A welfare state is a concept of government
in which the state plays a key role in the protection and promotion of the economic and
social well-being of its citizens. It is based on the principles of equality of opportunity,
equitable distribution of wealth, and public responsibility for those unable to avail themselves
of the minimal provisions for a good life. The general term may cover a variety of forms
of economic and social organization. The sociologist T.H. Marshall identified the welfare state
as a distinctive combination of democracy, welfare, and capitalism. Scholars have paid
special attention to the historic paths by which Germany, Britain and other countries
developed their welfare state. Modern welfare states include the Nordic countries,
such as Iceland, Sweden, Norway, Denmark, and Finland which employ a system known as
the Nordic model. Esping-Andersen classified the most developed welfare state systems into
three categories; Social Democratic, Conservative, and Liberal.
The welfare state involves a transfer of funds from the state, to the services provided as
well as directly to individuals. It is funded through redistributionist taxation and is
often referred to as a type of “mixed economy”. Such taxation usually includes a larger income
tax for people with higher incomes, called a progressive tax. This helps to reduce the
income gap between the rich and poor. Etymology
The German term Sozialstaat has been used since 1870 to describe state support programs
devised by German Sozialpolitiker and implemented as part of Bismarck’s conservative reforms.
The literal English equivalent “social state” didn’t catch on in Anglophone countries until
the Second World War, when Anglican Archbishop William Temple, author of the book Christianity
and the Social Order, popularized the concept using the phrase “welfare state.” Bishop Temple’s
use of “welfare state” has been connected to Benjamin Disraeli’s 1845 novel Sybil: or
the Two Nations, which speaks of “the only duty of power, the social welfare of the PEOPLE.'”
At the time he wrote Sybil, Disraeli, later Prime Minister, belonged to Young England,
a conservative group of youthful Tories who were appalled by what they saw as the Whig
indifference to the horrendous conditions of the industrial poor. Members of Young England
attempted to kindle among the privileged classes a sense of responsibility toward the less
fortunate and a recognition of the dignity of labor that they imagined had characterized
England during the Feudal Middle Ages. The Italian term stato sociale reproduces
the German term. The Swedish welfare state is called Folkhemmet — literally, “folk
home”, and goes back to the 1936 compromise between Swedish trade unions and large corporations.
Sweden’s mixed economy is based on strong unions, a robustly funded system of social
security, and universal health care. In Germany, the term Wohlfahrtsstaat, a direct translation
of the English “welfare state”, is used to describe Sweden’s social insurance arrangements.
Spanish and many other languages employ an analogous term: estado del bienestar— literally,
“state of well-being”. In Portuguese, two similar phrases exist: estado do bem-estar
social, which means “state of social well-being”, and estado de providência— “providing state”,
denoting the state’s mission to ensure the basic well-being of the citizenry. In Brazil,
the concept is referred to as previdência social, or “social providence”.
Modern model Modern welfare programs are chiefly distinguished
from earlier forms of poverty relief by their universal, comprehensive character. The institution
of social insurance in Germany under Bismarck was an influential template. Some schemes
were based largely in the development of autonomous, mutualist provision of benefits. Others were
founded on state provision. In an influential essay, “Citizenship and Social Class”, British
sociologist T.H. Marshall identified modern welfare states as a distinctive combination
of democracy, welfare, and capitalism, arguing that citizenship must encompass access to
social, as well as to political and civil rights. Examples of such states are Germany,
all of the Nordic countries, the Netherlands, Uruguay and New Zealand and the United Kingdom
in the 1930s. Since that time, the term welfare state applies only to states where social
rights are accompanied by civil and political rights.
Changed attitudes in reaction to the world-wide Great Depression, which brought unemployment
and misery to millions, were instrumental in the move to the welfare state in many countries.
During the Great Depression, the welfare state was seen as a “middle way” between the extremes
of communism on the left and unregulated laissez-faire capitalism on the right. In the period following
the World War II, many countries in Europe moved from partial or selective provision
of social services to relatively comprehensive “cradle-to-grave” coverage of the population.
The activities of present-day welfare states extend to the provision of both cash welfare
benefits and in-kind welfare services. Through these provisions, welfare states can affect
the distribution of wellbeing and personal autonomy among their citizens, as well as
influencing how their citizens consume and how they spend their time.
History of welfare states Historian Robert Paxton observes that on the
European continent the provisions of the welfare state were originally enacted by conservatives
in the late nineteenth century and by fascists in the twentieth in order to distract workers
from unions and socialism, and were opposed by leftists and radicals. He recalls that
the German welfare state was set up in the 1880s by Chancellor Bismarck, who had just
closed 45 newspapers and passed laws banning the German Socialist Party and other meetings
by trade unionists and socialists. A similar version was set up by Count Eduard von Taaffe
in the Austro-Hungarian Empire a few years later. “All the modern twentieth-century European
dictatorships of the right, both fascist and authoritarian, were welfare states”, he writes.
“They all provided medical care, pensions, affordable housing, and mass transport as
a matter of course, in order to maintain productivity, national unity, and social peace.” Continental European Marxists opposed piecemeal
welfare measures as likely to dilute worker militancy without changing anything fundamental
about the distribution of wealth and power. It was only after World War II, when they
abandoned Marxism, that continental European socialist parties and unions fully accepted
the welfare state as their ultimate goal. In Britain, the foundations for the welfare
state originated with the Liberal Party under governments headed by prime ministers Herbert
Asquith and David Lloyd George. British liberals supported a capitalist economy and in the
nineteenth-century had principally been concerned with issues of free trade, but by the turn
of the twentieth century, they shifted away from laissez faire economics and began to
favor pro-active social legislation to assure equal opportunity for all citizens. In this
they were directly inspired by the signal success of the German economy under Bismarck’s
top-down social reforms. The French welfare state originated in the 1930s during a period
of socialist political ascendency, with the Matignon Accords and the reforms of the Popular
Front, though, as Paxton points out, these reforms were paralleled and even exceeded
by measures taken by the Vichy regime in the 1940s.
Germany Otto von Bismarck, the first Chancellor of
Germany, created the modern welfare state by building on a tradition of welfare programs
in Prussia and Saxony that had began as early as in the 1840s. The measures that Bismarck
introduced – old age pensions, accident insurance, and medical care – formed the
basis of the modern European welfare state. His paternalistic programs aimed to forestall
social unrest, to undercut the appeal of the Socialist party, and to secure the support
of the working classes for the German Empire, as well as to reduce the outflow of immigrants
to the United States, where wages were higher but welfare did not exist. Bismarck further
won the support of both industry and skilled workers through his high tariff policies,
which protected profits and wages from American competition, although they alienated the liberal
intellectuals who wanted free trade. Great Britain The modern welfare state in Great Britain
started to emerge with the Liberal welfare reforms of 1906–1914 under Liberal Prime
Minister Herbert Asquith. These included the passing of the Old-Age Pensions Act in 1908,
the introduction of free school meals in 1909, the 1909 Labour Exchanges Act, the Development
Act 1909, which heralded greater Government intervention in economic development, and
the enacting of the National Insurance Act 1911 setting up a national insurance contribution
for unemployment and health benefits from work.
December 1942 saw the publication of the Report of the Inter-Departmental Committee on Social
Insurance and Allied Services, commonly known as the Beveridge Report after its chairman,
Sir William Beveridge. The Beveridge Report proposed a series of measures to aid those
who were in need of help, or in poverty and recommended that the government find ways
of tackling it called “the five giants”, namely: Want, Disease, Ignorance, Squalor, and Idleness.
It urged the government to take steps to provide citizens with adequate income, adequate health
care, adequate education, adequate housing, and adequate employment, proposing that “All
people of working age should pay a weekly National Insurance contribution. In return,
benefits would be paid to people who were sick, unemployed, retired, or widowed.”
The basic assumptions of the report were that the National Health Service would provide
free health care to all citizens; a Universal Child Benefit would give benefits to parents,
encouraging people to have children by enabling them to feed and support a family. The report
stressed the lower costs and efficiency of universal benefits. Beveridge cited miners’
pension schemes as examples of some of the most efficient available and argued that a
universal state scheme would be cheaper than a myriad of individual friendly societies
and private insurance schemes and also less expensive to administer than a means-tested
government-run welfare system for the poor. The report’s recommendations were adopted
by the Liberal Party, the Conservative Party, and then by the Labour Party. Following the
Labour election victory in the 1945 general election many of Beveridge’s reforms were
implemented through a series of Acts of Parliament. On July 5, 1948, the National Insurance Act,
National Assistance Act and National Health Service Act came into force, forming the key
planks of the modern UK welfare state. The universal system that was to be called National
Insurance, in which the rich paid in and the state paid out to the rich just as to the
poor, was justified on the grounds of both fairness and lower cost. Universal benefits,
such as the Universal Child Benefit, were particularly beneficial after the Second World
War when the birth rate was low, and may have helped drive the 1950s baby boom.
Before 1939, most health care had to be paid for through non-government organisations – through
a vast network of friendly societies, trade unions, and other insurance companies, which
counted the vast majority of the UK working population as members. These organizations
provided insurance for sickness, unemployment, and disability, providing an income to people
when they were unable to work. Following the implementation of Beveridge’s recommendations,
institutions run by local councils to provide health services for the uninsured poor, part
of the poor law tradition of workhouses, were merged into the new national system. As part
of the reforms, the Church of England also closed down its voluntary relief networks
and passed the ownership of thousands of church schools, hospitals and other bodies to the
state. Welfare systems continued to develop over
the following decades. By the end of the 20th century parts of the welfare system had been
restructured, with some provision channelled through non-governmental organizations which
became important providers of social services. United States Although the United States was to lag far
behind Germany and Britain, it did finally develop a limited welfare state in the 1930s.
Ironically, however, the earliest and most comprehensive philosophical justification
for the welfare state was produced by an American, the sociologist Lester Frank Ward, whom the
historian Henry Steele Commager called “the father of the modern welfare state”.
Nineteenth-century American businessmen had been quick to adopt the laissez-faire theories
of British philosopher Herbert Spencer and his American disciples. Spencer had strongly
opposed the paternalistic social reforms associated with Bismarck. He argued that coddling the
poor and unfit would only encourage them to reproduce, obstructing what he considered
the “scientific” and natural evolutionary progress of the human race.
Ward challenged Spencer’s contention that social phenomena are not amenable to human
control. “It is only through the artificial control of natural phenomena that science
is made to minister to human needs.” he wrote, “and if social laws are really analogous to
physical laws, there is no reason why social science should not receive practical application
such as have been given to physical science.” “The charge of paternalism” wrote Ward: is chiefly made by the class that enjoys the
largest share of government protection. Those who denounce it are those who most frequently
and successfully invoke it. Nothing is more obvious today than the signal inability of
capital and private enterprise to take care of themselves unaided by the state; and while
they are incessantly denouncing “paternalism,” by which they mean the claim of the defenseless
laborer and artisan to a share in this lavish state protection, they are all the while besieging
legislatures for relief from their own incompetency, and “pleading the baby act” through a trained
body of lawyers and lobbyists. The dispensing of national pap to this class should rather
be called “maternalism,” to which a square, open, and dignified paternalism would be infinitely
preferable. Central to Ward’s theories was his belief
that a universal and comprehensive system of education was necessary if a democratic
government was to function successfully. His writings profoundly influenced younger generations
of progressive thinkers such as Theodore Roosevelt, Thomas Dewey, and Frances Perkins, among others.
The United States would be the only industrialized country that went into the Great Depression
with no social insurance policies in place. It was not until 1935 that significant, if
conservative by European standards, social insurance policies were finally instituted
under Franklin D. Roosevelt’s New Deal. In 1938, the Fair Labor Standards Act, limiting
the work week to 40 hours and banning child labor for children under 16, was passed over
stiff congressional opposition. The price of passage of the New Deal’s Social Security
and Fair Labor acts was the exclusion of domestic, agricultural, and restaurant workers, who
were largely African-American, from social security benefits and labor protections.
By 2013 the U.S. remains the only major industrial state without a uniform national sickness
program. American spending on health care is the highest in the world, but it is a complex
mix of federal, state, philanthropic, employer and individual funding. The US spent 16% of
its GDP on health care in 2008, compared to 11% in France in second place.
Oil countries Saudi Arabia, Brunei, Kuwait, Qatar, Oman,
and the United Arab Emirates have become welfare states exclusively for their own citizens.
They exclude all foreign residents, who form the majority of the residents in their respective
nations, from access to social benefits. Early stages: China China traditionally relied on the extended
family to provide welfare services. In recent years the one-child policy has made that unrealistic,
and new models have emerged since the 1980s as China has rapidly become richer and more
urban. Much discussion is underway regarding China’s proposed path toward a welfare state.
Chinese policies have been incremental and fragmented in terms of social insurance, privatization,
and targeting. In the cities, where the rapid economic development has centered, there are
now lines of cleavage, between state sector and non-state sector employees and between
labor market insiders and outsiders. Three worlds of the welfare state
Broadly speaking, welfare states are either universal – with provisions that cover everybody,
or selective – with provisions covering only those deemed most needy. In his 1990
book The Three Worlds of Welfare Capitalism, Danish sociologist Gøsta Esping-Andersen
further identified three subtypes of welfare state models. Though increasingly criticised,
these classifications are still used as a starting point in analysis of modern welfare
states and remain a fundamental heuristic tool for welfare state scholars.
Esping-Andersen’s welfare classification acknowledges the historical role of three dominant twentieth-century
Western European and American political movements: Social Democracy, Christian Democracy; and
Liberalism. The Social-Democratic welfare state model
is based on the principle of Universalism, granting access to benefits and services based
on citizenship. Such a welfare state is said to provide a relatively high degree of citizen
autonomy, limiting reliance on family and market. In this context, social policies are
perceived as “politics against the market”. The Christian-Democratic welfare state model
is based on the principle of subsidiarity and the dominance of social insurance schemes,
offering a medium level of decommodification and permitting a high degree of social stratification.
The Liberal model is based on market dominance and private provision; ideally, in this model,
the state only interferes to ameliorate poverty and provide for basic needs, largely on a
means-tested basis. Hence, the decommodification potential of state benefits is assumed to
be low and social stratification high. Based on the decommodification index, Esping-Andersen
divided 18 OECD countries into the following groups:
Social Democratic: Denmark, Finland, the Netherlands, Norway and Sweden
Christian Democratic: Austria, Belgium, France, Germany, Spain and Italy
Liberal: Australia, Canada, Japan, Switzerland and the US
Not clearly classified: Ireland, New Zealand and the United Kingdom
Since the building of the decommodification index is limited, this typology could be also
criticized. Nevertheless, these 18 countries can be placed on a continuum from the most
purely social-democratic, Sweden, to the most liberal, the United States.
Swedish professor of political science Bo Rothstein points out that in non-universal
welfare states, the state is primarily concerned with directing resources to “the people most
in need”. This requires tight bureaucratic control in order to determine who is eligible
for assistance and who is not. Under universal models such as Sweden, on the other hand,
the state distributes welfare to all people who fulfill easily established criteria with
as little bureaucratic interference as possible. This, however, requires higher taxation due
to the scale of services provided. This model was constructed by the Scandinavian ministers
Karl Kristian Steincke and Gustav Möller in the 1930s and is dominant in Scandinavia.
Sociologist Lane Kenworthy argues that the Nordic experience demonstrates that the modern
social democratic model can “promote economic security, expand opportunity, and ensure rising
living standards for all . . . while facilitating freedom, flexibility and market dynamism.”
Effects of welfare on poverty Empirical evidence suggests that taxes and
transfers considerably reduce poverty in most countries whose welfare states constitute
at least a fifth of GDP. Effects of social expenditure on economic
growth, public debt, and education Researchers have found very little correlation
between economic performance and social expenditure. They also see little evidence that social
expenditures contribute to losses in productivity; economist Peter Lindert of the University
of California, Davis attributes this to policy innovations such as the implementation of
“pro-growth” tax policies in real-world welfare states.
Nor have social expenses contributed significantly to public debt. According to the OECD, social expenditures
in its 34 member countries rose steadily between 1980 and 2007, but the increase in costs was
almost completely offset by GDP growth. More money was spent on welfare because more money
circulated in the economy and because government revenues increased. In 1980, the OECD averaged
social expenditures equal to 16 percent of GDP. In 2007, just before the financial crisis
kicked into full gear, they had risen to 19 percent – a manageable increase. A Norwegian study covering the period 1980
to 2003 found welfare state spending correlated negatively with student achievement. However,
many of the top-ranking OECD countries on the 2009 PISA tests are considered welfare
states. The table below shows, first, social expenditure
as a percentage of GDP for some OECD member states and second, GDP per capita in 2012:
Criticism and response Early conservatives, under the influence of
Malthus, opposed every form of social insurance “root and branch”, arguing, as U. C. Berkeley
economist Brad DeLong put it: “make the poor richer, and they would become more fertile.
As a result, farm sizes would drop, labor productivity would fall, and the poor would
become even poorer. Social insurance was not just pointless; it was counterproductive.”
Malthus, a clergyman, for whom birth control was anathema, believed that the poor needed
to learn the hard way to practice frugality, self-control, and chastity. Traditional conservatives
also protested that the effect of social insurance would be to weaken private charity and loosen
traditional social bonds of family, friends, religious, and non-governmental welfare organisations.
Karl Marx, on the other hand, opposed piecemeal reforms advanced by middle class reformers
out of a sense of duty. In his Address of the Central Committee to the Communist League,
written after the failed revolution of 1848, he warned that measures designed to increase
wages, improve working conditions, and provide social insurance were merely bribes that would
only temporarily make the situation of working classes tolerable and in the long run would
weaken the revolutionary consciousness needed to achieve a socialist economy. Nevertheless,
Marx also proclaimed that the Communists had to support the bourgeoisie wherever it acted
as a revolutionary progressive class because “bourgeois liberties had first to be conquered
and then criticised.” In the twentieth century, opponents of the
welfare state have expressed apprehension about the creation of a large, possibly self-interested
bureaucracy required to administer it and the tax burden on the wealthier citizens that
this entailed. Political historian Alan Ryan points out that
the modern welfare state stops short of being an “advance in the direction of socialism,”
noting in particular that: “its egalitarian elements are more minimal than either its
defenders or its critics think”, and because it does not entail advocacy for social ownership
of industry. The modern welfare state, Ryan writes, does not set out: to make the poor richer and the rich poorer,
which is a central element in socialism, but to help people to provide for themselves in
sickness while they enjoy good health, to put money aside to cover unemployment while
they are in work, and to have adults provide for the education of their own and other people’s
children, expecting those children’s future taxes to pay in due course for the pensions
of their parents’ generation. These are devices for shifting income across different
stages in life, not for shifting income across classes. Another distinct difference is that
social insurance does not aim to transform work and working relations; employers and
employees pay taxes at a level they would not have done in the nineteenth century, but
owners are not expropriated, profits are not illegitimate, cooperativism does not replace
hierarchical management. See also Notes References
Arts, Wil and Gelissen John; “Three Worlds of Welfare Capitalism or More? A State-of-the-art
report” Journal of European Social Policy:2: 2:137–58.
Francis G. Castles et al.. The Oxford Handbook of the Welfare State. Oxford Handbooks Online.
p. 67. Esping-Andersen, Gosta; Politics against markets,
Princeton, NJ: Princeton University Press. Esping-Andersen, Gosta; “The Three Worlds
of Welfare Capitalism”, Princeton NJ: Princeton University Press.
Ferragina, Emanuele and Martin Seeleib-Kaiser, “Welfare Regime Debate: Past, Present, Futures?”
Policy & Politics: 39: 4: 583–611. Kenworthy, Lane. Social Democratic America.
Oxford University Press. ISBN 0199322511 Korpi, Walter; “The Democratic Class Struggle”;
London: Routledge. Kuhnle, Stein. “The Scandinavian Welfare State
in the 1990s: Challenged but Viable.” West European Politics 23#2 pp. 209–228
Kuhnle, Stein. Survival of the European Welfare State 2000 Routledge ISBN 0-415-21291-X
Rothstein, Bo. Just institutions matter: the moral and political logic of the universal
welfare state Stephens, John D. “The Transition from Capitalism
to Socialism”; Urbana, IL: University of Illinois Press.
Van Kersbergen, K. “Social Capitalism”; London: Routledge.
Vrooman, J.C. “Regimes and Cultures of Social Security: Comparing Institutional Models through
Nonlinear PCA”; International Journal of Comparative Sociology:, 53: 5-6: 444–77.
External links An introduction to social policy
Social Security Programs Throughout the World Race and Welfare in the United States
García Calvo’s Analysis of Welfare Society Shavell’s criticism of social justice programmes
Principles of Fairness versus Human Welfare: On the Evaluation of Legal Policy.
Journal containing free daily information on welfare policies at local, national and
EU level Western nations with social safety net happier.
Benjamin Radcliff, September 25, 2013. “Widefare: Asia’s Emerging Welfare States
Spread Themselves Thinly” The Economist: Asia, July 6, 2013
Lee Hyo-sik. “Korea Next to Last in Social Welfare Spending”. The Korea Times, February
12, 2010. South Korea now spends less, but article points out that its rate of spending
growth reached an annual average of 10.8 percent from 2004 through 2008, twice the OECD average,
and predicts this rate of increase will continue its upward curve as the government has to
spend more to care for the elderly and encourage people to have babies.
Data and statistics OECD – Health Policy and Data: Health Division
Website OECD – Social Expenditure database Website
Contains figures on wages and benefit systems in various OECD member states
The impact of benefit and tax uprating on incomes and poverty
Contains information on social security developments in various EC member states from 1957 to 1978
Contains information on social security developments in various EC member states from 1979 to 1989
Contains information on social assistance programmes in various EC member states in
1993 Contains detailed information on the welfare
systems in the former Yugoslav republics