Welfare state

The welfare state is a form of government in which the state protects and promotes the economic and social well-being of the citizens, based upon the principles of equal opportunity, equitable distribution of wealth, and public responsibility for citizens unable to avail themselves of the minimal provisions for a good life.[1] Sociologist T. H. Marshall described the modern welfare state as a distinctive combination of democracy, welfare, and capitalism.[2]

As a type of mixed economy, the welfare state funds the governmental institutions for healthcare and education along with direct benefits given to individual citizens.[3] Early features of the welfare state, such as public pensions and social insurance, developed from the 1880s onwards in industrializing Western countries.[4] The Great Depression, World War I and World War II have been characterized as important events that ushered expansions of the welfare state.[4] The modern welfare state emerged in a reactive way to the Great Depression of the 1930s as a form of state interventionism to address unemployment, lost output, and collapse of the financial system. By the late 1970s, the contemporary capitalist welfare state began to decline, in part due to the economic crisis of Post-World War II capitalism and Keynesianism, and in part due to the lack of a well-articulated ideological foundation for the welfare state.[5]

Etymology

The German term sozialstaat ("social state") has been used since 1870 to describe state support programs devised by German sozialpolitiker ("social politicians") and implemented as part of Bismarck's conservative reforms.[6] In Germany, the term wohlfahrtsstaat, a direct translation of the English "welfare state", is used to describe Sweden's social insurance arrangements.

The literal English equivalent "social state" did not catch on in Anglophone countries.[7] However, during the Second World War, Anglican Archbishop William Temple, author of the book Christianity and the Social Order (1942), popularized the concept using the phrase "welfare state".[8] Bishop Temple's use of "welfare state" has been connected to Benjamin Disraeli's 1845 novel Sybil: or the Two Nations (in other words, the rich and the poor), where he writes "power has only one duty – to secure the social welfare of the PEOPLE".[9] At the time he wrote Sybil, Disraeli (later a prime minister) belonged to Young England, a conservative group of youthful Tories who disagreed with how the Whigs dealt with the conditions of the industrial poor. Members of Young England attempted to garner support among the privileged classes to assist the less fortunate and to recognize the dignity of labor that they imagined had characterized England during the Feudal Middle Ages.[10]

The Swedish welfare state is called folkhemmet ("the people's home") and goes back to the 1936 compromise, as well as to another important contract made in 1938 between Swedish trade unions and large corporations. Even though the country is often rated comparably economically free, Sweden's mixed economy remains heavily influenced by the legal framework and continual renegotiations of union contracts, a government-directed and municipality-administered system of social security, and a system of universal health care that is run by the more specialized and in theory more politically isolated county councils of Sweden.

The Italian term stato sociale ("social state") and the Turkish term sosyal devlet reproduces the original German term. In French, the concept is expressed as l'État-providence. Spanish and many other languages employ an analogous term: estado del bienestar – literally, "state of well-being". In Portuguese, two similar phrases exist: estado de bem-estar social, which means "state of social well-being", and estado de providência – "providing state", denoting the state's mission to ensure the basic well-being of the citizenry. In Brazil the concept is referred to as previdência social, or "social providence".

Modern forms

Modern welfare programs are chiefly distinguished from earlier forms of poverty relief by their universal, comprehensive character. The institution of social insurance in Germany under Bismarck was an influential example. Some schemes were based largely in the development of autonomous, mutualist provision of benefits. Others were founded on state provision. In a highly influential essay, "Citizenship and Social Class" (1949), British sociologist T. H. Marshall identified modern welfare states as a distinctive combination of democracy, welfare, and capitalism, arguing that citizenship must encompass access to social, as well as to political and civil rights. Examples of such states are Germany, all of the Nordic countries, the Netherlands, France, Uruguay and New Zealand and the United Kingdom in the 1930s. Since that time, the term welfare state applies only to states where social rights are accompanied by civil and political rights.

Changed attitudes in reaction to the worldwide Great Depression, which brought unemployment and misery to millions, were instrumental in the move to the welfare state in many countries. During the Great Depression, the welfare state was seen as a "middle way" between the extremes of communism on the left and unregulated laissez-faire capitalism on the right.[3] In the period following World War II, some countries in Western Europe moved from partial or selective provision of social services to relatively comprehensive "cradle-to-grave" coverage of the population. Other Western European states did not, such as the United Kingdom, Ireland, Spain and France.[11]

The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old-age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare services). Through these provisions, welfare states can affect the distribution of wellbeing and personal autonomy among their citizens, as well as influencing how their citizens consume and how they spend their time.[12][13]

History

Ancient

Emperor Ashoka of India put forward his idea of a welfare state in the 3rd century BCE. He envisioned his dharma (religion or path) as not just a collection of high-sounding phrases. He consciously tried to adopt it as a matter of state policy; he declared that "all men are my children"[14] and "whatever exertion I make, I strive only to discharge debt that I owe to all living creatures." It was a totally new ideal of kingship.[15] Ashoka renounced war and conquest by violence and forbade the killing of many animals.[16] Since he wanted to conquer the world through love and faith, he sent many missions to propagate Dharma. Such missions were sent to places like Egypt, Greece, and Sri Lanka. The propagation of Dharma included many measures of people's welfare. Centers of the treatment of men and beasts founded inside and outside of the empire. Shady groves, wells, orchards and rest houses were laid out.[17] Ashoka also prohibited useless sacrifices and certain forms of gatherings which led to waste, indiscipline and superstition.[16] To implement these policies he recruited a new cadre of officers called Dharmamahamattas. Part of this group's duties was to see that people of various sects were treated fairly. They were especially asked to look after the welfare of prisoners.[18][19]

The Roman Republic intervened sporadically to distribute free or subsidized grain to its population, through the program known as Cura Annonae. The city of Rome grew rapidly during the Roman Republic and Empire, reaching a population approaching one million in the second century AD. The population of the city grew beyond the capacity of the nearby rural areas to meet the food needs of the city.[20]

Regular grain distribution began in 123 BC with a grain law proposed by Gaius Gracchus and approved by the Roman Plebeian Council (popular assembly). The numbers of those receiving free or subsidized grain expanded to a high of an estimated 320,000 people at one point.[21][22] In the 3rd century AD, the dole of grain was replaced by bread, probably during the reign of Septimius Severus (193-211 AD). Severus also began providing olive oil to residents of Rome, and later the emperor Aurelian (270-275) ordered the distribution of wine and pork.[23] The doles of bread, olive oil, wine, and pork apparently continued until near the end of the Western Roman Empire in 476 AD.[24] The dole in the early Roman Empire is estimated to account for 15 to 33 percent of the total grain imported and consumed in Rome.[25]

In addition to food, the Roman Republic also supplied free entertainment, through ludi (public games). Public money was allocated for the staging of ludi, but the presiding official increasingly came to augment the splendor of his games from personal funds as a form of public relations. The sponsor was able to cultivate the favor of the people of Rome.[26]

The concept of states taxing for the welfare budget was introduced in early 7th century Islamic law.[27] Zakat is one of the five pillars of Islam and is a mandatory form of 2.5% income tax to be paid by all individuals earning above a basic threshold to provide for the needy. Umar (584-644), leader of the Rashidun Caliphate (empire), established a welfare state through the Bayt al-mal (treasury), which for instance was used to stockpile food in every region of the Islamic Empire for disasters and emergencies.[28]

Modern

Otto von Bismarck established the first welfare state in a modern industrial society, with social-welfare legislation, in 1880's Imperial Germany.[29] Bismarck extended the privileges of the Junker social class to ordinary Germans.[29] His 17 November 1881 Imperial Message to the Reichstag used the term "practical Christianity" to describe his program.[30]

German laws from this era also insured workers against industrial risks inherent in the workplace.[31]

In Switzerland, the Swiss Factory Act of 1877 limited working hours for everyone, and gave maternity benefits.[31] The Swiss welfare state also arose in the late 19th century; its existence and depth varied individually by canton. Some of the programs first adopted within the Cantons of Switzerland were emergency relief, elementary schools, and homes for the elderly and children.[32]

In the Austro-Hungarian Empire, a version was set up by Count Eduard von Taaffe a few years after Bismarck in Germany. Legislation to help the working class in Austria emerged from Catholic conservatives. Von Taffe used Swiss and German models of social reform, including the Swiss Factory Act of 1877 German laws that insured workers against industrial risks inherent in the workplace to create the 1885 Trade Code Amendment.[31]

Analysis

Historian of the 20th Century fascist movement, Robert Paxton, observes that the provisions of the welfare state were enacted in the 19th Century by religious conservatives to counteract appeals from trade unions and socialism.[33]

Later, Paxton writes "All the modern twentieth-century European dictatorships of the right, both fascist and authoritarian, were welfare states...They all provided medical care, pensions, affordable housing, and mass transport as a matter of course, in order to maintain productivity, national unity, and social peace."[33] Adolf Hitler's National Socialist German Workers' Party expanded the welfare state to the point where over 17 million German citizens were receiving assistance under the auspices of the National Socialist People's Welfare by 1939.[34]

When social democratic parties abandoned Marxism after World War II, they increasingly accepted the welfare state as a political goal, either as a temporary goal within capitalism or an ultimate goal in itself.[33]

Writing in 2005, Jacob Hacker said that there was "broad agreement" in research on the welfare that there had not been welfare state retrenchment. Instead, "social policy frameworks remain secure."[35]

By country or region

Australia

Prior to 1900 in Australia, charitable assistance from benevolent societies, sometimes with financial contributions from the authorities, was the primary means of relief for people not able to support themselves.[36] The 1890s economic depression and the rise of the trade unions and the Labor parties during this period led to a movement for welfare reform.[37]

In 1900, the states of New South Wales and Victoria enacted legislation introducing non-contributory pensions for those aged 65 and over. Queensland legislated a similar system in 1907 before the federal labor government led by Andrew Fisher introduced a national aged pension under the Invalid and Old-Aged Pensions Act 1908. A national invalid disability pension was started in 1910, and a national maternity allowance was introduced in 1912.[36][38]

During the Second World War, Australia under a labor government created a welfare state by enacting national schemes for: child endowment in 1941; a widows' pension in 1942; a wife’s allowance in 1943; additional allowances for the children of pensioners in 1943; and unemployment, sickness, and special benefits in 1945.[36][38]

Canada

Canada's welfare programs[39] are funded and administered at all levels of government (with 13 different[39] provincial/territorial systems), and include medicare, public education (through graduate school), social housing and social services. Social support is given through programs including Social Assistance, Guaranteed Income Supplement, Child Tax Benefit, Old Age Security, Employment Insurance, Workers' Compensation, and the Canada/Quebec Pension Plans.[40]

France

After 1830 in France Liberalism and economic modernization were key goals. While liberalism was individualistic and laissez-faire in Britain and the United States, in France liberalism was based instead on a solidaristic conception of society, following the theme of the French Revolution, Liberté, égalité, fraternité ("liberty, equality, fraternity"). In the Third Republic, especially between 1895 and 1914 "Solidarité" ["solidarism"] was the guiding concept of a liberal social policy, whose chief champions were the prime ministers Leon Bourgeois (1895–96) and Pierre Waldeck-Rousseau (1899-1902).[41][42] The French welfare state expanded when it tried to follow some of Bismarck's policies.[43][44] Poor relief was the starting point.[45] More attention was paid to industrial labour in the 1930s during a short period of socialist political ascendency, with the Matignon Accords and the reforms of the Popular Front.[46] Paxton points out these reforms were paralleled and even exceeded by measures taken by the Vichy regime in the 1940s.

Germany

Otto von Bismarck, the powerful Chancellor of Germany (in office 1871–90), developed the first modern welfare state by building on a tradition of welfare programs in Prussia and Saxony that had begun as early as in the 1840s. The measures that Bismarck introduced – old-age pensions, accident insurance, and employee health insurance – formed the basis of the modern European welfare state. His paternalistic programs aimed to forestall social unrest and to undercut the appeal of the new Social Democratic Party, and to secure the support of the working classes for the German Empire, as well as to reduce emigration to the United States, where wages were higher but welfare did not exist.[47][48] Bismarck further won the support of both industry and skilled workers through his high-tariff policies, which protected profits and wages from American competition, although they alienated the liberal intellectuals who wanted free trade.[49][50] During the 12 years of rule by Adolf Hitler's National Socialist German Workers' Party the welfare state was expanded and extended to the point where over 17 million German citizens were receiving assistance under the auspices of the National Socialist People's Welfare (NSV) by 1939, an agency that projected a powerful image of caring and support.[34] Some policies enacted to enhance social welfare in Germany were Health Insurance 1883, Accident Insurance 1884, Old Age Pensions 1889, and National Unemployment Insurance 1927.

Latin America

Welfare states in Latin America have been considered as "welfare states in transition"[51] or "emerging welfare states".[52] Mesa-Lago has classified the countries taking into account the historical experience of their welfare systems.[53] The pioneers were Uruguay, Chile and Argentina, as they started to develop the first welfare programs in the 1920s following a bismarckian model. Other countries such as Costa Rica developed a more universal welfare system (1960s–1970s) with social security programs based on the Beveridge model.[54] Researchers such as Martinez-Franzoni[55] and Barba-Solano[56] have examined and identified several welfare regime models based on the typology of Esping-Andersen. Other scholars such as Riesco[57] and Cruz-Martinez[58] have examined the welfare state development in the region.

According to Alex Segura-Ubiergo:

Latin American countries can be unequivocally divided into two groups depending on their 'welfare effort' levels. The first group, which for convenience we may call welfare states, includes Uruguay, Argentina, Chile, Costa Rica, and Brazil. Within this group, average social spending per capita in the 1973–2000 period was around $532, while as a percentage of GDP and as a share of the budget, social spending reached 51.6 and 12.6 percent, respectively. In addition, between approximately 50 and 75 percent of the population is covered by the public health and pension social security system. In contrast, the second group of countries, which we call non-welfare states, has welfare-effort indices that range from 37 to 88. Within this second group, social spending per capita averaged $96.6, while social spending as a percentage of GDP and as a percentage of the budget averaged 5.2 and 34.7 percent, respectively. In terms of the percentage of the population actually covered, the percentage of the active population covered under some social security scheme does not even reach 10 percent.[59]

Middle East

Saudi Arabia,[60][61][62] Kuwait,[63] and Qatar have become welfare states exclusively for their own citizens.

Nordic countries
Main article: Nordic model

The Nordic welfare model refers to the welfare policies of the Nordic countries, which also tie into their labor market policies. The Nordic model of welfare is distinguished from other types of welfare states by its emphasis on maximizing labor force participation, promoting gender equality, egalitarian and extensive benefit levels, the large magnitude of income redistribution and liberal use of the expansionary fiscal policy.[64]

While there are differences among the Nordic countries, they all share a broad commitment to social cohesion, a universal nature of welfare provision in order to safeguard individualism by providing protection for vulnerable individuals and groups in society and maximizing public participation in social decision-making. It is characterized by flexibility and openness to innovation in the provision of welfare. The Nordic welfare systems are mainly funded through taxation.[65]

People's Republic of China

China traditionally relied on the extended family to provide welfare services.[66] The one-child policy introduced in 1978 has made that unrealistic, and new models have emerged since the 1980s as China has rapidly become richer and more urban. Much discussion is underway regarding China's proposed path toward a welfare state.[67] Chinese policies have been incremental and fragmented in terms of social insurance, privatization, and targeting. In the cities, where the rapid economic development has centered, lines of cleavage have developed between state-sector and non-state-sector employees, and between labor-market insiders and outsiders.[68]

United Kingdom

Historian Derek Fraser tells the British story in a nutshell:

It germinated in the social thought of late Victorian liberalism, reached its infancy in the collectivism of the pre-and post-Great War statism, matured in the universalism of the 1940s and flowered in full bloom in the consensus and affluence of the 1950s and 1960s. By the 1970s it was in decline, like the faded rose of autumn. Both UK and US governments are pursuing in the 1980s monetarist policies inimical to welfare.[69]

The modern welfare state in the United Kingdom began operations with the Liberal welfare reforms of 1906–1914 under Liberal Prime Minister H. H. Asquith.[70] These included the passing of the Old-Age Pensions Act in 1908, the introduction of free school meals in 1909, the 1909 Labour Exchanges Act, the Development Act 1909, which heralded greater Government intervention in economic development, and the enacting of the National Insurance Act 1911 setting up a national insurance contribution for unemployment and health benefits from work.[71][72]

The minimum wage was introduced in the United Kingdom in 1909 for certain low-wage industries and expanded to numerous industries, including farm labour, by 1920. However, by the 1920s, a new perspective was offered by reformers to emphasize the usefulness of family allowance targeted at low-income families was the alternative to relieving poverty without distorting the labour market.[73][74] The trade unions and the Labour Party adopted this view. In 1945, family allowances were introduced; minimum wages faded from view. Talk resumed in the 1970s, but in the 1980s the Thatcher administration made it clear it would not accept a national minimum wage. Finally, with the return of Labour, the National Minimum Wage Act 1998 set a minimum of ₤3.60 per hour, with lower rates for younger workers. It largely affected workers in high turnover service industries such as fast food restaurants, and members of ethnic minorities.[75]

December 1942 saw the publication of the Report of the Inter-Departmental Committee on Social Insurance and Allied Services, commonly known as the Beveridge Report after its chairman, Sir William Beveridge. The Beveridge Report proposed a series of measures to aid those who were in need of help, or in poverty and recommended that the government find ways of tackling what the report called "the five giants": Want, Disease, Ignorance, Squalor, and Idleness. It urged the government to take steps to provide citizens with adequate income, adequate health care, adequate education, adequate housing, and adequate employment, proposing that "All people of working age should pay a weekly National Insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired, or widowed."

The Beveridge Report assumed that:

  • the National Health Service would provide free health care to all citizens
  • a Universal Child Benefit would give benefits to parents, encouraging people to have children by enabling them to feed and support a family

The report stressed the lower costs and efficiency of universal benefits. Beveridge cited miners' pension schemes as examples of some of the most efficient available and argued that a universal state scheme would be cheaper than a myriad of individual friendly societies and private insurance schemes and also less expensive to administer than a means-tested government-run welfare system for the poor.

The Liberal Party, the Conservative Party, and then the Labour Party all adopted the Beveridge Report's recommendations.[76] Following the Labour election victory in the 1945 general election many of Beveridge's reforms were implemented through a series of Acts of Parliament. On 5 July 1948, the National Insurance Act, National Assistance Act and National Health Service Act came into force, forming the key planks of the modern UK welfare state. In 1949, the Legal Aid and Advice Act was passed, providing the "fourth pillar"[77] of the modern welfare state, access to advice for legal redress for all.

Before 1939, most health care had to be paid for through non-government organisations – through a vast network of friendly societies, trade unions, and other insurance companies, which counted the vast majority of the UK working population as members. These organizations provided insurance for sickness, unemployment, and disability, providing an income to people when they were unable to work. As part of the reforms, the Church of England also closed down its voluntary relief networks and passed the ownership of thousands of church schools, hospitals and other bodies to the state.[78]

Welfare systems continued to develop over the following decades. By the end of the 20th-century parts of the welfare system had been restructured, with some provision channelled through non-governmental organizations which became important providers of social services.[79]

United States
Main articles: History of Social Security in the United States and Social programs in the United States

The United States developed a limited welfare state in the 1930s.[80] The earliest and most comprehensive philosophical justification for the welfare state was produced by an American, the sociologist Lester Frank Ward (1841–1913), whom the historian Henry Steele Commager called "the father of the modern welfare state".

Ward saw social phenomena as amenable to human control. "It is only through the artificial control of natural phenomena that science is made to minister to human needs" he wrote, "and if social laws are really analogous to physical laws, there is no reason why social science should not receive practical application such as have been given to physical science."[81] Ward wrote:

The charge of paternalism is chiefly made by the class that enjoys the largest share of government protection. Those who denounce it are those who most frequently and successfully invoke it. Nothing is more obvious today than the single inability of capital and private enterprise to take care of themselves unaided by the state; and while they are incessantly denouncing "paternalism," by which they mean the claim of the defenseless laborer and artisan to a share in this lavish state protection, they are all the while besieging legislatures for relief from their own incompetency, and "pleading the baby act" through a trained body of lawyers and lobbyists. The dispensing of national pap to this class should rather be called "maternalism," to which a square, open, and dignified paternalism would be infinitely preferable. [82]

Ward's theories centred around his belief that a universal and comprehensive system of education was necessary if a democratic government was to function successfully. His writings profoundly influenced younger generations of progressive thinkers such as Theodore Roosevelt, Thomas Dewey, and Frances Perkins (1880–1965), among others.[83]

The United States was the only industrialized country that went into the Great Depression of the 1930s with no social insurance policies in place. In 1935 Franklin D. Roosevelt's New Deal instituted significant social insurance policies. In 1938 Congress passed the Fair Labor Standards Act, limiting the work week to 40 hours and banning child labor for children under 16, over stiff congressional opposition from the low-wage South.[80]

The Social Security law was very unpopular among many groups – especially farmers, who resented the additional taxes and feared they would never be made good. They lobbied hard for exclusion. Furthermore, the Treasury realized how difficult it would be to set up payroll deduction plans for farmers, for housekeepers who employed maids, and for non-profit groups; therefore they were excluded. State employees were excluded for constitutional reasons (the federal government in the United States cannot tax state governments). Federal employees were also excluded.

By 2013, the U.S. remained the only major industrial state without a uniform national sickness program. American spending on health care (as a percent of GDP) is the highest in the world, but it is a complex mix of federal, state, philanthropic, employer and individual funding. The US spent 16% of its GDP on health care in 2008, compared to 11% in France in second place.[84]

Some scholars, such as Gerard Friedman, argue that labor-union weakness in the Southern United States undermined unionization and social reform throughout the United States as a whole, and is largely responsible for the anemic U.S. welfare state.[85] Sociologists Loïc Wacquant and John L. Campbell contend that since the rise of neoliberal ideology in the late 1970s and early 1980s, an expanding carceral state, or government system of mass incarceration, has largely supplanted the increasingly retrenched social welfare state, which has been justified by its proponents with the argument that the citizenry must take on personal responsibility.[86][87][88] Scholars assert that this transformation of the welfare state to a post-welfare punitive state, along with neoliberal structural adjustment policies and the globalization of the U.S. economy, have created more extreme forms of "destitute poverty" in the U.S. which must be contained and controlled by expanding the criminal justice system into every aspect of the lives of the poor.[89]

Other scholars such as Esping-Andersen argue that the welfare state in the United States has been characterized by private provision because such a state would better reflect the racial and sexual biases within the private sector. The disproportionate number of racial and sexual minorities in private sector jobs with weaker benefits, he argues, is evidence that the American welfare state is not necessarily intended to improve the economic situation of such groups.[64]

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Broadly speaking, welfare states are either universal, with provisions that cover everybody; or selective, with provisions covering only those deemed most needy. In his 1990 book, The Three Worlds of Welfare Capitalism, Danish sociologist Gøsta Esping-Andersen further identified three subtypes of welfare state models.[90]

Since the building of the decommodification index is limited[lower-alpha 1] and the typology is debatable, these 18 countries could be ranked from most purely social-democratic (Sweden) to the most liberal (the United States).[91]:597 Ireland represents a near-hybrid model whereby two streams of unemployment benefit exist: contributory and means-tested. However, payments can begin immediately and are theoretically available to all Irish citizens even if they have never worked, provided they are habitually resident.[92]

Social stigma varies across the three conceptual welfare states. Particularly, it is highest in liberal states, and lowest in social democratic states. Espring-Andersen proposes that the universalist nature of social democratic states eliminate the duality between beneficiaries and non-recipients, whereas in means-tested liberal states there is resentment towards redistribution efforts. That is to say, the lower the percent of GDP spent on welfare, the higher the stigma of the welfare state.[64]

Esping-Andersen also argues that welfare states set the stage for post-industrial employment evolution in terms of employment growth, structure, and stratification. He uses Germany, Sweden, and the United States to provide examples of the differing results of each of the three welfare states.[64]

According to the Swedish political scientist Bo Rothstein, in non-universal welfare states, the state is primarily concerned with directing resources to "the people most in need". This requires tight bureaucratic control in order to determine who is eligible for assistance and who is not. Under universal models such as Sweden, on the other hand, the state distributes welfare to all people who fulfill easily established criteria (e.g. having children, receiving medical treatment, etc.) with as little bureaucratic interference as possible. This, however, requires higher taxation due to the scale of services provided. This model was constructed by the Scandinavian ministers Karl Kristian Steincke and Gustav Möller in the 1930s and is dominant in Scandinavia.[93]

Sociologist Lane Kenworthy argues that the Nordic experience demonstrates that the modern social democratic model can "promote economic security, expand opportunity, and ensure rising living standards for all ... while facilitating freedom, flexibility and market dynamism."[94]

American political scientist Benjamin Radcliff has also argued that the universality and generosity of the welfare state (i.e. the extent of decommodification) is the single most important societal-level structural factor affecting the quality of human life, based on the analysis of time serial data across both the industrial democracies and the American States. He maintains that the welfare state improves life for everyone, regardless of social class (as do similar institutions, such as pro-worker labor market regulations and strong labor unions).[95][lower-alpha 2]

Effects of welfare on poverty

Empirical evidence suggests that taxes and transfers considerably reduce poverty in most countries whose welfare states constitute at least a fifth of GDP.[96][97]

Country Absolute poverty rate (1960–1991)
(threshold set at 40% of U.S. median household income)[96]		 Relative poverty rate (1970–1997)[97]
Pre-welfare Post-welfare Pre-welfare Post-welfare
 Sweden23.75.814.84.8
 Norway9.21.712.44.0
 Netherlands22.17.318.511.5
 Finland11.93.712.43.1
 Denmark26.45.917.44.8
 Germany15.24.39.75.1
  Switzerland12.53.810.99.1
 Canada22.56.517.111.9
 France36.19.821.86.1
 Belgium26.86.019.54.1
 Australia23.311.916.29.2
 United Kingdom16.88.716.48.2
 United States21.011.717.215.1
 Italy30.714.319.79.1

Effects of social expenditure on economic growth, public debt and education

Researchers have found very little correlation between economic performance and social expenditure.[98] They also see little evidence that social expenditures contribute to losses in productivity; economist Peter Lindert of the University of California, Davis attributes this to policy innovations such as the implementation of "pro-growth" tax policies in real-world welfare states.[99]

Nor have social expenses contributed significantly to public debt.

According to the OECD, social expenditures in its 34 member countries rose steadily between 1980 and 2007, but the increase in costs was almost completely offset by GDP growth. More money was spent on welfare because more money circulated in the economy and because government revenues increased. In 1980, the OECD averaged social expenditures equal to 16 percent of GDP. In 2007, just before the financial crisis kicked into full gear, they had risen to 19 percent – a manageable increase.[100]

A Norwegian study covering the period 1980 to 2003 found welfare state spending correlated negatively with student achievement.[101] However, many of the top-ranking OECD countries on the 2009 PISA tests are considered welfare states.[102]

The table below shows social expenditure as a percentage of GDP for OECD member states in 2018:

NationSocial expenditure
(% of GDP)[103]		Year[lower-alpha 3]
 France 31.22018
 Belgium 28.92018
 Finland 28.72018
 Denmark 28.02018
 Italy 27.92018
 Austria 26.62018
 Sweden 26.12018
 Germany 25.12018
 Norway 25.02018
 Spain 23.72018
 Greece 23.52018
 Portugal 22.62018
 Luxembourg 22.42018
 Japan 21.92015
 Slovenia 21.22018
 Poland 21.12018
 United Kingdom 20.62018
 Hungary 19.42018
 New Zealand 18.92018
 Czech Republic 18.72018
 United States 18.72018
 Estonia 18.42018
 Australia 17.82016
 Canada 17.32017
 Netherlands 16.72018
 Latvia 16.22018
 Lithuania 16.22018
 Israel 16.02017
  Switzerland 16.02018
 Iceland 16.02018
 Ireland 14.42018
 Turkey 12.52016
 South Korea 11.12018
 Chile 10.92017
 Mexico 7.52016

Criticism and response

Early conservatives, under the influence of Thomas Malthus, opposed every form of social insurance "root and branch". They argued, according to economist Brad DeLong, that it would "make the poor richer, and they would become more fertile. As a result, farm sizes would drop (as the land was divided among ever more children), labor productivity would fall, and the poor would become even poorer. Social insurance was not just pointless; it was counterproductive."[104] Malthus, a clergyman for whom birth control was anathema, believed that the poor needed to learn the hard way to practice frugality, self-control and chastity. Traditional conservatives also protested that the effect of social insurance would be to weaken private charity and loosen traditional social bonds of family, friends, religious and non-governmental welfare organisations.[105]

On the other hand, Karl Marx opposed piecemeal reforms advanced by middle-class reformers out of a sense of duty. In his Address of the Central Committee to the Communist League, written after the failed revolution of 1848, he warned that measures designed to increase wages, improve working conditions and provide social insurance were merely bribes that would temporarily make the situation of working classes tolerable to weaken the revolutionary consciousness that was needed to achieve a socialist economy.[lower-alpha 4] Nevertheless, Marx also proclaimed that the Communists had to support the bourgeoisie wherever it acted as a revolutionary progressive class because "bourgeois liberties had first to be conquered and then criticised".[107]

In the 20th century, opponents of the welfare state have expressed apprehension about the creation of a large, possibly self-interested, bureaucracy required to administer it and the tax burden on the wealthier citizens that this entailed.[108]

Political historian Alan Ryan points out that the modern welfare state stops short of being an "advance in the direction of socialism.... its egalitarian elements are more minimal than either its defenders or its critics think". It does not entail advocacy for social ownership of industry. The modern welfare state, Ryan writes, does not set out

to make the poor richer and the rich poorer, which is a central element in socialism, but to help people to provide for themselves in sickness while they enjoy good health, to put money aside to cover unemployment while they are in work, and to have adults provide for the education of their own and other people's children, expecting those children's future taxes to pay in due course for the pensions of their parents' generation. These are devices for shifting income across different stages in life, not for shifting income across classes. Another distinct difference is that social insurance does not aim to transform work and working relations; employers and employees pay taxes at a level they would not have done in the nineteenth century, but owners are not expropriated, profits are not illegitimate, cooperativism does not replace hierarchical management.[109]

Historian Walter Scheidel has commented that the establishment of welfare states in the West in the early 20th century could be partly a reaction by elites to the Bolshevik Revolution and its violence against the bourgeoisie, which feared violent revolution in its own backyard. They were diminished decades later as the perceived threat receded:

It's a little tricky because the US never really had any strong leftist movement. But if you look at Europe, after 1917 people were really scared about communism in all the Western European countries. You have all these poor people, they might rise up and kill us and take our stuff. That wasn't just a fantasy because it was happening next door. And that, we can show, did trigger steps in the direction of having more welfare programs and a rudimentary safety net in response to fear of communism. Not that they [the communists] would invade, but that there would be homegrown movements of this sort. American populism is a little different because it's more detached from that. But it happens roughly at the same time, and people in America are worried about communism, too – not necessarily very reasonably. But that was always in the background. And people have only begun to study systematically to what extent the threat, real or imagined, of this type of radical regime really influenced policy changes in Western democracies. You don't necessarily even have to go out and kill rich people – if there was some plausible alternative out there, it would arguably have an impact on policy making at home. That's certainly there in the 20s, 30s, 40s, 50s, and 60s. And there's a debate, right, because it becomes clear that the Soviet Union is really not in very good shape, and people don't really like to be there, and all these movements lost their appeal. That's a contributing factor, arguably, that the end of the Cold War coincides roughly with the time when inequality really starts going up again, because elites are much more relaxed about the possibility of credible alternatives or threats being out there.[110]

See also
  • Constitutional economics
  • Corporate welfare
  • Fifth power
  • Flexicurity
  • Free rider problem
  • Happiness economics
  • Hidden welfare state
  • Nanny state
  • Social policy
  • Social protection
  • Social stratification
  • State Socialism (Germany)
  • Unintended consequences
  • Welfare capitalism
  • Welfare reform
  • Welfare state in the United Kingdom
Models
Transfer of wealth
  • Cloward–Piven strategy
  • Transfer payment
Housing
  • Council house
  • Housing estate
  • Public housing
  • Subsidized housing

Notes
  1. According to the French sociologist Georges Menahem, Esping-Andersen's "decommodification index" aggregates both qualitative and quantitative variables for "sets of dimensions" which fluid, and pertain to three very different areas. These characters involve similar limits of the validity of the index and of its potential for replication. Cf. Menahem 2007.
  2. See also "this collection of full-text peer-reviewed scholarly articles on this subject" by Radcliff and colleagues (such as "Social Forces," "The Journal of Politics," and "Perspectives on Politics," among others)
  3. For social expenditure figures.
  4. "However, the democratic petty bourgeois want better wages and security for the workers, and hope to achieve this by an extension of state employment and by welfare measures; in short, they hope to bribe the workers with a more or less disguised form of alms and to break their revolutionary strength by temporarily rendering their situation tolerable."[106]

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