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International Journal of Sociology
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4 The Three Political Economies of the Welfare
State
Gøsta Esping-Andersen
To cite this article: Gøsta Esping-Andersen (1990) 4 The Three Political Economies of the Welfare
State, International Journal of Sociology, 20:3, 92-123, DOI: 10.1080/15579336.1990.11770001
To link to this article: https://doi.org/10.1080/15579336.1990.11770001
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4
The Three Political Economies
of the Welfare State
G0STA ESPING-ANDERSEN
Introduction
The protracted debate on the welfare state has failed to produce conclusive
answers as to either the nature or the causes of welfare state
development. This chapter has three aims: (I) to reintegrate the debate
into the intellectual tradition of political economy thus putting into
sharper focus the principal theoretical questions involved; (2) to specify
the salient characteristics of welfare states since the conventional
ways of measuring welfare states in terms of their expenditures will no
longer suffice; and (3) to "sociologize" the study of welfare states.
Most studies have assumed a world of linearity: more or less power,
industrialization, or spending. This chapter insists that we understand
welfare states as clusters of regime types, and that their development
must be explained interactively.
The legacy of classical political economy
Contemporary welfare state debates have been guided by two questions.
First, does social citizenship diminish the salience of class? Or,
in other words, can the welfare state fundamentally transform capitalist
society? Second, what are the causal forces behind welfare state development?
These questions are not recent. Indeed, they were formulated
by the nineteenth-century political economists one hundred years before
any welfare state can rightfully be said to have come into exis-
92
FALL 1990 93
tence. The classical political economists-whether of liberal, conservative,
or Marxist persuasion-were preoccupied with the relationship
between capitalism and welfare. Their answers obviously diverged, but
their analyses were unequivocally directed to the relationship between
market (and property) and the state (democracy). The question they
asked was largely normative: What is the optimal division of responsibility
between market and state?
Contemporary neoliberalism echoes the contributions of classical
liberal political economy. To Adam Smith, the market was the superior
means for the abolition of class, inequality, and privilege. Aside from a
necessary minimum, state intervention would likely stifle the equalizing
process of competitive exchange and create monopolies, protectionism,
and inefficiency: in short the state upholds class; the market can
potentially undo class society (Smith 1961, Vol. 2 especially 232-36).1
Liberal political economists were not necessarily of one mind when
it came to policy advocacy. Nassau Senior and later Manchester liberals
emphasized the laissez-faire element of Smith, rejecting any form
of social protection outside the cash nexus. John Stuart Mill and the
"reformed liberals," in tum, were willing to let markets be regulated
by a modicum of political regulation. Yet, they all agreed that the road
to equality and prosperity should be paved with a maximum of free
markets and a minimum of state interference.
This enthusiastic embrace of market capitalism may now appear
unjustified. But, we must take into account that the state. which confronted
these early political economists. was tinged with legacies of
absolutist privileges. mercantilist protectionisms. and pervasive corruption.
They were attacking systems of governance that repressed the
ideals of both freedom and enterprise. Hence. theirs was revolutionary
theory. and from this vantage point. we can understand why Adam
Smith sometimes reads like Karl Marx.2
Democracy was an Achilles' heel to many liberals. Their ideals of
freedom and democratic participation were grounded in a world of
small property owners. not of growing propertyless masses who held
in their sheer numbers the possibility of seizing state power. The liberals
feared the principle of universal suffrage. for it would likely politicize
the distributional struggle. pervert the market. and fuel
inefficiencies. Many liberals discovered that democracy would contradict
the market.
Both conservative and Marxist political economists understood this
94 INTERNATIONAL JOURNAL OF SOCIOLOGY
contradiction, but proposed, ofcourse, opposite solutions. The most coherent
conservative critique of laissez-faire came from the German historical
school; in particular from Friedrich List, Adolph Wagner, and Gustav
Schmoller. They refused to believe that capitalist efficiency was best
assured by the pure commodity status of workers in the raw cash nexus of
the market. Instead, conservative political economists believed that patriarchal
neoabsolutism could provide the kind of legal, political, and social
framework that would assure capitalism without class struggle.
One prominent conservative school promoted a "Monarchical Welfare
State" that would, at once, provide for social welfare, class harmony,
loyalty, and productivity. It was discipline, not competition, that
would guarantee efficiency. The state (or church) was the institution
best equipped to harmonize conflicting interests.3
Conservative political economy emerged in reaction to the French
Revolution and the Paris Commune. It was avowedly nationalist, antirevolutionary,
and sought to arrest the democratic impulse. It feared
social leveling and favored a society that retained both hierarchy and
class. It held that class conflicts were not natural; that democratic mass
participation and the dissolution of recognized rank and status boundaries
were threats to social harmony.
The key to Marxian political economy, of course, was its rejection
of the liberal claim that markets guarantee equality. Capitalist accumulation,
as Dobb (1946) put it, disowns people of property with the end
result being ever deeper class divisions. Here, the state's role is not
neutrally benevolent, nor is it a fountain of emancipation; the state
exists to defend property rights and the authority of capital. According
to Marxism, this capitalist state is the foundation of class dominance.
The central question, not only for Marxism but for the entire contemporary
debate on the welfare state, is whether and under what
conditions the class divisions and social inequalities produced by capitalism
can be undone by parliamentary democracy.
The liberals feared that democracy would produce socialism and
they were consequently not especially eager to extend it. The socialists,
in contrast, suspected that parliamentarism would be little more
than an empty shell or, as Lenin suggested. a mere "talking shop"
(Jessop 1982). This line of analysis. echoed in much of contemporary
Marxism, leads to the conclusion that social reforms emerge in response
to the exigencies of capitalist reproduction. not the emancipatory
desires of the working classes..t
FAlL 1990 95
Among socialists, a more positive analysis of parliamentarism came
to prevail after the extension of full political citizenship. The theoretically
most sophisticated contributions came from Austro-Marxists
such as Adler and Bauer, and from German social democrats, especially
Eduard Heimann. Heimann's (1929) starting point was that even
conservative reforms may have been motivated by desires to repress
labor mobilization, but that their very presence nonetheless alters the
balance of class power: the social wage lessens the worker's dependence
on the market and employers. The social wage is thus also a
potential power resource that defmes the frontier between capitalism
and socialism. It introduces an alien element into the capitalist political
economy. This intellectual position has enjoyed quite a renaissance in
recent Marxism (Offe 1985; Bowles and Gintis 1986).
The social democratic model, as outlined above, did not necessarily
abandon the orthodox assumption that fundamental equality requires
economic socialization. Yet, historical experience soon demonstrated
that socialization was a goal that could not be pursued realistically
through parliamentarism.5
Social democracy's embrace of parliamentary reformism as its dominant
strategy for equality and socialism was premised on two arguments.
The first was that workers require social resources, health, and
education to participate effectively in a democratized economy. The
second argument was that social policy is not only emancipatory, but it
is also economically efficient (Myrdal and Myrdal 1936). Following
Marx on this point, the strategy therefore promotes the onward march
of capitalist productive forces. The beauty of the strategy was that
social policy would also assure social democratic power mobilization.
By eradicating poverty, unemployment. and complete wage dependency,
the welfare state increases political capacities and diminishes
the social divisions that are barriers to political unity among workers.
The social democratic model. then. puts forward one of the leading
hypotheses of contemporary welfare state debate: the argument that
parliamentary class mobilization is a means for the realization of socialist
ideals of equality, justice, freedom, and solidarity.
The political economy of the welfare state
Our political economy forebears defined the analytic basis of much
recent scholarship. They isolated the key variables of class. state, mar-
96 INTERNATIONAL JOURNAL OF SOCIOLOGY
ket, and democracy, and they formulated the basic propositions about
citizenship and class, efficiency and equality, and capitalism and socialism.
Contemporary social science distinguishes itself from classical
political economy on two scientifically vital fronts. First, it defmes
itself as a positive science and shies away from normative prescription
(Robbins 1976). Second, classical political economists had little interest
in historical variability; they saw their efforts as leading toward a
system of universal laws. Although contemporary political economy
sometimes still clings to the belief in absolute truths, the comparative
and historical method that, today, underpins almost all good political
economy is one that reveals variation and permeability.
Despite these differences, most recent scholarship has as its focal
point the state-economy relationship defmed by nineteenth-century political
economists. And, given its enormous growth, it is understandable
that the welfare state has become a major test case for contending
theories of political economy.
Next, we shall review the contributions of comparative research on
the development of welfare states in advanced capitalist countries. We
will argue that most scholarship has been misdirected, mainly because
it became detached from its theoretical foundations. We must therefore
recast both the methodology and concepts of political economy in
order to adequately study the welfare state. This will constitute the
focus of the final section of this chapter.
Two types of approaches have dominated in the explanation of welfare
states: one, a systemic (or structuralist) theory; the other, an institutional
or actor-oriented explanation.
The systemidstructuralist approach
The first approach, system--or structuralist-theory, seeks to capture
the logic of development holistically. It focuses on the functional requisites
for the reproduction of society and economy; it tends to emphasize
cross-national similarities rather than differences.
One variant of structuralist theory begins with a theory of the industrial
society, and argues that industrialization makes social policy both
necessary and possible. It makes welfare states necessary because preindustrial
modes of social reproduction, such as the family, the church,
noblesse oblige, and guild solidarity, are destroyed by the forces attached
to modernization-social mobility, urbanization, individualism,
FALL 1990 97
and market dependence. The crux of the matter is that the market is no
adequate substitute because it caters only to those who are able to
perform in it. Hence, the "welfare function" is appropriated by the
nation state. The welfare state is also made possible by the rise of
modem bureaucracy as a rational, universalist, and efficient form of
organization. It is a means for managing collective goods, but also a
center of power in its own right, and will thus be inclined to promote
its own growth.
This kind of reasoning has formed the so-called logic of industrialism
perspective, according to which the welfare state will emerge as
the modern industrial economy destroys traditional forms of social
security (Flora and Alber 1981; Pryor 1969). But, the thesis has difficulties
explaining why government social policy only emerged fifty or
even one hundred years after traditional community was effectively
destroyed. The basic response draws on Wagner's Law (1962) and on
Marshall (1920), namely that a certain level of economic development,
and thus surplus, is needed in order to permit the diversion of scarce
resources from productive use (investments) to welfare (Wilensky and
Lebeaux 1958). In this sense, the perspective follows in the footsteps
of the old liberals. Social redistribution endangers efficiency, and only
at a certain economic level will a negative-sum trade-off be avoidable
(Okun 1975).
The new structural Marxism offers a surprisingly parallel analysis.
It breaks with its classical forebears' strongly action-centered theory.
Like the industrialism thesis, its analytical starting point is not the
problems of markets, but the logic of a mode of production. Capital
accumulation creates contradictions that social reform can alleviate
(O'Connor 1973). This tradition of Marxism or "logic of capitalism"
much like its "logic of industrialism" counterpart, fails to see much
relevance of actors in the promotion of welfare states. The point is that
the state, as an actor, is positioned in such a way that it will serve the
collective needs of capital. The theory is thus premised on two crucial
assumptions: first, that power is structural and, second, that the state is
"relatively" autonomous from class directives (Poulantzas 1973;
Block 1977; for a recent critical assessment of this literature, see
Therborn 1986; and Skocpol and Amenta 1986).
The logic of capitalism perspective invites difficult questions. If. as
Przworski (1980) has argued. working class consent is assured on the
basis of material hegemony. that is. self-willed subordination to the
98 INTERNATIONAL JOURNAL OF SOCIOLOGY
system, it is difficult to see why up to 40 percent of the gross national
product must be allocated to the legitimation activities of a welfare
state. A second problem is to derive state activities from a "mode of
production" analysis. Eastern Europe may perhaps not qualify as socialist,
but neither is it capitalist. Yet, there we fmd "welfare states,"
too. Perhaps accumulation has functional requirements in whichever
way it proceeds (Skocpol and Amenta 1986; Bell 1978).
The institutional approach
The classical political economists made it clear why democratic institutions
should influence welfare state development. The liberals feared
that full democracy might jeopardize markets and inaugurate socialism.
Freedom, in their view, necessitated a defence of markets against
political intrusion. In practice, this is what the laissez-faire state sought
to accomplish. But it was this divorce of politics and economy that
fueled much of the institutionalist analyses-the second approach used
to explain the welfare state. Best represented by Polanyi (1944), but
also by a number of antidemocratic exponents of the historical school,
the institutional approach insists that any effort to isolate the economy
from social and political institutions will destroy human society. The
economy must be embedded in social communities in order for it to
survive. Thus, Polanyi sees social policy as a necessary precondition
for the reintegration of the social economy.
An interesting recent variant of institutional alignment theory is the
argument that welfare states emerge more readily in small, open economies,
which are particularly vulnerable to international markets. As
Katzenstein (1985) and Cameron (1978) show, there is a greater inclination
to regulate class distributional conflicts through government and
interest concertation when both business and labor are captives to
forces beyond domestic control.
The impact of democracy on welfare states has been argued ever
since the days of J. S. Mill and Alexis de Tocqueville. The argument is
typically phrased without reference to any particular social agent or
class. It is, in this sense, institutional. In its classical formulation, the
thesis was simply that majority groups will favor social distribution to
compensate for market weakness or market risks. If wage earners are
likely to demand a social wage, so are capitalists (or farmers) apt to
demand protection in the form of tariffs, monopolies, or subsidies.
FALL 1990 99
Democracy is an institution that cannot resist majoritarian demands.
In its modem formulations, the democratic-institutionalist thesis has
many variants. One identifies stages of nation-building in which full
citizenship incorporation requires social rights (Marshall 1950; Bendix
1964; Rokkan 1970). A secbnd variant, developed by both pluralist
and public choice theory, argues that democracy will nurture intense
party competition around the median voter that will, in tum, fuel rising
public expenditures. Tufte (1978), for example, argues that major extensions
of public intervention will occur around elections as a means
of voter mobilization.
The democratic-institutionalist approach faces considerable empirical
problems (Skocpol and Amenta 1986). According to the thesis, a
democratic polity is the basic precondition for welfare state emergence,
and welfare states are more likely to develop the more democratic
rights are extended. Yet, the thesis confronts not only the
historical oddity that the first major welfare state initiatives occurred
prior to democracy, but also that they were often motivated by desires
to arrest its realization. This was certainly the case in France under
Napoleon II, in Germany under Bismarck, and in Austria under von
Taaffe. Conversely, welfare state development was most retarded
where democracy arrived early, such as in the United States, Australia,
and Switzerland. This apparent contradiction can be explained, but
only with reference to social classes and social structure: nations in
which democracy appeared early were overwhelmingly agrarian and
dominated by small property owners who used their electoral powers
to reduce, not raise, taxes (Dich 1973). In contrast, ruling classes in
authoritarian polities were better positioned to impose high taxes on an
unwilling populace.
Social class as a political agent
We have noted that the case for a third approach to analyzing the
welfare state, the class mobilization thesis, flows from social democratic
political economy. It differs from structuralist and institutional
analyses by its emphasis on the social classes as the main agents of
change and its argument that the balance of class power determines
distributional outcomes. To emphasize active class mobilization does
not necessarily deny the importance of structured or hegemonic power
(Korpi 1983). But it is held that parliaments are, in principle. effective
ZOO INTERNATIONAL JOURNAL OF SOCIOLOGY
institutions for the translation of mobilized power into desired policies
and reforms. Accordingly, parliamentary politics are capable of overriding
hegemony, and may be made to serve interests that are antagonistic
to capital. Further, the class mobilization theory assumes that
welfare states do more than simply alleviate the current ills of the
system; a "social democratic" welfare state will, in its own right,
establish critical power resources for wage earners and, thus,
strengthen labor movements. As Heimann (1929) originally held, social
rights push back the frontiers of capitalist power and prerogatives.
The question of why the welfare state itself is a power resource is
vital for the theory's applicability. The answer is that wage earners in
the market are inherently atomized and stratified, compelled to compete,
and are insecure and dependent on decisions and forces beyond
their control. This limits their capacity for collective solidarity and
mobilization. The social rights, income security, equalization of income,
and eradication of poverty that a universalistic welfare state
pursues are necessary preconditions for the strength and unity that
collective power mobilization demands (Esping-Andersen 1985a).
The single most difficult problem for this thesis is to specify the
conditions for power mobilization. Power depends on the resources
that flow from the unity of electoral numbers and from collective bargaining.
Power mobilization, in tum, depends on the levels of trade
union organization and voter shares and the number of parliamentary
and cabinet seats held by left or labor parties. But how long a period of
sustained power mobilization is required in order to produce decisive
effects? If power is measured over a brief time span (five to ten years),
we risk the fallacy of a "Blum"/"Mitterand" effect: a brief spell of
leftist power that proves ineffectual because the left is ousted before
having had a chance to act.
There are several valid objections to the class mobilization thesis. Three,
in particular, are quite fundamental. One is that in advanced capitalist
nations, the locusofdecision making and powermay shift from parliaments
to neocorporatist institutions of interest intermediation (Shonfield 1965;
Schmitter and Lembruch 1979). A second criticism is that the capacity of
labor parties to influence welfare state development is circumscribed by
the structure of rightist party power. Castles (1978; 1982) has argued that
the degree of unity among the rightist parties is more important than is the
activated power of the left. Other authors have emphasized the fact that
denominational (usually social catholic) parties in countries such as the
FALL 1990 101
Netherlands, Italy, and Gennany mobilize large sections of the working
classes and pursue welfare state programs not drastically at variance with
their socialist competitors (Schmidt 1982; Wilensky 1981). The class
mobilization thesis has, rightfully so, been criticized for its Swedocentrism,
that is, its inclination to defme the process of power mobilization too much
on the basis ofthe rather extraordinary Swedish experience (Shalev 1983).
These objections address a basic fallacy in the theory's assumptions
about class fonnation: we carmot assume that socialism is the natural
basis for wage-earner mobilization. Indeed, the conditions under which
workers become socialists are still not adequately documented. Historically,
the natural organizational bases of worker mobilization were
precapitalist communities, especially the guilds, but also church,
ethnicity, or language. A ready-made reference to false consciousness
will not do to explain why Dutch, Italian, or U.S. workers continue to
mobilize around nonsocialist principles. The dominance of socialism in
the Swedish working class is as much a puzzle as is the dominance of
confessionalism in the Dutch.
The third and, perhaps, most fundamental objection has to do with
the model's linear view of power. It is problematic to hold that a
numerical increase in votes, unionization, or parliamentary seats will
translate into more welfare statism. First, for socialist as for other
parties, the magical "50 percent" threshold for parliamentary majorities
seems practically insunnountab1e (przworski 1985). Second, if socialist
parties represent working classes in the traditional sense, it is
clear that they will never succeed in their project. In very few cases has
the traditional working class been numerically a majority, and its role
is rapidly becoming marginal.6
Probably the most promising way to resolve the combined linearity-and
working class minority-problem lies in recent applications
of Barrington Moore's path-breaking class coalition thesis to the transfonnation
of the modem state (Weir and Skocpol 1985; Gourevitch
1986; Esping-Andersen 1985a; Esping-Andersen and Friedland 1982).
Thus, the origins of the Keynesian full employment commitment and
the social democratic welfare state edifice have been traced to the
capacity of (variably) strong working-class movements to forge a political
alliance with fanners' organizations; in addition. it is arguable
that sustained social democracy has come to depend on the fonnation
of a new working class-white collar coalition.
The class coalitional approach has additional virtues. Two nations.
102 INTERNATIONAL JOURNAL OF SOCIOLOGY
such as Austria and Sweden, may score similarly on working-class
mobilization variables, and yet produce highly unequal policy results.
This can be explained by differences in the two countries' historical
coalition formation: The breakthrough of Swedish social democratic
hegemony stems from its capacity to forge the famous "red-green"
alliance; the comparative disadvantage of the Austrian socialists rests
in the .•ghetto" status assigned to them by virtue of the rural classes being
captured by a conservative coalition (Esping-Andersen and Korpi 1984).
In sum, we have to think in terms of social relations, not just social
categories. Whereas structural-functionalist explanations identify convergent
welfare state outcomes, and class-mobilization paradigms see
large, but linearly distributed, differences, an interactive model such as
the coalitions approach directs attention to distinct welfare state re-
gimes.
What is the welfare state?
Every theoretical paradigm must somehow define the welfare state.
How do we know when and if a welfare state responds functionally to
the needs of industrialism, or to capitalist reproduction and legitimacy?
And how do we identify a welfare state that corresponds to the demands
that a mobilized working class might have? We cannot test
contending arguments unless we have a commonly shared conception
of the phenomenon to be explained.
A remarkable attribute of the entire literature is its lack of much
genuine interest in the welfare state as such. Welfare state studies have
been motivated by theoretical concerns with other phenomena, such as
power, industrialization, or capitalist contradictions; the welfare state
itself has generally received scant conceptual attention. If welfare
states differ, how do they differ? And when, indeed, is a state a welfare
state? This turns attention straight back to the original question: what is
the welfare state? A common textbook definition is that it involves
state responsibility for securing some basic modicum of welfare for its
citizens. Such a definition skirts the issue of whether social policies are
emancipatory or not; whether they help system legitimation or not;
whether they contradict or aid the market process; and what, indeed, is
meant by "basic"? Would it not be more appropriate to require of a
welfare state that it satisfies more than our basic or minimal welfare
needs?
FALL 1990 103
The ftrst generation of comparative studies started with this type of
conceptualization. Its authors assumed, without much reflection, that
the level of social expenditure adequately reflects a state's commitment
to welfare. The theoretical intent was not really to arrive at an
understanding of the welfare state, but rather to test the validity of
contending theoretical models in political economy. By scoring nations
with respect to urbanization, level of economic growth, and the share
of aged in the demographic structure, it was believed that the essential
features of industrial modernization were adequately captured. Alternatively,
by scoring nations on left party strength, or working-class
power mobilization (with complex weighted scores of trade unionism,
electoral strength, and cabinet power), others sought to identify the
impact of working-class mobilization as formulated in the social democratic
model.
The fmdings of the ftrst generation of comparativists are extremely
diffIcult to evaluate. No convincing case can be made for any particular
theory. The shortage of nations for comparisons statistically restricts
the number of variables that can be tested simultaneously. Thus,
when Cutright (1965) or Wilensky (1975) ftnds that economic level,
with its demographic and bureaucratic correlates, explains most welfare
state variations in "rich countries," relevant measures of
working-class mobilization or economic openness are not included. A
conclusion in favor of a logic of industrialism view is therefore in
doubt. And, when Hewitt (1977), Stephens (1979), Korpi (1983),
Myles (1984), and Esping-Andersen (1985b) find strong evidence in
favor of a working-class mobilization thesis, or when Schmidt (1982;
1983) finds support for a neocorporatist, and Cameron (1978) for an
economic openness argument, it is without fully testing against the
strongest alternative explanation.7
Most of these studies claim to explain the welfare state. Yet, their
focus on spending may be irrelevant or, at best, misleading. Expenditures
are epiphenomenal to the theoretical substance of welfare states.
Moreover, the linear scoring approach (more or less power, democracy,
or spending) contradicts the sociological notion that power, democracy,
and welfare are relational and structured phenomena. By
scoring welfare states on spending, we assume that all spending counts
equally. But, some welfare states, Austria for example, spend a large
share on benefits to privileged civil servants. This is normally not what
we would consider a commitment to social citizenship and solidarity.
104 INTERNATIONAL JOURNAL OF SOCIOLOGY
Other nations spend disproportionally on means-tested social assistance.
Few contemporary analysts would agree that a reformed poor
relief tradition qualifies as a welfare state commitment. Some nations
spend enormous sums on fiscal welfare in the form of tax privileges to
private insurance plans that mainly benefit the middle classes. But
these tax expenditures do not show up on expenditure accounts. In the
United Kingdom, total social expenditure has grown during the
Thatcher period; yet, this is almost exclusively a function of very high
unemployment. Low expenditures on some programs may signify a
welfare state more seriously committed to full employment.
Therbom (1983) is right when he holds that we must begin with a
conception of state structure. What are the criteria with which we
should judge whether, and when, a state is a welfare state? There are
three approaches to this question. Therbom's proposal is to begin with
the historical transformation of state activities. Minimally, the majority
of a genuine welfare state's daily routine activities must be devoted
to servicing the welfare needs of households. This criterion has farreaching
consequences. If we simply measure routine activity in terms
of spending and personnel, the result is that no state can be regarded as
a real welfare state until the 1970s! And, some that we normally label
as welfare states will still not qualify because the majority of their
routine activities concern defense, law and order, administration, and
the like (Therborn 1983). Social scientists have been too quick to
accept nations' self-proclaimed welfare state status. They have also
been too quick to conclude that the presence of the battery of typical
social programs signifies the birth of a welfare state.
The second conceptual approach derives from Richard Titmuss's
(1958) classical distinction between residual and institutional welfare
states. The former assumes that state responsibility begins only when
the family or the market fails; its commitment is limited to marginal
groups in society. The latter model addresses the entire population, is
universalistic, and implants an institutionalized commitment to welfare.
It will, in principle, extend welfare commitments to all areas of
distribution vital for societal welfare. This approach has fertilized a
variety of new developments in comparative welfare state research
(Myles 1984; Korpi 1980; Esping-Andersen and Korpi 1984; 1986;
Esping-Andersen 1985b; 1987). And it has forced researchers to move
away from the black box of expenditures and toward the content of
welfare states: targeted versus universalistic programs. the conditions
FAlL 1990 105
of eligibility, the quality of benefits and services, and, perhaps most
importantly, the extent to which employment and working life are
encompassed in the state's extension of citizen rights. This shift to
welfare state typologies makes simple linear welfare state rankings
difficult to sustain. We might in fact be comparing categorically different
types of states.
The third approach is to select theoretically the criteria on which to
judge types of welfare states. This can be done by measuring actual
welfare states against some abstract model and then by scoring programs,
or entire welfare states, accordingly (Day 1978; Myles 1984).
The weakness of this approach is that it is ahistorical, and does not
necessarily capture the ideals or designs that historical actors sought to
realize in the struggles over the welfare state. If our aim is to test
causal theories that involve actors, we should begin with the demands
that were actually promoted by those actors that we deem critical in the
history of welfare state development. It is difficult to imagine that
anyone struggled for spending per se.
A respecification of the welfare state
Few people can disagree with T. H. Marshall's (1950) proposition that
social citizenship constitutes the core idea of a welfare state. What,
then, are the key principles involved in social citizenship? In our view,
they must involve first and foremost the granting of social rights. This
mainly entails a decommodification of the status of individuals vis-avis
the market. Second, social citizenship involves social stratification;
one's status as a citizen will compete with, or even replace, one's class
position. Third, the welfare state must be understood in terms of the
interface between the market, the family, and the state. These principles
need to be fleshed out prior to any theoretical specification of the
welfare state.8
Rights and decommodification
As commodities in the market, workers depend for their welfare entirely
on the cash-nexus. The question of social rights is thus one of
decommodification, that is, of granting alternative means of welfare to
that of the market. Decommodification may refer either to the service
rendered, or to the status of a person, but in both cases it signifies the
106 INTERNATIONAL JOURNAL OF SOCIOLOGY
degree to which distribution is detached from the market mechanism.
This means that the mere presence of social assistance or insurance
may not necessarily bring about significant decommodification if it
does not substantially emancipate individuals from market dependence.
Means-tested poor relief will possibly offer a security blanket as
a last resort. But if benefits are low and attached with social stigma, the
relief system will compel all but the most desperate to participate in the
market. This was precisely the intent of tht! nineteenth-century poor
laws. Similarly, most of the early social insurance programs were deliberately
designed to maximize labor market performance (Ogus
1979). Benefits required long contribution periods and were tailored
to prior work effort. In either case, the motive was to avert workdisincentive
effects.
There is no doubt that decommodification has been a hugely contested
issue in welfare state development. For labor, it has always been
a priority. When workers are completely market dependent, they are
difficult to mobilize for solidaristic action. Since their resources mirror
market inequalities, divisions emerge between the "ins" and the
"outs," making labor movement formation difficult. Decommodification
strengthens the worker and weakens the absolute authority of the
employer. It is for exactly this reason that employers have historically
opposed decommodification.
Decommodified rights are differentially developed in contemporary
welfare states. In welfare states dominated by social assistance, rights
are not so much attached to work performance as to demonstrable
need. Needs-tests and typically meager benefits, however, serve to
curtail the decommodifying effect. Thus, in nations where this model
is dominant (mainly in the Anglo-Saxon countries), the result is actually
to strengthen the market since all but those who fail in the market
will be encouraged to contract private sector welfare.
A second dominant model espouses compulsory state social insurance
with fairly strong entitlements. Yet, again, this may not automatically
secure substantial decommodification, since this hinges very
much on the fabric of eligibility and benefit rules. Germany was the
pioneer of social insurance but over most of the twentieth century can
hardly be said to have brought about much in the way of decommodification
through its social programs. Benefits have depended almost
entirely on contributions and, thus, work and employment. In fact,
before World War II, average pensions in the German insurance sys-
FALL 1990 107
tern for workers were lower than prevailing poverty assistance rates
(Myles 1984). The consequence, as with the social assistance model,
was that most workers chose to remain at work rather than retire. In
other words, it is not the mere presence of a social right, but the
corresponding rules and preconditions that dictate the extent to which
welfare programs offer genuine alternatives to market dependence.
The third dominant model of welfare, namely the Beveridge-type
citizens' benefit, may, at first glance, appear the most decommodifying.
It offers a basic, equal benefit to all irrespective of prior earnings,
contributions, or work performance. It may indeed be a more solidaristic
system, but not necessarily decommodifying since only rarely have
such schemes been able to offer benefits of such a standard that they
provide recipients with a genuine option to that of working.
Decommodifying welfare states are, in practice, of very recent date.
A minimalist definition must entail that citizens can freely, and without
potential loss of jobs, income, or general welfare, opt out of work
under conditions when they, themselves, consider it necessary for reasons
of health, family, age, or even educational self-improvement;
when, in short, they deem it necessary for participating adequately in
the social community.
With this definition in mind, we would, for example, require of
sickness insurance that individuals have a guarantee of benefits equal
to normal earnings, the right to absence with minimal proof of medical
impairment and for the duration that the individual deems necessary.
These conditions, it is worth noting, are those usually enjoyed by academics,
civil servants, and higher echelon white-collar employees.
Similar requirements would be made of pensions, maternity leave, parental
leave, educational leave, and unemployment insurance.
Some nations have moved toward this level of decommodification,
but only recently and, in many cases, with significant exemptions.
Thus, in almost all nations, benefits were upgraded to almost equal
normal wages in the late 1960s and early 1970s. But, in some countries,
for example, prompt medical certification in case of illness is still
required; in others, entitlements depend on long waiting periods of up
to two weeks; in others, the duration of entitlements is very short (in
the United States, for example, unemployment benefit duration is maximally
six months, compared to thirty months in Denmark). Overall.
the Scandinavian welfare states tend to be the most decommodifying;
the Anglo-Saxon ones the least.
108 INTERNATIONAL JOURNAL OF SOCIOLOGY
The welfare stllte as a system ofstratification
Despite the emphasis given to it in both classical political economy
and in T. H. Marshall's pioneering work, the relationship between social
citizenship and social class remains severely neglected, both theoretically
and empirically. Generally speaking, the issue has either been
assumed away (it has been taken for granted that the welfare state
creates a more egalitarian society), or it has been approached narrowly
in terms of income distribution or in terms of whether education promotes
upward social mobility. A more basic question, it seems, is:
What kind of stratification system is promoted by social policy? The
welfare state is not just a mechanism that intervenes in, and possibly
corrects, the structure of inequality; it is, in its own right, a system of
stratification. It actively and directly orders social relations.
Comparatively and historically, we can easily identify alternative
systems of stratification embedded in welfare states. The poor relief
tradition and its contemporary means-tested social assistance offshoot
were conspicuously designed for purposes of stratification. By punishing
and stigmatizing recipients, it promotes severe social dualisms,
especially within the ranks of the working classes. It comes as no
surprise that this model of welfare has been a chief target of labor
movement attacks.
The social insurance model promoted by conservative reformers
such as Bismarck and von Taaffe was also explicitly a form of class
politics. It sought, in fact, to achieve two simultaneous stratification
results. The first goal was to consolidate divisions among wage earners
by legislating distinct programs for different class and status groups,
each with its own conspicuously unique set of rights and privileges
designed to accentuate the individual's appropriate station in life. The
second objective was to tie the loyalties of the individual directly to the
monarchy, or central state authority. This was Bismarck's motive
when he promoted a direct state supplement to the pension benefit.
This state-corporativist model was pursued mainly in nations such as
Germany, Austria. Italy, and France and often resulted in a labyrinth of
status-specific insurance funds (in France and Italy. for example. there
exist more than one hundred status-distinct pension schemes).
Of special importance in this corporatist tradition was the establishment
of particularly privileged welfare provisions for the civil service
("Beamten"). In part. Jlis was a means of rewarding loyalty to the
FALL 1990 109
state and in part, a way of demarcating this group's uniquely exalted
social status. We should, however, be careful to note that the corporatist
status-differentiated model springs mainly from the old guild tradition.
The neoabsolutist autocrats, such as Bismarck, saw in this
tradition a means to combat the rising labor movements.
The labor movements were as hostile to the corporatist model as
they were to poor relief-in both cases for obvious reasons. Yet, the
altematives first espoused by labor were no less problematic from the
point of view of uniting the workers as one solidaristic class. Almost
invariably, the model that labor first pursued was that of
the self-organized friendly societies or equivalent union- or partysponsored
fraternal welfare plan. This is not surprising. Workers were
obviously suspicious of reforms sponsored by a hostile state, and saw
their own organizations not only as the basis of class mobilization, but
also as embryos of an alternative world of solidarity and justice, as a
microcosm of the socialist haven to come. Nonetheless, these microsocialist
societies often became problematic class ghettos that divided
rather than united workers. Membership was typically restricted to the
strongest strata of the working-class and the weakest-who needed
protection most-were most likely outside. In brief, the fraternal society
model contradicted the goal of working-class mobilization.
The socialist ghetto approach was an additional obstacle when
socialist parties found themselves forming governments and having to
pass the social reforms they so long had demanded. For reasons of
political coalition building and broader solidarity, their welfare model
had to be recast as welfare for the "people." Hence, the socialists
came to espouse the principle of universalism and, borrowing from the
liberals. typically designed their welfare model on the lines of the
democratic flat-rate. general revenue-financed. Beveridge model.
As an alternative to means-tested assistance and corporatist social
insurance. the universalistic system promotes status equality. All citizens
are endowed with similar rights. irrespective of class or market
position. In this sense. the system is meant to cultivate cross-class
solidarity, a solidarity of the nation. But. the solidarity of flat-rate
universalism presumes a historically peculiar class structure. one in
which the vast majority of the population are the "little people" for
whom a modest. albeit egalitarian. benefit may be considered adequate.
Where this condition no longer exists. as occurs with growing
working-class prosperity and the rise of the new middle classes. flat-
110 INTERNATIONAL JOURNAL OF SOCIOLOGY
rate universalism inadvertently promotes dualism because the betteroff
tum to private insurance and to fringe-benefit bargaining to supplement
modest equality with their accustomed standards of welfare.
Where this process unfolds (as in Canada or the United Kingdom), the
result is that the wonderfully egalitarian spirit of universalism turns
into a dualism similar to that of the social assistance state: the poor rely
on the state, and the remaining groups on the market.
It is not only the universalist, but in fact all historical welfare state
models, that have faced the dilemma of class structural change. But,
the response to prosperity and middle-class growth has been varied
and, therefore, so has the stratificational outcome. The corporatist insurance
tradition was, in a sense, best equipped to manage new and
loftier welfare state expectations since the existing system could technically
be upgraded quite easily to distribute more adequate benefits.
Konrad Adenauer's 1957 pension reform in Germany was a pioneer in
this respect. Its avowed purpose was to restore status differences that
had eroded due to the old insurance system's incapacity to provide
benefits tailored to expectations. This it did simply by moving from
contribution- to earnings-graduated benefits without altering the framework
of status-distinctiveness.
In nations with either a social assistance- or a universalistic
Beveridge-type system, the option was whether to allow the market or
the state to furnish adequacy and satisfy middle-class aspirations. Two
alternative models emerged from this political choice. The one typical
of the United Kingdom and most of the Anglo-Saxon world was to
preserve an essentially modest universalism in the state and allow the
market to reign for the growing social strata demanding superior welfare.
Due to the political power of such groups, the dualism that
emerges is not merely one between state and market, but also between
forms of welfare state transfers: in these nations, one of the fastest
growing components of public expenditure is tax-subsidies for socalled
private welfare plans. And the typical political effect is eroding
middle-class support for what is less and less a universalistic public
sector transfer system.
Yet another alternative has been to seek a synthesis of universalism
and adequacy outside the market. This road has been followed in the
countries where. by mandate or legislation. the state includes the new
middle classes by erecting a luxurious second-tier. universally inclusive.
earnings-related insurance scheme on top of the flat-rate egalitar-
FALL 1990 111
ian one. Notable examples are Sweden and Norway. By guaranteeing
benefits tailored to expectations, this solution reintroduces benefit inequalities,
but effectively blocks off the market. It thus succeeds in
retaining universalism and, therefore, also the degree of political consensus
required to preserve broad and solidaristic support for the high
taxes that such a welfare state model demands.
Welfare state regimes
Welfare states vary considerably with respect to their principles of
rights and stratification. This results in qualitatively different arrangements
among state, market, and the family. The welfare state variations
we find are therefore not linearly distributed, but clustered by regime
types.
In one cluster, we find the "liberal" welfare state, in which meanstested
assistance, modest universal transfers, or modest social insurance
plans predominate. These cater mainly to a clientele of low-income,
usually working-class, state dependents. It is a model in which, implicitly
or explicitly, the progress of social reform has been severely circumscribed
by traditional, liberal work-ethic norms; one where the
limits of welfare equal the marginal propensity to demand welfare
instead of work. Entitlement rules are therefore strict and often associated
with stigma; benefits are typically modest. In tum, the state encourages
the market, either passively, by guaranteeing only a
minimum, or actively, by subsidizing private welfare schemes.
The consequence is that this welfare state regime minimizes
decommodification effects, effectively contains the realm of social
rights, and erects a stratification order that blends a relative equality of
poverty among state welfare recipients. market-differentiated welfare
among the majorities, and a class-political dualism between the two.
The archetypical examples of this model are the United States, Canada,
and Australia. Nations that approximate the model are Denmark, Switzerland,
and the United Kingdom.
A second regime cluster is composed of nations such as Austria,
France, Germany, and Italy. Here, the historical corporatist-statist legacy
was upgraded to cater to the new"postindustrial" class structure.
In these "corporativist" welfare states, the liberal obsession with market
efficiency and commodification was never preeminent and, as
such, the granting of social rights was hardly ever a seriously contested
112 INTERNATIONAL JOURNAL OF SOCIOLOGY
issue. What predominated was the preservation of status differentials;
rights, therefore, were attached to class and status. This corporativism
was subsumed under a state edifice perfectly ready to displace the
market as a provider of welfare; hence, private insurance and occupational
fringe benefits play a truly marginal role in this model. On the
other hand, the state's emphasis on upholding status differences means
that its redistributive effects are negligible.
But, the corporativist regimes are also typically shaped by the
church, and therefore influenced by a strong commitment to the preservation
of traditional family patterns. Social insurance typically excludes
nonworking wives and family benefits encourage motherhood.
Day care, and similar family services, are conspicuously underdeveloped,
and the "subsidiarity principle" serves to emphasize that the
state will only interfere when the family's capacity to service its members
is exhausted. An illustrative example is German unemployment
assistance. Once a person has exhausted his or her entitlement to normal
unemployment insurance, eligibility for continued assistance depends
on whether one's family commands the financial capacity to aid
the unfortunate; this applies to persons of any age.
The third, and clearly smallest, regime cluster is composed of those
countries in which the principles of universalism and decommodifying
social rights were extended to the new middle classes. We may call it the
"social democratic" regime type since, in these nations, social democracy
clearly was the dominant force behind social reform. Norway and
Sweden are the clearest cases, but we should also consider Denmark
and Finland. Rather than tolerate a dualism between state and market,
between working class and middle class, the social democrats pursued
a welfare state that would promote an equality of the highest standards,
rather than an equality of minimal needs as was pursued elsewhere.
This implied, first, that services and benefits be upgraded to levels
commensurable to even the most discriminate tastes of the new middle
classes, and, second, that equality be furnished by guaranteeing workers
full participation in the quality of rights enjoyed by the better-off.
This formula translates into a mix of highly decommodifying and
universalistic programs that, nonetheless. are tailored to differentiated
expectations. Thus. manual workers come to enjoy rights identical to
those of salaried white-collar employees or civil servants; all strata and
classes are incorporated under one universal insurance system; yet,
benefits are graduated according to accustomed earnings. This model
FALL 1990 113
crowds out the market and, consequently, inculcates an essentially universal
solidarity behind the welfare state. All benefit, all are dependent,
and all will presumably feel obliged to pay.
The social democratic regime's policy of emancipation addresses
both the market and the traditional family. In contrast to the corporatistsubsidiarity
model, the principle is not to wait until the family's capacity
to aid is exhausted, but to preemptively socialize the costs of familyhood.
The ideal is to maximize not dependence on the family, but
capacities for individual independence. In this sense, the model is a
peculiar fusion of liberalism and socialism. The result is a welfare state
that grants transfers directly to the children, and takes direct caring
responsibilities for children, the aged, and the helpless. It is, accordingly,
committed to a heavy social service burden, not only to service
family needs, but also to permit women to chose work outside the
household.
Perhaps the most salient characteristic of the social democratic regime
is its fusion of welfare and work. It is, at once, a welfare state
genuinely committed to a full employment guarantee and a welfare
state entirely dependent on its attainment. On the one side, it is a model
in which the right to work has status equal to the right of income
protection. On the other side, the enormous costs of maintaining a
solidaristic, universalistic, and decommodifying welfare system means
{hal j{ must minimize social problems and maximize revenue. This is
obviously best done with the most people working, and the fewest
possible people living off social transfers.
While it is empirically clear that welfare states cluster, we must recognize
that no single case is pure. The social democratic regimes of Scandinavia
blend crucial socialist and liberal elements. The Danish and Swedish
unemployment insurance schemes, for example, are still essentially voluntarist.
Denmark's labor movement has been chronically incapable of
pursuing full employment policies due in part to trade union resistance to
active labor market policy. And in both Denmark and Finland, the market
has been allowed to playa decisive role in pensions.
Nor are the liberal regimes pure. The U.S. social security system is
redistributive, compUlsory, and far from actuarial. At least in its early
formulation, the New Deal was as social democratic as was contemporary
Scandinavian social democracy. In contrast, the Australian welfare
state would appear exceedingly close to the bourgeois-liberal ideal
type, but much of its edifice has the coresponsibility of Australian
114 INTERNATIONAL JOURNAL OF SOCIOLOGY
labor. And, fmally, the European corporatist regimes have received
both liberal and social democratic impulses. Social insurance schemes
have been substantially destratified and unified in Austria, Germany,
France, and Italy. Their extremely corporativist character has thus been
reduced.
Notwithstanding the lack of purity, if our essential criteria for defining
welfare states have to do with the quality of social rights, social
stratification, and the relationship between state, market, and family,
the world is composed of distinct regime clusters. Comparing welfare
states on scales based on more or less or, indeed, better or worse, will
yield highly misleading results.
The causes of welfare state regimes
If welfare states cluster into three distinct regime types, we are confronted
with a substantially more complex task of identifying the
causes of welfare state differences. What is the explanatory power of
industrialization, economic growth, capitalism, or working-class political
power in accounting for regime types? A first superficial answer
would be: very little. The nations we study are all more or less similar
with regard to all but the working-class mobilization variable. And we
find very powerful labor movements and parties in each of the three
clusters. A theory of welfare state developments must clearly reconsider
its causal assumptions if we wish to explain clusters. The hope to
find one single powerful causal motor must be abandoned; the task is
to identify salient interaction effects. Based on the preceding arguments,
three factors in particular should be of importance: the nature of
(especially working-) class mobilization; class-political coalition structures;
and the historical legacy of regime institutionalization.
As we have noted, there is absolutely no compelling reason to believe
that workers will automatically and naturally forge a socialist
class identity; nor is it plausible that their mobilization will look especially
Swedish. The actual historical formation of working-class collectivities
will diverge, and so also will their aims and political
capacities. Fundamental differences appear both in trade unionism and
party development. A key element in trade unionism is the mix of craft
and industrial unions. The former is prone to particularism and
corporativism; the latter is inclined to articulate broader, more universal
objectives. This blend decisively affects the scope for labor party
FALL 1990 115
action and also the nature of political demands. Thus, the dominance of
the American Federation of Labor (AFL) in pre-World War II United
States was a major impediment to social policy development. Likewise,
the heavily craft-oriented Danish labor movement, compared to
its Norwegian and Swedish counterparts, blocked social democracy's
aspirations for an active labor market policy for full employment. In
the United States, craft unions believed that negotiating occupational
benefits was a superior strategy, given their privileged market position.
In Denmark, craft unions jealously guarded their monopoly on training
and labor mobility. Conversely, centralized industrial unionism tends
to present a more unified and consolidated working-class clientele to
the labor party, making policy consensus easier, and power mobilization
more effective. It is clear, therefore, that a working-class mobilization
thesis must pay attention to union structure.
Equally decisive is political or denominational union fragmentation.
In many nations, for example, Finland, France, and Italy, trade unionists
are divided between socialist and communist parties; white-collar
unions are politically unaffiliated or divide their affiliation among several
parties. Denominational trade unionism has been a powerful feature
in the Netherlands, Italy, and other nations. Since trade unionism
is such a centrally important basis for party mobilization, such fragmentation
will weaken the left and thus benefit the nonsocialist parties'
chances of power. In addition, fragmentation may entail that welfare
state demands will be directed to many parties at once. The result may
be less party conflict over social policy, but it may also mean a plurality
of competing welfare state principles. For example, the subsidiarity
principle of Christian workers will conflict with the socialists' concern
for the emancipation of women.
The structure of trade unionism mayor may not be reflected in labor
party formation. But, under what conditions are we likely to expect
certain welfare state outcomes from specific party configurations?
There are many factors that conspire to make it virtually impossible to
assume that any labor or left party will ever be capable, singlehandedly,
of structuring a welfare state. Denominational or other divisions
aside, it will be only under extraordinary historical circumstances
that a labor party alone will command a parliamentary majority long
enough to impose its will. We have noted that the traditional working
class has, nowhere, ever been an electoral majority. It follows that a
theory of class mobilization must look beyond the major leftist party. It
116 INTERNATIONAL JOURNAL OF SOCIOLOGY
is a historical fact that welfare state construction has depended on
political coalition building. The structure of class coalitions is much
more decisive than are the power resources of any single class.
The emergence of alternative class coalitions is, in part, determined
by class formation. In the earlier phases of industrialization, the rural
classes usually constituted the single largest electorate. If social democrats
wanted political majorities, it was here that they were forced to
look for allies. Therefore, it was ironically the rural economy that was
decisive for the future of socialism. Where the rural economy was
dominated by small, capital-intensive family farmers, the potential for
an alliance was greater than if it depended on large pools of cheap
labor. And, where farmers were politically articulate and well organized
(as in Scandinavia), the capacity to negotiate political deals was
vastly superior.
The role of the farmers in coalition formation and, hence, in welfare
state development is clear. In the Nordic countries, the conditions provided
for a broad red-green alliance for a full employment welfare
state in return for farm price subsidies. This was especially true in
Norway and Sweden. where farming was highly precarious and dependent
on state aid. In the United States, the New Deal was premised on
a similar coalition (forged by the Democratic party) but with the important
difference that the labor-intensive South blocked a truly universalistic
social security system and opposed further welfare state
developments. In contrast. the rural economy of continental Europe
was very inhospitable to red-green coalitions. Often, as in Germany
and Italy. much of agriculture was labor-intensive and labor unions and
left parties were seen as a threat. In addition. the conservative forces
on the continent had succeeded in incorporating farmers into
"reactionary" alliances, helping to consolidate the political isolation
of labor.
Political dominance was. before World War II. largely a question of
rural class politics. The construction of welfare states in this period
was, therefore. dictated by which force captured the farmers. The absence
of a red-green alliance does not necessarily imply that no welfare
state reforms were possible. On the contrary. it implies which
political force came to dominate their design. The United Kingdom is
an exception to this general rule because the political significance of
the rural classes eroded before the turn of the nineteenth century. In
this way. the United Kingdom's coalition logic showed at an early date
FALL 1990 117
the dilemma that faced most other nations later, namely that the new
white-collar middle classes constitute the linchpin for political majorities.
The consolidation of welfare states after World War II came to
depend fundamentally on the political alliances of the new middle
classes. For social democracy, the challenge was to synthesize workingclass
and white-collar demands without sacrificing the commitment to
solidarity.
Since the new middle classes have, historically, enjoyed a relatively
privileged position in the market, they have also been quite successful
in meeting their welfare demands outside the state or as civil servants
by privileged state welfare. Their employment security has traditionally
been such that full employment has been a peripheral concern.
Finally, any program for drastic income equalization is likely to be met
with great hostility among a middle-class clientele. On these grounds,
it would appear that the rise of the new middle classes would abort the
social democratic project and strengthen a liberal welfare state formula
The political position of the new middle classes has, indeed, been
decisive for welfare state consolidation. Their role in shaping the three
welfare state regimes described earlier is clear. The Scandinavian, or
social democratic, model relied almost entirely on social democracy's
capacity to incorporate the middle class in a new kind of welfare state:
one that provided benefits tailored to the tastes and expectations of the
middle classes, but nonetheless retained universalism of rights. Indeed,
by expanding social services and public employment, the welfare state
participated directly in manufacturing a middle class instrumentally
devoted to social democracy.
In contrast, the Anglo-Saxon nations retained the residual liberal
welfare state model precisely because the new middle classes were not
wooed from the market into the state. In class terms, the consequence
is dualism. The welfare state caters essentially to the working class and
the poor. Private insurance and occupational fringe benefits cater to the
middle classes. Given the electoral importance of the latter, it is quite
logical that further extensions of welfare state activities are resisted.
Indeed, the most powerful thrust in these countries is an accent on
fiscal welfare; that is, on tax expenditures and deductions for private
sector welfare plans.
The third, or corporativist welfare regime of continental Europe, has
also been patterned by the new middle classes, but in a different way.
The cause is historical. Developed by conservative political forces,
118 INTERNATIONAL JOURNAL OF SOCIOLOGY
these regimes institutionalized a middle-class loyalty to the preservation
of both occupationally segregated social insurance programs and,
ultimately, to the political forces that brought them into being.
Adenauer's great pension reform in 1957 was explicitly designed to
resurrect middle-class loyalties.
Conclusion
We have presented an alternative to a simple class mobilization theory
of welfare state development. It is motivated by the analytical necessity
of shifting from a linear to an interactive approach with regard to
both welfare states and their historical foundations. If we wish to study
welfare states, we must begin with a set of criteria that define their role
in society. This role is certainly not to spend or tax, nor is it necessarily
that of creating equality. We have presented a framework for comparing
welfare states that takes into consideration the principles for which
the historical actors willingly have struggled and mobilized. And,
when we focus on the principles embedded in welfare states, we discover
distinct regime clusters, not merely variations of "more" or
"less" around a common denominator.
The salient forces that explain the crystallization of regime differences
are interactive. They involve, first, the pattern of working class
political formation and, second, the structuralization of political coalitions
with the historical shift from a rural economy to a middle-class
society. The question of political coalition formation is decisive.
Third, past reforms have contributed decisively to the institutionalization
of class preferences and political behavior. In the corporatist
regimes, hierarchical status-distinctive social insurance cemented
middle-class loyalty to a peculiar type of welfare state. In the liberal
regimes, the middle classes became institutionally wedded to the market.
And, in Scandinavia, the fortunes of social democracy after World
War II were closely tied to the establishment of a middle-class welfare
state that benefited both its traditional working-class clientele and the
new white-collar strata. In part, the Scandinavian social democrats
were able to do so because the private welfare market was relatively
undeveloped and, in part, because they were capable of building a
welfare state with features of sufficient lUXUry to satisfy the tastes of a
more discriminating pUblic. This also explains the extraordinarily high
cost of Scandinavian welfare states.
FALL 1990 119
But, a theory that seeks to explain welfare state growth should also
be able to understand its retrenchment or decline. It is typically believed
that welfare state backlash movements, tax revolts, and rollbacks
are ignited when social expenditure burdens become too heavy.
Paradoxically, the opposite is true. Anti-welfare state sentiments over
the past decade have generally been weakest where welfare spending
has been heaviest, and vice versa. Why?
The risks of welfare state backlash depend not on spending, but on
the class character of welfare states. Middle-class welfare states, be
they social democratic (as in Scandinavia) or corporatist (as in Germany),
forge middle-class loyalties. In contrast, liberal, residualist welfare
states found in the United States, Canada, and, increasingly, the
United Kingdom depend on the loyalties of a numerically weak, and
often politically residual social stratum. In this sense, the class coalitions
in which the three welfare states were founded explain not only
their past evolution but also their future prospects.
Notes
I. Adam Smith is often cited but rarely read. A closer inspection of his writings
reveals a degree of nuance and a battery of reservations that substantially
qualify a delirious enthusiasm for the blessings of capitalism.
2. In the Wealth of Nations (Smith 1961, vol. 2, 236), Smith comments on
states that uphold the privilege and security of the propertied as follows:
" ... civil government, so far as it is instituted for the security of property, is in
reality instituted for the defense of the rich against the poor, or of those who have
some property against those who have none at all.··
3. This tradition is virtually unknown to Anglo-Saxon readers. since so little
has been translated into English. A key text. which greatly influenced public
debate and later social legislation, is Adolph Wagner's Rede Uber die Soziale
Frage (1872). For an English language overview of this tradition of political
economy, see Schumpeter (1954), and especially Bower (1947).
From the Catholic tradition, the fundamental texts are the two Papal Encycli·
cals. Rerum Novarum (1891). see Rutter 1932. and Quadrogesimo Anno (Pius XI
1938). The social Catholic political economy's main advocacy is a social organization
where a strong family is integrated in cross-class corporations. aided by the
state in terms of the subsidiarity principle. For a recent discussion. see Richter
(1987).
Like the liberals. the conservative political economists also have their contemporary
echoes. although they are substantially fewer in number. A revival occurred
with Fascism's concept of the Corporative ("Standiche") state of Ottmar
Spann in Germany. The subsidiary principle still guides much of German Christian
Democratic politics (see Richter 1987).
120 INTERNATIONAL JOURNAL OF SOCIOLOGY
4. Chief proponents of this analysis are members of the German "state
derivation" school (Milller and Neusilss 1973; Offe 1972; O'Connor 1973;
Gough 1979; see also the work of Poulantzas (1973). As Skocpol and Amenta
(1986) note in their excellent overview, the approach is far from one-dimensional.
Thus, Offe, O'Connor, and Gough identify the function of social reforms as also
being concessions to mass demands and as potentially contradictory.
Historically, socialist opposition to parliamentary reforms was principled less
by theory than by reality. August Bebel, the great leader of German social democracy,
rejected Bismarck's pioneering social legislation, not because he did not
favor social protection, but because of the blatantly anti-socialist and divisionary
motives behind Bismarck's reforms.
5. This realization came from two types of experiences. One, typified by
Swedish socialism in the 1920s, was the discovery that not even the working-class
base showed much enthusiasm for socialization. In fact, when the Swedish socialists
established a special commission to prepare plans for socialization, it concluded
after ten years of exploration that it would be practically quite impossible
to undertake. A second kind of experience, typified by the Norwegian socialists
and Blum's Popular Front government in 1936, was the discovery that radical
proposals could easily be sabotaged by the capitalists' capacity to withhold investments
and export their capital abroad.
6. This is obviously not a problem for the parliamentary class hypothesis
alone; structural Marxism faces the same problem of specifying the class character
of the new middle classes. If such a specification fails to demonstrate that it
constitutes a new working class, both varieties of Marxist theory face severe
(although not identical) problems.
7. This literature has been reviewed in great detail by a number of authors.
See. for example. Wilensky et al. (1985). For excellent and more critical evaluations.
see Uusitalo (1984), Shalev (1983). and Skocpol and Amenta (1986).
8. This section derives much of its material from earlier writings (see. especially
Esping-Andersen (1985a; 1985b; 1987).
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