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. Historically, the Islamic Caliphate under Umar was the first welfare state. In modern history, late-19th-century Imperial Germany (1871–1918) was the first welfare state, which Chancellor Otto von Bismarck established with the social-welfare legislation that extended the privileges of the Junker social class to ordinary Germans. Sociologist T. H. Marshall described the modern welfare state as a distinctive combination of democracy, welfare, and capitalism.
As a type of mixed economy,
the welfare state funds the governmental institutions for healthcare
and education along with direct benefits paid to individual citizens. Modern welfare states include Germany and France, Belgium and the Netherlands, as well as the Nordic countries, which employ a system known as the Nordic model.
The various implementations of the welfare state fall into three
categories: (i) social democratic, (ii) conservative, and (iii) liberal.
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. 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. 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." 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". 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 Whig 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.
The Swedish welfare state is called folkhemmet
("the people's home") and goes back to the 1936 compromise, as well as
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. 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.
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.
History of welfare states
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" (http://www.cs.colostate.edu/~malaiya/ashoka.html)
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. Ashoka renounced war and conquest by violence and forbade the killing of many animals.
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 empire. Shady groves, wells,
orchards and rest houses were laid out. Ashoka also prohibited useless sacrifices and certain forms of gatherings which led to waste, indiscipline and superstition.
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.
The concepts of welfare and pension were introduced in early Islamic law as forms of Zakat (charity), one of the Five Pillars of Islam, under the Rashidun Caliphate in the 7th century. This practice continued well into the Abbasid era of the Caliphate. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali
(Algazel, 1058–1111), the government was also expected to stockpile
food supplies in every region in case a disaster or famine occurred. The
Caliphate can thus be considered the world's first major welfare state.
Historian Robert Paxton
observes that on the European continent the provisions of the welfare
state were originally enacted by conservatives in the late nineteenth
century and by fascists in the twentieth in order to distract workers
from unions and socialism, and were opposed by leftists and radicals. He
recalls that the German welfare state was set up in the 1880s by Chancellor Bismarck, who had just closed 45 newspapers and passed laws banning the German Socialist Party and other meetings by trade unionists and socialists. A similar version was set up by Count Eduard von Taaffe in the Austro-Hungarian Empire
a few years later. Legislation to help the working class in Austria
emerged from Catholic conservatives. They turned to social reform by
using Swiss and German models and intervening in state economic matters.
They studied the Swiss Factory Act of 1877 that limited working hours
for everyone, and gave maternity benefits, and German laws that insured
workers against industrial risks inherent in the workplace. These served
as the basis for Austria's 1885 Trade Code Amendment.
"All the modern twentieth-century European dictatorships of the
right, both fascist and authoritarian, were welfare states", Paxton
writes. "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."
Continental European Marxists opposed piecemeal welfare measures as
likely to dilute worker militancy without changing anything fundamental
about the distribution of wealth and power. It was only after World War
II, when they abandoned Marxism (in 1959 in West Germany, for example),
that continental European socialist parties and unions fully accepted
the welfare state as their ultimate goal.
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. 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.
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.
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.
Canada
Canada's welfare programs are funded and administered at all levels of government (with 13 different
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.
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). The French welfare state expanded when it tried to follow some of Bismarck's policies. Poor relief was the starting point. 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. 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 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. 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.
During the 12 years of Hitler’s Third Reich, the National Socialists
expanded and extended 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 (NSV) by 1939, an agency that had projected a powerful image of caring and support.
Some policies enacted that were representative of welfare state 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' or 'emerging welfare states'. Mesa-Lago has classified the countries taking into account the historical experience of their welfare systems.
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. Researchers such as Martinez-Franzoni and Barba-Solano have examined and identified several welfare regime models based on the
typology of Esping-Andersen. Other scholars such as Riesco and Cruz-Martinez 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.
Middle East
Nordic countries
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 expansionary fiscal policy.
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.
People's Republic of China
China traditionally relied on the extended family to provide welfare services. 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.
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.
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.
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. 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.
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.
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.
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. 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" 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.
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.
United States
The United States developed a limited welfare state in the 1930s.
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." 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.
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.
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.
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 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.
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 anaemic U.S. welfare
state. 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.
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.
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.
Three worlds of the welfare state
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. Though increasingly criticised, these classifications are still used as a starting point in analysis of modern welfare states
and remain a fundamental heuristic tool for welfare state scholars.
Even for those who claim that in-depth analysis of a single case is more
suited to capture the complexity of different social policy
arrangements, welfare typologies can provide a comparative lens that can
help to place single cases in perspective.
Esping-Andersen's welfare classification acknowledges the
historical role of three dominant twentieth-century Western European and
American political movements: Social Democracy (socialism), Christian Democracy (conservatism); and Liberalism.
- The Social-Democratic welfare state model is based on the principle of Universalism, granting access to benefits and services based on citizenship. Such a welfare state is said to provide a relatively high degree of citizen autonomy, limiting reliance on family and market. In this context, social policies are perceived as "politics against the market".
- The Christian-Democratic welfare state model is based on the principle of subsidiarity (decentralization) and the dominance of social insurance schemes, offering a medium level of decommodification and permitting a high degree of social stratification.
- The Liberal model is based on market dominance and private provision; ideally, in this model, the state only interferes to ameliorate poverty and provide for basic needs, largely on a means-tested basis. Hence, the decommodification potential of state benefits is assumed to be low and social stratification high.
Based on the decommodification index, Esping-Andersen divided 18 Organisation for Economic Co-operation and Development (OECD) countries into the following groups:
- Social Democratic: Denmark, Finland, Netherlands, Norway and Sweden
- Christian Democratic: Austria, Belgium, France, Germany, Italy and Spain
- Liberal: Australia, Canada, Japan, New Zealand, Switzerland and US
- Not clearly classified: Ireland and United Kingdom
Since the building of the decommodification index is limited
and the typology is debatable, these 18 countries could be ranked from
most purely social-democratic (Sweden) to the most liberal (the United
States).
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.
Social stigma varies across the three conceptual welfare states.
Particularly, it is highest in liberal states, and lowest in social
democratic states. Espring-Anderson 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.
Esping-Anderson
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.
Swedish professor of political science Bo Rothstein
points out that 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.
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."
Finally, scholars have also proposed to classify welfare regimes
using 'outcomes', such as inequalities, poverty rates, response to
different social risks, rather than simply focusing on institutional
configurations.
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).
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.
| Country | Absolute poverty rate (1960–1991) (threshold set at 40% of U.S. median household income) |
Relative poverty rate (1970–1997) | ||
|---|---|---|---|---|
| Pre-welfare | Post-welfare | Pre-welfare | Post-welfare | |
 Sweden |
23.7 | 5.8 | 14.8 | 4.8 |
 Norway |
9.2 | 1.7 | 12.4 | 4.0 |
 Netherlands |
22.1 | 7.3 | 18.5 | 11.5 |
 Finland |
11.9 | 3.7 | 12.4 | 3.1 |
 Denmark |
26.4 | 5.9 | 17.4 | 4.8 |
 Germany |
15.2 | 4.3 | 9.7 | 5.1 |
 Switzerland |
12.5 | 3.8 | 10.9 | 9.1 |
 Canada |
22.5 | 6.5 | 17.1 | 11.9 |
 France |
36.1 | 9.8 | 21.8 | 6.1 |
 Belgium |
26.8 | 6.0 | 19.5 | 4.1 |
 Australia |
23.3 | 11.9 | 16.2 | 9.2 |
 United Kingdom |
16.8 | 8.7 | 16.4 | 8.2 |
 United States |
21.0 | 11.7 | 17.2 | 15.1 |
 Italy |
30.7 | 14.3 | 19.7 | 9.1 |
Effects of social expenditure on economic growth, public debt and education
Researchers have found very little correlation between economic performance and social expenditure. 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.
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.
A Norwegian study covering the period 1980 to 2003 found welfare state spending correlated negatively with student achievement. However, many of the top-ranking OECD countries on the 2009 PISA tests are considered welfare states.
| Nation | Social expenditure (% of GDP) |
Year |
|---|---|---|
| France
|
31.2 | 2018 |
| Belgium
|
28.9 | 2018 |
| Finland
|
28.7 | 2018 |
| Denmark
|
28.0 | 2018 |
| Italy
|
27.9 | 2018 |
 Austria
|
26.6 | 2018 |
| Sweden
|
26.1 | 2018 |
| Germany
|
25.1 | 2018 |
| Norway
|
25.0 | 2018 |
 Spain
|
23.7 | 2018 |
 Greece
|
23.5 | 2018 |
 Portugal
|
22.6 | 2018 |
 Luxembourg
|
22.4 | 2018 |
 Japan
|
21.9 | 2015 |
 Slovenia
|
21.2 | 2018 |
 Poland
|
21.1 | 2018 |
| United Kingdom
|
20.6 | 2018 |
 Hungary
|
19.4 | 2018 |
 New Zealand
|
18.9 | 2018 |
 Czech Republic
|
18.7 | 2018 |
| United States
|
18.7 | 2018 |
 Estonia
|
18.4 | 2018 |
| Australia
|
17.8 | 2016 |
| Canada
|
17.3 | 2017 |
| Netherlands
|
16.7 | 2018 |
 Latvia
|
16.2 | 2018 |
 Lithuania
|
16.2 | 2018 |
 Israel
|
16.0 | 2017 |
| Switzerland
|
16.0 | 2018 |
 Iceland
|
16.0 | 2018 |
 Ireland
|
14.4 | 2018 |
 Turkey
|
12.5 | 2016 |
 South Korea
|
11.1 | 2018 |
 Chile
|
10.9 | 2017 |
 Mexico
|
7.5 | 2016 |
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 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." 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.
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.
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".
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.
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.
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.
