Welfare State

The concept of a welfare state is difficult to define. In the simplest terms, it refers to a state that has assumed some responsibility for individual welfare through the provision of both income transfers and social services. Government provision of social programs includes pensions, unemployment insurance, invalidity and sick pay, social assistance, family assistance, parental leave, health care, care for the elderly and people with disabilities, employment services, specialized services (e.g., alcohol and drug treatment and foster care), and housing. The earliest welfare state developed in Germany in the late nineteenth century, when the Chancellor Otto von Bismarck extended health and [Page 1020]social insurance benefits to workers. Today, most advanced industrial countries would be classified as welfare states, with social expenditure in 2001 accounting for an average of over twenty percent of Gross Domestic Product in Organisation for Economic Co-operation and Development (OECD) countries, according to OECD figures.

However, many scholars have argued that this definition is radically incomplete. First, government involvement in individual welfare is affected by far more than social policy, with regulation of private provision of services and transfers, support for family provision, and a broader set of state policies in the labor market, education, and overall macroeconomy all playing an important role. Second, social policy generally aims at doing more than narrowly producing individual welfare, and indeed, is often linked to a broader set of economic (and occasionally religious or military) policies. Gøsta Esping-Andersen argued in 1990 that we should look at welfare state regimes or forms of welfare capitalism rather than at the welfare state narrowly, examining the links between social welfare policies and differential state and capitalist structures. This argument presents the governance of the welfare state as part of the broader governance of the modern capitalist economy.

Esping-Andersen argues that the fundamental goals of different welfare states diverge and therefore produce different distributional and social outcomes. Building on Richard Titmuss's early typology of welfare states, Esping-Andersen identifies three types of welfare regimes: Social Democratic, Conservative, and Liberal. For Esping-Andersen, the concept of decommodification is central to this divergence, and he argues that strong unions and social democratic parties were able to use the welfare state to change the character of advanced capitalism. This outcome is best achieved in the Social Democratic regime, which provides high-quality universal services that crowd out private (and family) provision, emphasizes full employment, and thereby produces high levels of decommodification. The Conservative regime also entails high levels of social spending, but this spending occurs primarily through status-maintaining income transfers and policies that support traditional notions of the family and church. These policies reproduce market disparities through welfare transfers, meaning decommodification is less extensive. Finally, the Liberal regime is characterized by meager, means-tested benefits that cater to a mainly poor clientele and entail social stigma, low quality, basic services, all of which force individuals to rely on the market and thereby entail minimal decommodification. For Esping-Andersen, the Scandinavian countries are examples of the Social Democratic model, the Continental European countries represent the Conservative model, and the English-speaking countries generally fall into the Liberal model.

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