Economic Growth and Welfare Systems. Jean Monnet Chair in European Integration Studies Prof. PASQUALE TRIDICO

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1 Economic Growth and Welfare Systems Jean Monnet Chair in European Integration Studies Prof. PASQUALE TRIDICO

2 The Political Economy of European Welfare Capitalism 1. European Welfare Capitalism in Good Times and Bad 2. Varieties of European Welfare Capitalism 3. Globalisation, Europeanisation and the Welfare State 4. Competitiveness and the Welfare State 5. European Integration and Welfare Capitalism 6. Convergence and Divergence in European Welfare

3 Varieties of European Welfare Capitalism To illustrate the point, the development of Bismarckian and Beveridgean welfare systems can appear as a fundamental bifurcation between European states. Different initial institutional designs set countries on distinct trajectories that ultimately generated quite different forms of state welfare provision Bismarckian : the former rooted in occupationally fractured, statuspreserving, corporatist systems, Beveridgean : the latter provide universal flat-rate benefits.

4 Worlds of welfare capitalism The Three Worlds of Welfare Capitalism (1990), has become the standard approach in welfare state analysis. The persuasive power of Esping-Andersen s analysis derives, in large part, from the clarity with which he proclaimed the existence of three distinct types of welfare state 1. Liberal (different from the Beveridgian) 2. conservative-corporatist 3. social democratic (closer to the idea of Beveridge). Each is associated with a specific exemplary form of welfare provision (respectively means-testing, occupationally or sector-specific social insurance, and universalism).

5 the liberal welfare state the liberal welfare state, is characterised by Esping-Andersen as one in which means tested assistance, modest universal transfers, or modest social insurance plans predominate and the progress of social reforms has been severely circumscribed by traditional, liberal work-ethic norms (1990: 26). Within such regimes, the state may actively encourage the market by subsidising private welfare schemes thereby aggravating the dualism between statewelfare recipients and the majority who use private systems. This liberal group is often equated with a model linked to cultural, linguistic or economic features of Anglo-Saxon states (alabeling term used, for example, by Sapir 2006). Esping-Andersen identified the US, Canada and Australia as archetypical examples of

6 conservative-corporatist regime-type the conservative-corporatist regime-type, the state stands perfectly ready to displace the market. Accordingly, private insurance fringe benefits play a truly marginal role. In this largely state-initiated corporatist social insurance system, the preservation of status differentials is key, and hence the redistributive impact of social policy is negligible. These regimes are also typically shaped by the church and hence strongly committed to the preservation of traditional family-hood. Non-working wives are invariably excluded from social insurance. Esping-Andersen notes that day care and families services are conspicuously underdeveloped within this regime-type cluster, mentioning Austria, France, Germany and Italy as examples (in 1990)

7 The social democratic regime cluster In the social democratic regime, policy does not tolerate a dualism between state and market, or working class and middle class the welfare state promotes an equality of the highest standards, not of minimum needs as was pursued elsewhere. Services and benefits were upgraded to levels commensurate with even the most discriminating tastes of the new middle classes and workers were guaranteed full participation in the quality of rights enjoyed by the better off. The Nordic countries provide the obvious model for it. Indeed other analysts often describe it as a Scandinavian or Nordic model

8 Ideological def. vs cultural/linguistic categories Ideological def: 1. liberalism, 2. conservatism, 3. social democracy, 4. radical geographical and/or cultural/linguistic categories: 1. continental European; 2. southern Europe or Mediterranean; 3. Anglo-Saxon or sometimes Anglo-liberal; 4. eastern European, or east central European, 5. Baltic; 6. Nordic, Scandinavian;

9 WS general objectives welfarism has a range of objectives and implicates a variety of moral principles. These might include: promoting economic efficiency; reducing poverty; promoting social equality; promoting social integration and avoiding social exclusion; promoting social stability; and promoting autonomy

10 WS general definition 1 definition: expenditure perspective WS is a set of institutions and programme that provide public services and good to decrease risk life and increase income standard 2 definition: social rights perspective WS is identified by the degree of social rights on the basis of which welfare goods and service are allocated from universalistic to residual forms, in order to reduce inequality and to decommodify welfare provisions from market This second def is more appropriate according to Esping-Andersen in order to identify better the welfare and social mission of a state, otherwise, if we judge WS from the expenditure perspective, you may find that public expenditure of Health system for instance in USA is larger than many EU states, but this does not contribute more to reduce inequality, and to increase general health, because the health care is not decommodified

11 Commodification vs de-commodification The commodification of labor, for Marx implied worker alienation The answer to commodification in welfare terms is decommodification Decommodification as putting out of the market welfare goods and services A different degree decommodification occurs among WS Decomodification is linked to the extend of social rights among citizen, from universal (socialdemocartic WS) to residual (in liberal WS) to selective (in corporative WS) Decommodification of WS is very HIGH in socialdemocratic WS, lower in Liberal WS, medium in Corporative WS Esping-Andersen argues that decommodification occurs when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market

12 The decommodification index Esping-Andersen

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14 Esping-Andersen s degrees of conservatism, liberalism and socialism in welfare states

15 Evolution of 3 worlds of capitalism

16 Pontusson, 2008 (2 worlds of capitalism?)

17 Conservative liberal (Y-axis) and egalitarian (X-axis) dimensions of welfare statehood, early 1980s Pontusson 2008

18 Conservative liberal (Y-axis) and egalitarian (X-axis) dimensions of welfare statehood, early 2000s Pontusson 2008

19 Castles and Mitchell s (1993) categorisation of welfare regimes