Welfare States in Transition: National Adaptations in Global Economies


Edited by: Gøsta Esping-Andersen

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  • United Nations Research Institute for Social Development

    The United Nations Research Institute for Social Development (UNRISD) is an autonomous agency that engages in multi-disciplinary research on the social dimensions of contemporary problems affecting development. Its work is guided by the conviction that, for effective development policies to be formulated, an understanding of the social and political context is crucial. The Institute attempts to provide governments, development agencies, grassroots organizations and scholars with a better understanding of how development policies and processes of economic, social and environmental change affect different social groups. Working through an extensive network of national research centres, UNRISD aims to promote original research and strengthen research capacity in developing countries.

    Its research themes include Crisis, Adjustment and Social Change; Socio-Economic and Political Consequences of the International Trade in Illicit Drugs; Environment, Sustainable Development and Social Change; Ethnic Conflict and Development; Integrating Gender into Development Policy; Participation and Changes in Property Relations in Communist and Post-Communist Societies; Refugees, Returnees and Local Society; and Political Violence and Social Movements. UNRISD research projects focused on the 1995 World Summit for Social Development included Rethinking Social Development in the 1990s; Economic Restructuring and New Social Policies; Ethnic Diversity and Public Policies; and the War-Torn Societies Project.

    A list of the Institute's free and priced publications can be obtained by writing to: UNRISD, Reference Centre, Palais des Nations, CH-1211, Geneva 10, Switzerland.


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    The future of the welfare state, the theme of this book, is one of the most important social issues of our times. The publication of this book could not therefore be more timely as social policy everywhere is in a state of flux and is hence a subject of intense and passionate debate. The great virtue of this book is that it looks at the welfare state in a historical and comparative perspective, analysing its recent evolution and likely trends in the light of startling changes in recent years in economic policy, social structures and political configurations. The result is an admirable survey of the key forces shaping the welfare state in different regions of the world and an insightful exploration of alternative responses and options in an increasingly integrated global economy.

    The welfare state is the culmination of a centuries-old struggle for social protection and security in the industrialized countries. It may justly be regarded as one of their proudest achievements in the post-war period. It set a model and a standard for aspiration for the newly industrializing and transitional countries as also for the poorer countries. All too often the welfare state is treated as a homogeneous entity and as an economic project. This book brings out clearly the rich diversity of the welfare state not only across different regions of the world but among the advanced industrialized countries themselves.

    At the same time the book reveals the multifaceted character of the welfare state. It is at one and the same time a manifestation of a political community, an expression of social solidarity, and an attempt to eliminate destitution, reduce class differences and forge cohesive and stable communities. It has served as a defining element in national identity and citizenship. Now that the welfare state is under threat from powerful forces and interests, it is important to recall its encompassing mission and solid achievements in promoting economic security and well-being, human dignity and social solidarity, political participation and empowerment.

    Almost everywhere the welfare state is under siege and is being recast in new directions. A number of forces have come together to question its viability, efficacy and utility. These forces include ageing of the population, changes in family structures, slowdown in economic growth, high levels of unemployment, soaring budget deficits, growing resistance to high taxes, ascendancy of market forces, privatization of economic and social activities, increasing national and international competition, accelerated globalization and technological change. The pressures exerted by these forces are being reinforced by new ideologies and powerful interests stressing the harmful economic, social and psychological effects of the operation of the welfare state. The result is that an increasing number of countries are dismantling key programmes, reducing the scope and diluting the level and range of benefits.

    What can be done in this situation? There appears to be a need for action on several fronts to preserve the major achievements of the welfare state. First, there must be reform of the welfare state to eliminate or reduce its abuses and adverse effects. For instance, if welfare provisions discourage the search for work and the acquisition of skills, or give incentives to unjustified absenteeism, their reform is needed for both efficiency and equity. Efficiency may also be promoted through greater decentralization and community participation in the planning and implementation of social security and welfare. Likewise beyond a certain point, high rates of taxation can exert strong adverse effects on work, investment and risk taking and reward efforts to evade taxes.

    Second, policies which promote growth and employment are also likely to be beneficial for preservation and strengthening of the welfare system. By the same token, sustained economic crisis and stagnation are likely to erode the support and viability of comprehensive welfare schemes. Third, a certain measure of coordination of social policy of countries at similar stages of development may be necessary to resist pressures to improve competitive positions through progressive dismantling or dilution of the welfare state. Fourth, efforts must be stepped up at national and international levels to promote growth, employment and provision of a core set of entitlements in poor countries. In the long run, the surest guarantee for the preservation of the welfare state in the advanced countries must lie in a steady reduction of international income inequalities and a gradual extension of social protection and welfare to the disadvantaged population of the world.


    Director, United Nations Research Institute for Social Development

    Editor's Preface

    This book is the result of a study commissioned by UNRISD in preparation for the United Nations World Summit in Copenhagen, March 1995. The idea was to assess the future of the beleaguered welfare states of Western Europe, North America and the Antipodes and, at the same time, the prospects for welfare state construction in the newly democratized nations in East Asia, Latin America, and East-Central Europe. The latter group includes countries with existing, if perhaps rudimentary, social security systems and some, like the ex-communist nations, which once boasted genuine and comprehensive ‘Soviet’ welfare models, now rapidly being undone. Some Latin American nations, like Argentina and Chile, have a long tradition of social insurance, but now espouse liberalization. The East Asian countries now match Europe in economic development, but their social security systems remain, so far, much less comprehensive.

    Trends in the ‘new’ industrial democracies, in fact, fit badly with conventional modernization theory, which claimed that economic development breeds institutional convergence. Our study will examine one group of countries – led by Chile – which has adopted a neo-liberal course; another, exemplified by Costa Rica, which exhibits embryonic social democratic traits; and a third, more hybrid path, characteristic of the East Asian nations.

    It is clearly not the case that all developing nations will follow the Western welfare state trajectory. But then it is now obvious that the advanced Western democracies built highly diverse social security systems. Moreover, their response to the contemporary crisis is as diverse as are social policy developments in the ‘new’ nations. In brief, the neo-liberal deregulatory thrust is present in advanced welfare states such as the United States, Great Britain and the Antipodes, and also in new industrial democracies. Other new and old industrial democracies pursue radically different approaches. In this regard, our study could not escape the necessity of omission. Within the group of advanced nations, the omission of Britain may seem curious, both because it was a welfare state pioneer, and because it is the only notable case of radical change in Europe so far. We shall discuss this case in passing, but it proved too difficult to include it under any of the region headings. In any case, the literature on the British case is voluminous. Likewise, it proved logistically impossible to include major countries such as India or the People's Republic of China, and the entire African continent.

    The study is structured as a double-layered comparison. We compare global ‘welfare state regions’, and select nations within each region. One criterion for our selection of regions has to do with their respective position in the new global order. Many of the difficulties facing the Western welfare states are linked to the new competition from East Asia, East Europe, and Latin America; in turn, as the latter become successful industrializers, their traditional forms of social protection become untenable if not outright incompatible with sustained growth and democracy. The regions we examine are, additionally, quite distinct in terms of cultural and political legacies, economic development, and shared social policy traditions.

    Nonetheless, in each region we discover sharply different and, in most cases, opposite policy choices. The Anglo-Saxon nations have favoured deregulation, but with varying degrees of commitment to equality. Europe is bifurcating into a vaguely distinguishable renovation of the Nordic social democratic welfare state amidst crisis, and essentially ‘frozen’ continental European welfare states. Likewise, we see the contours of two distinct Latin American and East-Central European trajectories, one with a strong neoliberal bias, another more ‘social democratic’.


    Notes on the Contributors

    Francis G. Castles is Coordinator of the Reshaping Australian Institutions project in the Research School of Social Sciences at the Australian National University, having formerly been Professor of Public Policy and Head of the Graduate Program in Public Policy at the same university. He is a specialist in social policy development in both Scandinavia and Australasia and has been editor of a number of influential books in the area of comparative public policy, including The Impact of Parties (Sage, 1982), The Comparative History of Public Policy (Polity Press, 1989) and Families of Nations (Dartmouth Press, 1993).

    Gøsta Esping-Andersen is currently Professor of Comparative Social Systems at the University of Trento, Italy. He has previously taught at Harvard University and at the European University in Florence. His research has concentrated on social democracy, comparative social policy, welfare states, and labour markets. He is the author of Politics against Markets (Princeton University Press, 1985) and The Three Worlds of Welfare Capitalism (Polity Press and Princeton University Press, 1990), and co-author and editor of Changing Classes (Sage, 1993).

    Roger Goodman is a Fellow of St Antony's College and Lecturer in the Social Anthropology of Japan at the University of Oxford. He is the author of Japan's ‘International Youth’ (Oxford University Press, 1990) and Kikokushijo (Iwanami Shoten, 1992); and co-editor and author of Ideology and Practice in Modern Japan (Routledge, 1992) and Case Studies on Human Rights in Japan (Japan Library, 1996).

    Evelyne Huber is Morehead Alumni Professor of Political Science and Director of the Institute of Latin American Studies at the University of North Carolina. Her research interests are in the areas of democratic politics and social policy, comparing Latin America, Europe and the Caribbean. Among her publications are The Politics of Workers' Participation: the Peruvian Approach in Comparative Perspective (Academic Press, 1980); Democratic Socialism in Jamaica (with John D. Stephens, Princeton University Press, 1986) and Capitalist Development and Democracy (with Dietrich Rueschemeyer and John D. Stephens, Polity Press and University of Chicago Press, 1992).

    John Myles, previously Professor of Sociology at Carleton University, Ottawa, is currently Professor of Sociology at Florida State University. He has published widely on the welfare state, labour markets, and contemporary class structures. His most recent book is Relations of Ruling (with Wallace Clements, McGill—Queens University Press, 1994).

    Ito Peng, born in Taiwan, was educated in Japan and Canada and obtained her PhD from the London School of Economics. At the time of writing, she was Post-Doctoral Fellow associated with the Suntory and Toyota International Centre for Economics and Related Disciplines (STICERD) at LSE, and was undertaking further research on East Asian welfare regimes at the Institute of Social Science, University of Tokyo. She is now a Lecturer at Hokusei Gakuen University in Sapporo, Japan. She has worked at policy level with the Ministry of Health and Welfare in Japan and with the Ontario Provincial Government in Canada.

    Guy Standing is Director of Labour Market Polities in the International Labour Organization. From 1992 to 1994, he was Director of the ILO's Central and Eastern European Team, based in Budapest, responsible for the ILO's technical and advisory work. He has a doctorate in economics from the University of Cambridge, and among his most recent publications are Reviving Dead Souls: Enterprise Restructuring and Mass Unemployment in Russia (Macmillan, 1996) and Minimum Wages in Central and Eastern Europe: From Protection to Destitution (edited with Daniel Vaughan-Whitehead, Central European University Press, 1995). He is co-chairman of the Basic Income European Network.

    John D. Stephens is Professor of Political Science and Sociology at the University of North Carolina at Chapel Hill. He is the author of The Transition from Capitalism to Socialism (Macmillan, 1979), and the coauthor of Democratic Socialism in Jamaica (with Evelyne Huber Stephens, Princeton University Press, 1986) and of Capitalist Development and Democracy (with Dietrich Rueschemeyer and Evelyne Huber Stephens, Polity Press and University of Chicago Press, 1992). He is currently working on a comparative historical and quantitative study of the social origins and outcomes of welfare states, and on the current impasse of social democracy.

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