West European Welfare States

Introduction In a series of papers, political scientist Paul Pierson sought to answer the question of why welfare states remain so resilient in the face of retrenchment efforts, that is, why big-spending almost socialist welfare states of Western Europe remain so strong despite attempts within their governments to cut spending on social programs. His answer pointed to blame avoidance among politicians: if politicians make welfare state reforms they run the risk of not being reelected due to the tremendous unpopularity of cutbacks on social programs. Elinor Scarbrough’s article, Western European welfare states: The old politics of retrenchment, attempts to rebut Pierson’s argument. She discusses what she thinks is Pierson’s major flaw: his claim that welfare state retrenchment politics cannot be explained at all in terms of original welfare state expansion. Scarbrough argues the opposite instead, claiming that scaling back the welfare state is difficult on account of much of the same pressures that led to the emergence of welfare states.” She focuses first on welfare state theories, then on empirical evidence about the political forces involved in welfare state policymaking. She summarizes it best on page 227: “The common thrust of the arguments is that the constellation of societal problems and political forces that shaped the fundamentals and expansion of welfare states also shape the politics of retrenchment, putting radical reform beyond the grasp of governments.” Theories of the Welfare State All three of the following theories point to the reasons why welfare states exist, that is, why government intervention in the condition of its people ever even arose. Scarbrough then takes contemporary developments in society and compares them to these theories. They are the logic of industrialism, the crisis of capitalism, and nation building. 1. Logic of Industrialism This perspective suggests that the welfare state is both necessary and possible as a result of industrialization. First, the industrialism theory claims that the welfare state exists because it is necessary. With mass industrialization after the Industrial Revolution came mass urbanization, individual and family mobility, the individualization of households, and dependence on wage labor. These factors caused a change in traditional social institutions and left only those in the labor force successful – as the family, churches and guilds as social institutions were no longer able to meet welfare needs, this meant that the young, unemployed, sick and disabled and elderly needed protection. Thus, the welfare state emerged to replace those archaic social institutions. In addition to this, the theory claims that the welfare state is possible as a result of industrialization. Industrialization after

the Industrial Revolution generated an economic surplus for use by the government in advancing societal wellbeing and government efficiency. Pierson argued that the reasons for the emergence of the welfare state have nothing to do with the politics of retrenchment. But as Scarbrough points out, the situation in Western Europe from the viewpoint of the logic of industrialism theory is no different now that it was when the welfare state emerged. Western Europe is highly urbanized and is predicted to become even more highly urbanized. Urbanization has grown from in Western Europe 1975-1995 and is projected to grow at a higher rate through 2015. One-quarter to one-third of populations of the European Union live in large urban concentrations. Also, many urban areas in northwest Europe are losing population which is not compensated for by suburban growth, leading to urban decay and typical inner-city problems. The populations left behind typically face the problems of poverty, deprivation and social exclusion. These trends perpetuate the need for welfare states. The “second demographic transition” away from the typical family social structure which has been occurring since the 1960’s also perpetuates this need. Household sizes are declining and single-person households are rising. Divorce rates and cohabitation rates are rising, as is the number of single-parent households and lifetime childlessness. Three-generation households are no longer the norm as people live longer lives and living standards increase—this explains the population of elderly people living alone. In addition to three-generation households, childcare is affected by the widespread and rising entry of women into the labor market. The dependence on wage labor has also perpetuated the need for welfare states. Unemployment in Western Europe from the 1970’s has risen inexorably which contributed to large public spending in the 80’s and 90’s. Dynamic, flexible, hightechnology economies of today are accompanied by rising part-time and temporary employment. Also, these economies offer little social protection to and cause long-term unemployment of low-skilled workers. The growth of outsourcing, franchising, and working-at-home similarly leaves workers unprotected. Also, for 50% of those in Western Europe who lose full-time jobs, they will re-enter the workforce in a part-time job, denoting a shift from good to bad jobs. Some argue that retrenchment is the only option available to Western European welfare states because the costs of programs are no longer affordable and big government is no longer manageable. However, as Scarbrough points out, Western European welfare states are still possible by the view of the logic of industrialism argument. Western European economies have grown overall and year-to-year since the 1980’s. Retrenchment efforts, therefore, cannot be rooted in failing national prosperity.

Some counter-claim that citizens of Western Europe have become averse to high taxation rates and their shift to more moderate rates is what explains their economic growth. However, Scarbrough shows through polls that there is an overall support for the redistributive and service activities of welfare states. Most in Western Europe actually support extending expenditures on welfare services and desire progressive taxation and the reduction of income differences. Others counter-claim that big government is unmanageable and point to instances of budgetary constraint and administrative reorganization among welfare states. However, these shifts just represent a change from centralized government to more localized administration of welfare activities and oversight. 2. Contradictions of Capitalism This theory suggests that welfare states originated in efforts to mediate the inherent contradictions of capitalism and democracy; to ensure favorable conditions for capital formation and protect society from class conflicts caused by that formation. Unemployment in Western Europe runs rampant, averaging 11 percent in the mid1990’s. Retrenchment is advocated to reinvigorate the economic growth necessary to reduce that unemployment. However, it is governments which are responsible for fueling that growth by delivering the appropriate economic environment (labor with appropriate skills, fiscal policies ensuring work incentives, appropriate regulatory institutions) and for absorbing externalities (regulation of social order, public policies to offset the social costs of industrial restructuring, raising levels of human capital). This suggests that more government involvement is necessary, not retrenchment. Even after imposing market economies in Europe in the post-Soviet Era, there was much instability, fear of economic depression and then a call for regulation of financial markets following economic crises of 82, 87, 94-95, 97-98. Action agreed between the G7 governments staved off economic collapse following these economic crises, which testifies to the fact that markets cannot sustain viability in the long-term. On the question of globalization, some argue that increased internationalization of trade and investment limits government’s ability to intervene in national economies for social purposes and forces them to favor big business rather than social welfare. However, Scarbrough counters that globalization is a historically recurring and temporary phenomenon. She begs us to look at the inter-war period which resulted in economic collapse because of the market, and then a return to a welfare state. Also, she points out that if a government’s social policy secures free trade to make society more prosperous, then that government is just as interventionist as during welfare expansion. Welfare expansion, as this crisis/contradiction of capitalism theory points out, emphasizes the importance of the government as managing conflicting interests between capital and labor which mark retrenchment objectives.

3. Nation-state building According to this state-centered perspective, West European welfare states grew not out of societal pressures or mass political mobilization, but from bureaucrats’ strategies to integrate the workers into the capitalist economy and the national state. Social protection, under this theory, takes impersonal, rational and legal form, making social protection a matter of rights. To secure the legitimacy of the nation-state after World War II, West European democracies’ bureaucrats created the welfare state by securing social and political incorporation. This ties citizens to the state and to one another. It is said that international and supranational organizations, like the European Union, strip state institutions of authority. Also, internationalization of trade has undermined the state as an actor to manage national economies with social goals in mind. Scarbrough quickly dismisses these arguments, rebutting that international and supranational institutions are sanctioned by and entered into by the authority of national governments – no outside actors are involved in these decisions. Thus, jurisdiction always remains with the state. Furthermore, however readily globalization spreads, controls over social policy still remain national – even in the European Union where free trade is the most advanced, member nations are visibly hesitant and unwilling to transfer social policy tasks to the EU. Even though the welfare state was never founded out of democratic politics, Scarbrough notes that overwhelming majorities of people support and expect extensive government intervention in social and economic life. The nation-building theory imposes a contract and moral obligation on the state to provide social protection as a right of the people. Retrenchment is thus seen as an attempt to dismantle this sacred contract and instead as an attempt to strip away the rights and citizenship claims of welfare state citizens. In summary of the Theories section, Scarbrough effectively shows that Pierson’s claims are incorrect—the major theories advanced to explain the arrival or the welfare state does offer compelling insights on why retrenchment objectives are hard to achieve. These theories provide adequate evidence to suggest that state intervention in Western European societies to ensure security and equity among its citizens remains central to societal cohesion and political order. Empirical Claims Empirical claims focus on discovering the institutional reasons for welfare state development. Scarbrough examines three forces: trade union strength, left-party strength, and traditions of state government. She argues directly against Pierson who claims that retrenchment politics is different from the politics of expansion and that lefty-party and trade union strength does not impact welfare state outcomes anymore.

1. Trade Union Strength The general claim is that welfare states emerged as a strategy to incorporate the politics of class conflict associated with industrialization, pushed by trade unions, which united a consciousness of common interests, mobilized support from the leftist parties, and negotiated with employers and the government. As Scarbrough points out with evidence in tables, there is no general declining union density in Western Europe. Despite its decline in a few countries, it has risen in others. Even where density seems to steadily be declining, the total number of union members has generally increased. Where density has declined among men, it has increased among women. This rise suggests that trade unions are becoming more adapted to the needs of women and temporary and part-time workers. Some of the most active trade unions are even opening their doors to those who have no stable employment or job at all. There is more to trade unions than their numbers and density though: despite declining numbers density-wise in France, the country was brought to a halt in 95 as a result of union-organized protests against government reforms of social security and public sector pensions. Examples of this can be found all over Europe. In 1999 in Sweden, tax cuts after a government surplus were abandoned in favor of increased spending on health care, social services, and education. All of this can be attributed to trade union pressure. Tax cuts and welfare reform were also abandoned in Germany in 1992 for the same reason. Despite Pierson’s claims that the power of organized labor in Europe has shrunk, trade unions have demonstrated considerable success in Western Europe and have protected their members’ interests against government efforts to redraw boundaries of the welfare state. 2. Left Part Strength The strength of left parties, whether in government or a pressure on governments, also emerges from empirical research as a stimulus to welfare state development. Despite claims to the contrary, leftist parties are not in decline across Western Europe. Support for the left in the 70’s decreased, remained steady in the 80’s and then rose during the 90’s whereas support for the rightwing parties decreased substantially, especially since the 80’s. Pierson also argues that new political actors, rather than parties, have hurt retrenchment efforts, such as client groups, public services providers, and public interest organizations. Scarbrough claims though that the only example of an effective organization of any of these groups other than trade unions is the United States’

American Association of Retired People. The other groups have little to no influence, as they are poorly organized and funded. Some service providing agencies in Britain are actually funded by the government and can thus be easily considered “instruments of the state.” 3. Traditions of State Governance Welfare states embody norms about the relationship between the state and its citizens, and also have a great impact on the lives of their citizens. In short, this empirical argument says that citizens are basically used to the welfare state. It defines their own identities. People within a welfare state look for the state to deliver them from insecurities and justify this in the name of many moral principles—liberal, social democratic, and corporatist/Catholic values. The extended role of the state is basically a tradition in the welfare state countries. To fracture the bond the state has with people would be to trample over the sacred contract they have had with it for many years. These states have provided most of their citizens with a degree of security and have shaped opportunity structures for individuals and families by manipulating labor markets, social relations, and political alliances. Re-engineering institutional structures after disembodying a welfare state would be difficult too. What would replace the services that people are used to getting? Too many people expect the state’s intervention to overthrow the welfare state. Discussion questions 1. Is it an effective argument to say that with globalization and supranational organization that the state still retains all of its authority? If a trend exists in a state to give private organizations more power, the government will be less able to repeal the laws without opposition which allowed that trend to occur. Just because the state sanctions a measure does not mean that it still retains control. 2. Although the United States’ streets are supposedly lined in gold as it is the richest country in the world, Western European welfare states have less poverty than the United States and a more equal distribution of income. Is this more admirable? Does it make democracy more effective?