please let
go of me!
• power shift from labor to
capital; from social
welfare programs to
corporate profit priorities.
• downsizing of the welfare
state and the non-profit
sector
• privatization and
increased political and
economic inequality 34
•
•
•
•
WELFARE STATE DECLINE:
CAUSES, EVIDENCE, AND CONSEQUENCES
Disappearance (?) of popular expectations that activist
government could solve our national problems. (Social
transformation/demographic fading of the
Depression/WWII generation.)
Few new social welfare programs; reduction or
elimination of established ones
Privatization of former state services: e.g., prisons,
welfare, and maintenance.
Growing economic inequality, racial tension, and
political alienation.
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GLOBALIZATION: SUMMING UP
• The impact of globalization has indeed been “global,” insofar as it
has affected all aspects of life, and not merely the WS. There are
two general ways of summing up the impact of these changes.
• Radicals deplore globalization and instead continue to see
government as a positive force capable of improving life through
its capacity to plan, regulate, protect, and promote social and
economic equality within traditional national settings.
• The opposing globalization thesis, supported by conservatives and
by our own government (indeed, it is sometimes called the
“Washington consensus”), holds that markets rather than
governments are the indispensable motors of material progress,
and that government economic regulation must therefore be
reduced to an absolute minimum.
• The next slide summarizes two correspondingly divergent ways
of
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envisioning the consequences of continued globalization.
ALTERNATIVE GLOBAL FUTURES
HOMOGENIZATION
RESISTANCE
• Continuation of current • Growing resistance to
current trends based on
trends resulting in
the following possible
creation of a globally
factors:
integrated “consumer
culture,” which replaces
– religious belief
virtually all local cultures
– possible collapse of the
world economy
• Formal retention of state
– increased worker
sovereignty and political
immiseration
democracy as a façade for
– environmental collapse
corporate power.
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WHAT DO YOU THINK?
WHAT KIND OF WS WORKS BEST
FOR SOCIETY? FOR THE
INDIVIDUAL CITIZEN?
SHOUD QUESTIONS OF SOCIAL
JUSTICE BE DECIDED BY THE
MARKET OR BY LEGISLATIVE
BODIES, LIKE CONGRESS?
IS GLOBALIZATION THE KEY TO
PROGRESS, AS CONSERVATIVES
CLAIM, OR IS IT IN FACT THE
SOCIAL DISASTER, AS
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RADICALS CONTEND?