- Welfare state
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."
Modern welfare states include countries such as Sweden, Norway, Denmark and Finland which employ a system known as the Nordic model. The welfare state involves a direct transfer of funds from the state, to the services provided (i.e. healthcare, education) as well as directly to individuals ("benefits"). The welfare state is funded through redistributionist taxation and is often referred to as a type of "mixed economy" in the United States and many other countries.
The German term (Sozialstaat, "social state") has been used since 1870 to describe state support programs being developed by the German Sozialpolitiker—"Social Politicians"— and implemented through Bismarck's conservative reforms.
Despite early attempts to use an equivalent phrase in English the term only entered common use when William Temple popularized it during the Second World War, contrasting wartime Britain's welfare state with the "warfare state" of Nazi Germany.
The Italian term "Social state" (Stato sociale) has the same origin. The Swedish welfare state is called Folkhemmet (literally; the folk home) and goes back to the 1936 compromise between the Union and big Corporate companies. It is a Mixed economy, built on strong unions and a strong system of Social security and universal health care. The term "Wohlfahrtsstaat", a direct translation from English, is used in Germany to describe Sweden. In Spanish and many other languages, an analogous term is used: estado del bienestar; translated literally: "state of well-being". In Portuguese, two similar phrases exist: "Estado do bem-estar socal" which means "state of social well-being" and Estado de Providência which means "Providing State", as in the State should provide citizens their demands in order to achieve people's well-being. In Brazil it is referred to as Previdencia Social, translated as social providence.
History of welfare states
In Germany, Chancellor Otto von Bismarck created the modern welfare state by building on a tradition of welfare programs in Prussia and Saxony that began as early as in the 1840s, and by winning the support of business. In the 1880s he introduced old age pensions, accident insurance, medical care and unemployment insurance that formed the basis of the modern European welfare state. His paternalistic programs won the support of German industry because its goals were to win the support of the working classes for the Empire and reduce the outflow of immigrants to America, where wages were higher but welfare did not exist. Bismarck further won the support of both industry and skilled workers by his high tariff policies, which protected profits and wages from American competition, although they alienated the liberal intellectuals who wanted free trade.
Modern welfare programs differed from previous schemes of poverty relief due to their relatively universal coverage. The development of social insurance in Germany under Bismarck was particularly influential. Some schemes were based largely in the development of autonomous, mutualist provision of benefits. Others were founded on state provision. The term was not, however, applied to all states offering social protection. The sociologist T.H. Marshall identified the welfare state as a distinctive combination of democracy, welfare and capitalism. Examples of early welfare states in the modern world are Germany, all of the Nordic Countries, the Netherlands, Uruguay and New Zealand and the United Kingdom in the 1930s.
Changed attitudes in reaction to the Great Depression were instrumental in the move to the welfare state in many countries, a harbinger of new times where "cradle-to-grave" services became a reality after the poverty of the Depression. During the Great Depression, it was seen as an alternative "middle way" between communism and capitalism. In the period following the Second World War, many countries in Europe moved from partial or selective provision of social services to relatively comprehensive coverage of the population.
The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old-age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare 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.
In Britain, the beginning of the modern welfare state was in 1911 when David Lloyd George and his Liberal Party enacted the National Insurance Act 1911 setting up a national insurance contribution for unemployment and health benefits from work. In 1942, the Social Insurance and Allied Services was created by Sir William Beveridge in order to aid those who were in need of help, or in poverty. Beveridge worked as a volunteer for the poor, and set up national insurance. He stated 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. The Universal Child Benefit was a scheme to give benefits to parents, encouraging people to have children by enabling them to feed and support a family. One theme of the report was the relative cheapness of universal benefits. Beveridge quoted miner's pension schemes as some of the most efficient available, and argued that a state scheme would be cheaper to run than individual friendly societies and private insurance schemes, as well as being cheaper than means-tested government-run schemes for the poor.
The cheapness of what was to be called National Insurance was an argument alongside fairness, and justified a scheme in which the rich paid-in and the state paid-out to the rich, just as for the poor. In the original scheme, only some benefits called National Assistance were to be paid regardless of contribution. Universal benefits paid to rich and poor such as child benefit were particularly beneficial after the Second World War when the birth rate was low. Universal Child Benefit may have helped drive the Baby boom.
Beveridge recommended to the government that they should find ways of tackling the five giants, being Want, Disease, Ignorance, Squalor and Idleness. He argued to cure these problems, the government should provide adequate income to people, adequate health care, adequate education, adequate housing and adequate employment. Before 1939, most health care had to be paid for through non government organisations, this was done 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 friendly societies provided insurance for sickness, unemployment and invalidity, therefore providing people with an income when they were unable to work. But because of the 1942 Beveridge Report, in 5 July 1948, the National Insurance Act, National Assistance Act and National Health Service Act came into force, thus this is the day that the modern UK welfare state was founded. 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.
Welfare systems had been developing intensively since the end of the World War II. At the end of the century due to their restructuring, part of their responsibilities started to be channeled through non-governmental organizations which became important providers of social services.
Three worlds of the welfare state
Esping-Andersen categorised three different types of welfare states in the 1990 book 'The Three Worlds of Welfare Capitalism'. Though increasingly criticised (for a review of the debate on the Three worlds of Welfare Capitalism see Art and Gelissen  and Ferragina and Seeleib-Kaiser), these classifications remain the most commonly used in distinguishing types of modern welfare states, and offer a solid starting point in such analysis. It has been argued that these typologies remain a fundamental heuristic tool for welfare state scholars, even for those who claim that in-depth analysis of a single case is more suited to capture the complexity of different social policy arrangments. Welfare typologies have the function to provide a comparative lens and place even the single case into a a comparative perspective (Ferragina and Seeleib-Kaiser 2011) .
Esping-Andersen (1990) constructed the welfare regime typology acknowledging the ideational importance and power of the three dominant political movements of the long 20th century in Western Europe and North America, that is Social Demcoracy, Christian Democracy(conservatism) and Liberalism (Stephens 1979; Korpi 1983; Van Kersbergen 1995; Ferragina and Seeleib-Kaiser 2011). The ideal Social-Democratic welfare state 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 autonomy, limiting the reliance of family and market (Ferragina and Seeleib-Kaiser 2011) . In this context, social policies are perceived as 'politics against the market' (Esping-Andersen 1985). Christian-democratic welfare states are based on the principle of subsidiarity and the dominance of social insurance schemes, offering a medium level of decommodification and a high degree of social stratification. The liberal regime is based on the notion of market dominance and private provision; ideally, 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 (Ferragina and Seeleib-Kaiser 2011) .
Based on the decommodification index Esping-Andersen divided into the following regimes 18 OECD countries (Esping-Andersen 1990: 71): 1. Liberal: Australia, Canada, Japan, Switzerland and the US; 2. Conservative: Austria, Belgium, France, Germany and Italy; 3. Social Demcoratic: Denmark, Finland, the Netherlands, Norway and Sweden 4. Not clearly classified: Ireland, New Zealand and the United Kingdom. These 18 countries can be placed on a continuum from the most purely social-democratic, Sweden, to the most liberal country, the United States (Ferragina and Seeleib-Kaiser 2011) .
Rothstein argues that in the first model, the state is primarily concerned with directing the resources to “the people most in need”. This requires a tight bureaucratic control over the people concerned. Under the second model, the state distributes welfare with as little bureaucratic interference as possible, to all people who fulfill easily established criteria (e.g. having children, receiving medical treatment, etc.). This requires high taxation. This model was constructed by the Scandinavian ministers Karl Kristian Steincke and Gustav Möller in the 30s and is dominant in Scandinavia. The third model is similar to the one found in Britain (Beveridge model) and is based more on citizenship and a certain level of welfare ‘as a right’, which may then be modified according to needs.
Effects on poverty
Empirical evidence suggests that taxes and transfers considerably reduce poverty in most countries, whose welfare states commonly constitute at least a fifth of GDP. Most "welfare states" have considerably lower poverty rates than they had before the implementation of welfare programs.
Country Absolute poverty rate (1960–1991)
(threshold set at 40% of U.S. median household income)
Relative poverty rate
Pre-welfare Post-welfare Pre-welfare Post-welfare Sweden 23.7 5.8 14.8 4.8 Norway 9.2 1.7 12.4 4.0 Netherlands 22.1 7.3 18.5 11.5 Finland 11.9 3.7 12.4 3.1 Denmark 26.4 5.9 17.4 4.8 Germany 15.2 4.3 9.7 5.1 Switzerland 12.5 3.8 10.9 9.1 Canada 22.5 6.5 17.1 11.9 France 36.1 9.8 21.8 6.1 Belgium 26.8 6.0 19.5 4.1 Australia 23.3 11.9 16.2 9.2 United Kingdom 16.8 8.7 16.4 8.2 United States 21.0 11.7 17.2 15.1 Italy 30.7 14.3 19.7 9.1
There is very little correlation between economic performance and welfare expenditure.
The table does not show the effect of expenditure on income inequalities, and does not encompass some other forms of welfare provision (such as occupational welfare).
Nation Welfare expenditure
(% of GDP)
(% of GDP)
GDP per capita (PPP US$) Denmark 29.2 37.9 $29,000 Sweden 28.9 38.2 $24,180 France 28.5 34.9 $23,990 Germany 27.4 33.2 $25,350 Belgium 27.2 32.7 $25,520 Switzerland 26.4 31.6 $28,100 Austria 26.0 32.4 $26,730 Finland 24.8 32.3 $24,430 Netherlands 24.3 27.3 $27,190 Italy 24.4 28.6 $24,670 Greece 24.3 28.4 $17,440 Norway 23.9 33.2 $29,620 Poland 23.0 N/A $9,450 United Kingdom 21.8 25.9 $24,160 Portugal 21.1 25.5 $18,150 Luxembourg 20.8 N/A $53,780 Czech Republic 20.1 N/A $14,720 Hungary 20.1 N/A $12,340 Iceland 19.8 23.2 $29,990 Spain 19.6 25.3 $20,150 New Zealand 18.5 25.8 $19,160 Australia 18.0 22.5 $25,370 Slovak Republic 17.9 N/A $11,960 Canada 17.8 23.1 $27,130 Japan 16.9 18.6 $25,130 United States 14.8 19.4 $36,000 Ireland 13.8 18.5 $32,410 Mexico 11.8 N/A $8,430 South Korea 6.1 11.0 $15,090
Criticisms of welfare
The notion, and the extent of, the modern welfare state has been criticized on economic, social, and ideological grounds from both the Left and the Right of the political spectrum.
- Swedish welfare state
- Third way
- Nordic model
- European welfare state
- American welfare state
- Welfare State (United Kingdom)
Transfer of wealth:
- Welfare Management System
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- Center for Public Policy
- Social Policy Virtual Library
- Social Sciences Information Gateway
- Race and Welfare in the United States
- The Welfare State: A Critique
- Shavell's criticism of social justice programmes
- Kaplow's criticism of social justice programmes.
- García Calvo's Analysis of Welfare Society
- World report on Welfare State
- Journal containing free daily information on welfare policies at local, national and EU level
Data and statistics
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