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Welfare-State Retrenchment Revisited: Entitlement Cuts, Public Sector Restructuring, and Inegalitarian Trends in Advanced Capitalist Societies

Published online by Cambridge University Press:  13 June 2011

Richard Clayton  and
Jonas Pontusson
Richard Clayton
Affiliation:
Cornell University
Jonas Pontusson
Affiliation:
Cornell University
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Abstract

In recent years it has become commonplace for comparativists to emphasize the resilience of welfare states in advanced capitalist societies and the failure of neoliberal efforts to dismantle the welfare state. Challenging some tenets of the resilience thesis, this article seeks to broaden the discussion of welfare-state retrenchment. The authors argue that a sharp deceleration of social spending has occurred in most OECD countries since 1980, that welfare states have failed to offset the rise of market-generated inequality and insecurity, and that welfare programs have become less universalistic. They stress the distributive and political consequences of market-oriented reforms of the public sector.

Type
Research Article
Information
World Politics , Volume 51 , Issue 1 , October 1998 , pp. 67 - 98
Copyright
Copyright © Trustees of Princeton University 1998

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References

1 Pierson, , “The New Politics of the Welfare State,” World Politics 48 (January 1996)CrossRefGoogle Scholar. Pierson's article builds on his book, Dismantling the Welfare State? (New York: Cambridge University Press, 1994)Google Scholar, which analyzes the Thatcher and Reagan experiments in detail. Other comparative analyses emphasizing the resilience of welfare states include Garrett, Geoffrey, Partisan Politics in the Global Economy (New York: Cambridge University Press, 1998)CrossRefGoogle Scholar; John Stephens, Evelyne Huber, and Leonard Ray, “The Welfare State in Hard Times,” in Herbert Kitschelt et al., eds., Continuity and Change in Contemporary Capitalism (New York: Cambridge University Press, forthcoming); and Duane Swank, “Social Democratic Welfare States in a Global Economy,” in Robert Geyer, Christine Ingebritsen, and Jonathon Moses, eds., Globalization, Europeanization and the End ofScandinavian SocialDemocracy? (London: MacMillan, forthcoming). For a detailed critique of Pierson's work, see Jens Alber, “Selectivity, Universalism, and the Politics of Welfare Retrenchment” (Paper presented at the annual meetings of the American Political Science Association, San Francisco, 1996); and for a comprehensive review of recent welfare-state literature, see Kees van Kersbergen, “The Declining Resistance of National Welfare States to Change?” (Manuscript, School of Public Affairs, University of Nijmegen, 1997).

2 Pierson (fn. 1,1996), 150.

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5 Ibid., 171.

6 Esping-Andersen, , The Three Worlds of Welfare Capitalism (Princeton: Princeton University Press, 1990)Google Scholar. The importance of services relative to transfer payments constitutes the most obvious basis for distinguishing among “institutional welfare states” (say, between Sweden and the Netherlands). Esp-ing-Andersen's concept of “decommodification” partly captures but also blurs this distinction. Scoring very high on Esping-Andersen's decommodification index, the Scandinavian welfare states have traditionally promoted labor-force participation and strengthened the power of wage earners as sellers of labor power (rather than reducing their dependence on the sale of labor power).

7 While everyone agrees that demographic pressures are important, the claim that international capital mobility exerts pressure on welfare states is contested by both Garrett (fn. 1) and Swank (fn. 1). It is neither possible nor necessary to develop and support this claim here. Suffice it to say that the question of whether capital mobility exerts downward pressure on welfare states should not be conflated with the question of whether capital mobility produces convergence among welfare states. The evidence presented by Garrett and Swank speaks primarily to the latter question.

8 It is sometimes argued that the fundamental purpose of the welfare state is to provide for social security and that only some welfare states (in the first instance, the Scandinavian welfare states) have had redistributive ambitions as well. While welfare states clearly vary in their redistributive effects, we find this argument somewhat dubious: since some groups are far more insecure than others in a capitalist society, the public provision of social security is itself a redistributive activity.

9 Cf. OECD, Employment Outlook (Paris: OECD July 1996)Google Scholar, chap. 3; and Pontusson, “Wage Distribution and Labor-Market Institutions,” in Torben Iversen, Jonas Pontusson, and David Soskice, eds., Unions, Employers and Central Banks (New York: Cambridge University Press, forthcoming).

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14 See Ian Gough et al., “Social Assistance in OECD Countries,” Journal of European Social Policy (February 1997), 24–27. Of course, the percentage of the population receiving social assistance might also increase because of political decisions to broaden the coverage of social assistance programs or to cut the benefits provided by more universalistic welfare programs. By the same token, poverty must be measured in terms of market income as well as disposable income in order to distinguish the effects of market forces from the effects of changes in social policy. Finally, it should be noted that the figures in Table 3 refer to relative poverty, as distinct from the absolute measures, such as the official U.S. poverty line. The percentage of the U.S. population living in households with a disposable income below the official poverty line fell from 22 percent in 1960 to less than 12 percent in 1973–79, and then began to rise, reaching 16–17 percent in the early 1990s; see Blank, Rebecca, It Takes a Nation (Princeton: Princeton University Press, 1997), 55Google Scholar.

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19 The U.K. ratio of disposable-income poverty to market-income poverty increased from .16 to .21 over the time period covered by Table 3. By contrast, the German ratio increased from .15 to .17, the U.S. ratio held steady at .56, and the Swedish ratio declined from .38 to .18.

20 As state-owned corporations are not included in the OECD measure of government employment, these figure reflect the government agencies in corporate form but not the privatization of state-owned corporations.

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28 Social insurance replacement levels were cut from 90 percent to 80 percent by the bourgeois coalition government of 1991–94. The social democrats cut them further to 75 percent in 1995 but subsequently restored these cuts. This summary of Swedish changes draws primarily on Palme, Joakim and Wennemo, Irene, Swedish Social Security in the 1990s (Stockholm: Ministry of Health and Social Affairs, 1998)Google Scholar. Cf. also Stephens, “The Scandinavian Welfare States,” in Esping-Andersen (fn. 18).

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31 The data points in Figure 1 are the average replacement rate for workers at 66 percent and 100 percent of the average production worker's income in three different family situations (single, married with a dependent spouse, and married with a working spouse). For more details on this measure, see OECD, The OECD Jobs Study: Evidence and Explanations (Paris: OECD, 1994)Google Scholar, chap. 8.

32 For a broader discussion of Swedish convergence on the German model, see Pontusson, , “Between Neoliberalism and the German Model: Swedish Capitalism in Transition,” in Crouch, Colin and Streeck, Wolfgang, eds., Political Economy of Modern Capitalism (London: Sage, 1997)Google Scholar.

33 Cf. Schwartz, Herman, “Small States in Big Trouble: State Reorganization in Australia, Denmark, New Zealand, and Sweden in the 1980s,” World Politics 46 (July 1994)CrossRefGoogle Scholar. See also Colin Fudge and Gustafsson, Lennart, “Administrative Reform and Public Management in Sweden and the United Kingdom,” Public Money and Management 9 (Summer 1989)Google Scholar; and Premfors, Rune, “The ‘Swedish Model’ and Public Sector Reform,” West European Politics 14 (July 1991)CrossRefGoogle Scholar.

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35 Ibid., 106. Cf. Olsson, Sven, Social Policy and Welfare State in Sweden (Lund: Arkiv, 1993)Google Scholar, chap. 4.

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44 Esping-Andersen, “Welfare States without Work,” in Esping-Andersen (fn. 18).

45 Cf. Streeck, Wolfgang, “Neo-Voluntarism: A New European Social Policy Regime?” in Scharpf, Fritz, Schmitter, Philippe, and Streeck, Wolfgang, eds., Governance in the European Union (London: Sage, 1996)Google Scholar.

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47 National Statistical Office, New Earnings Survey (London, various editions).

48 Pierson (fn. 1,1994), 146–61.

49 See Richard Clayton, “Confronting the Market: Public Sector Unions and Market-Oriented Reform in British Health Services and Education” (Paper presented at the conference on Distributive Dimensions of Political Economy, Center for European Studies, Harvard University, March 1–3,1996).