Transcript Document

Social Choice
Session 16
Carmen Pasca and John Hey
The Welfare State and The Welfare Society
• Definition of Welfare State: 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.
• Fundamental features of the Welfare State are social
insurance, national insurance (UK) and social security (US).
• The modern term was used in Great Britain in 1948.
• From a Welfare State to a Welfare Society: a welfare state
provides a range of goods to its citizens through legal
entitlements; the welfare society, provides welfare through
private means (the social services should be decentralized
and privatized to better serve diverse social needs).
Welfare Economics
• Welfare Economics is the normative branch of economics
which tries to make prescriptions.
• The prescriptions are based on value judgements which are
made explicit.
• The most important values judgements are consumer
sovereignty:
• that is, individuals preferences are to be taken into account
using the Pareto criterion: that is, if at least one is better off
but no one worse off, the economy is better off.
• Direct judgements on distribution of well-being.
Equality and welfare
• I discussed, during the last lecture, the trade-off
between equality and efficency inside the postindustrial societies in the context of distributive
justice (Rawls).
• The concepts of equality and welfare have become
almost synonymous, and both have become
shorthand for post-war welfare capitalism.
• If post-industrial society is driven by a trade-off
between equality and other goals it seem necessary
to understand which concept of equality is involved.
Different types of ‘equality’
• There exist few concepts with such variegated meanings as
equality.
• It can denote fairness and justice: that is, issues of equity.
• The distribution of opportunities, resources, and capabilities:
which address equality of life chances.
• The allocation of rewards and the differentiation of living
conditions or permanent social cleavages: a question of class
formation.
• Equality is also invoked when, for example, social reformers
or trade union organizers call for universalism and solidarityissues of equality or rights and duty.
Equality in different social sciences
• In economics, the stress is on the distribution and utilisation of
scarce resources;
• In political science more on power;
• In sociology on social stratification;
• The meaning of equality changes across historical epochs:
• In the first part of twentieth century, the problem of equality was
an echo of marxist question of class: “la question sociale” in France;
in Britain Disraeli spoke of “Two Nations”.
• The post-war embrace of Keynesianism and the welfare state
appeared to have resolved the “social question” once and for all
and, hence, equality became more individualised, a matter of
mobility chances.
Welfare Capitalism
• The notion of welfare capitalism actually dates back to the
1920’s when the American Right sought to deflect the
demand for European-style social insurance by encouraging
voluntary, company-based welfare plans.
• The first and foremost was the welfare state with its promise
of universal social citizenship, of a new social solidarity.
• The notion of the welfare state points immediately to the
second, namely full democracy.
• Welfare states find stronger expression than in TH Marshall’s
assertion that the civil and the political rights are only
democratically meaningful if complemented with social rights.
Different models of welfare
• The idea of the "welfare state" means different things in different
countries.
• An ideal model. The "welfare state" usually refers to an ideal model
of provision, where the state accepts responsibility for the
provision of comprehensive and universal welfare for its citizens.
• State welfare. Some commentators use it to mean "welfare
provided by the state". This is the main use in the USA.
• Social protection. In many "welfare states", notably those in
Western Europe and Scandinavia, social protection is not delivered
only by the state, but by a combination of government,
independent, voluntary, and autonomous public services. These
countries are usually thought of as "welfare states".
Comparing welfare states
• The United Kingdom
• Three principal elements of the Welfare State:
• A guarantee of minimum standards, including a minimum
income;
• Social protection in the event of insecurity;
• The provision of services at the best level possible.
• Germany: the Social Market
• The post-war German settlement was based on the idea of a
'social state', sometimes rendered as a 'social market
economy.'
The role of economic development
• The first central principle was that economic development
was the best way to achieve social welfare.
• The structure of social services had to reflect this priority.
• The principle is represented most clearly in the close
relationship of services to people's position in the labour
market
• Social benefits are earnings-related, and those without work
records may find they are not covered for important
contingencies.
• Less clear, but probably even more important, is the general
concern to ensure that public expenditure on welfare is
directly compatible with the need for economic development
and growth.
The Subsidiarity Principle in the German case
• The German economy, and the welfare system, developed through
a corporatist structure.
• This principle was developed by Bismarck on the basis of existing
mutual aid associations, and remained the basis for social
protection subsequently.
• Social insurance, which covers the costs of health, some social care
and much of the income maintenance system, is managed by a
system of independent funds.
• There is a strong emphasis on the principle of "subsidiarity". This
principle is taken in Germany to mean both that services should be
decentralised or independently managed, and that the level of
state intervention should be residual - that is, limited to
circumstances which are not adequately covered in other ways.
The French case
• Higher earners are not covered by the main social insurance
system, but are left to make their own arrangements.
• France: Solidarity and insertion
• Social protection in France is based on the principle of solidarity.
• The commitment is declared in the first article of the French Code
of Social Security
• The principle is used in a number of different senses.
• The idea seems, at first sight, to refer to co-operative mutual
support
• Some writers apply the term in relation to 'mutualist' groups
(friendly societies) and emphasise that people insured within
national schemes (les assurés sociaux) are called to contribute
and benefit on an equal footing.
The Solidarity Principle
• Others stress that relationships of solidarity are based in
interdependence.
• Solidarity is usually understood, in this context, in terms of
common action, mutual responsibility and shared risks.
• The pursuit of 'national solidarity' was undertaken in the first
place by attempting progressively to extend the scope of
existing solidarities, most notably through the creation of a
'régime général' for health and social security, and
subsequently through its progressive expansion.
• Since the 1970s this pattern of solidarities has been
supplemented by additional measures designed to bring
‘excluded' people into the net.
The French way ....
• The most important of these measures is the Revenu
Minimum d'Insertion (RMI), introduced in 1988, which
combines a basic benefit with a personal contract for
'insertion' or social inclusion. In recent years, however,there
has been a greater emphasis on "active solidarity", which puts
more stress on the individual responsibility of unemployed
people.
• The French system of welfare is a complex, patchwork quilt of
services
• This kind of arrangement is relatively expensive, and much of
the focus of social policy in recent years has fallen on the
control of expenditure - filling 'the hole in the social', le trou
de la Sécu.
The French, the Swedish and British models of Welfare
• The main areas of concern are not dependency or
unemployment, but pensions, because of the special
privileges accorded to particular occupational groups, and
spending on health care, where the stress on independent,
market-led services (la médicine libérale) presents
considerable problems in cost control.
• Sweden: the Institutional-Redistributive model
• The Swedish model can be seen as an ideal form of 'welfare
state', offering institutional care in the sense that it offers
universal minima to its citizens
• It goes further than the British model in its commitment to
social equality.
Social Protection
• Sweden has the highest level of spending on social
protection in the OECD, and the lowest proportion of
income left to independent households - less than half its
national income.
• The institutional-redistributive model combines the
principles of comprehensive social provision with
egalitarianism.
• This is an "ideal type", rather than a description of reality.
• Social protection is not necessarily associated with
equality; the French and German systems offer differential
protection according to one's position in the labour market.
Two welfare regimes
• The Swedish system, looked at in greater detail, has many of
the same characteristics: Ringen describes the system as
"selective by occupational experience”.
• However, the importance of equality - sometimes identified
with 'solidarity', in the sense of organised co-operation - is
considerable. The model of this is the 'solidaristic wage policy'
advocated by the labour movement, which emphasised
improving standards, limited differentials, and redistribution.
• The United States: a 'liberal' regime? The United States is
sometimes described as a “liberal” welfare regime, in the
sense that it represents individualism, laissez-faire,
residualism and a punitive view of poverty.
The U.S Welfare system
• These issues often seem to dominate US debates on
welfare: examples are the introduction of 'workfare', the
exclusion of long-term benefit dependents, and the
criticism of the 'underclass'.
• The US does not, however, have a unified welfare
system. Federalism has meant that many important
functions are held by the States, including public
assistance, social care and various health schemes
(Hawaii has had mandatory health insurance and a statefunded health system since the 1970s.
• The current reforms of health care will reinforce that
diversity
The U.S Welfare system
• By comparison with other developed countries,
central government has had a limited role in social
welfare provision: the main developments of federal
provision were during the Roosevelt administration
of the 1930s, which laid the foundations for the
social security system, and the "War on Poverty" of
the 1960s, which provided some important benefits
(notably health care for people on low incomes) and
engaged the federal government in a wide variety of
projects and activities at local level.
The particularity of the U.S system
• In practice, the US is pluralistic, rather than liberal.
• There are significant departures from the residual model – for
example, state schooling, social insurance, or services for
military personnel, veterans and their families, which provide
for more than 60 million people. In addition to federal and
state activity, there are extensive private, mutualist and
corporate interests in welfare provision.
• The resulting systems are complex (and expensive): the
guiding principle is less one of consistent individualism than
what Klass has called "decentralised social altruism.
• Diversity and complexity come at a price, and despite - or
perhaps because of - political hostility to welfare provision,
the US system is also unusually expensive.
The history of the Wefare State
• The origins of Welfare State:
• From the end of 19th century , in every industrial country of
Europe, states have taken mesures of social protection, of
variable importance.
• On 1938 , the propaganda of totalitarian governments of
Italy, Germany and USSR alleged the largest choice of
measures with some real effects.
• These effects are a major explanation of large adhesion of the
population to the regimes.
Italy
• Italy: the origins of welfare state:
• The fascist period.
• The Italian fascist state received in inheritance one ambitious
social legislation.
• 1919: compulsory insurance for industrial employees for
pensions, disability and unemployment.
• 30 april 1927: The labor charter announces the
subordination of private interests to the national interest and
makes the state the arbiter between employers and
employees.
• 1943: the health insurance system is reorganised.
The Italian Case 1
• The Italian welfare today.
• Italy stands out from Europe by the distribution of
its expenditure on social protection:
• The management of old age: here there is more than
60% of the total expenditure on social protection,
well
beyond the EU average.
• In comparison, social expenditure on health is less
than 30% of total social expenditure.
The Italian Case 2
• In addition, Italy has a distortion in its distributive policies.
• For certain kinds of expenditure, including those concerning
pensions, there is a clear inequality of protection (both for
access to benefits and their generosity) between different
occupational categories.
• The Italian employees of large companies and the civil
servants are among the "insiders“ - the most protected in the
European Union.
• The millions of people who work in the underground
economy (which produces between 20% and 30% of Italian
GDP) get little benefit from any protection.
The Italian Case 3
• The dual distortion of social protection:
• Italy is experiencing a growing problem in terms of efficiency,
effectiveness and equity, both within generations and
between generations, as regards protection (for example, a
permanent job, and a generous pension).
• The goal of social protection sometimes becomes forgotten
by defenders of the status quo whose activities inevitably
increase the barriers to institutional change and reforms.
Other European Countries
• In democratic countries, all populations attached to the
traditional conception of liberal and no-interventionist state
struggle against the emergence of a welfare state.
• Scandinavian nations succeed in adoption of comprehensive
legislation.
• During the inter-wars period, British governement met
difficulties in application of measures adopted before the first
world war.
• In France, a populationist and nationalist drift is the reply to
the menace of totalitarism.
The U.S and the U.K.
• The welfare state did not exist either in Europe or the United
States in the early twentieth century.
• States have only gradually felt responsible for the institutional
well-being of the population, and the idea of ​a massive
government intervention in what was still considered the
private sphere (employment, family, housing, medical care )
has been accepted at the expense of social and political
liberalism, strongly installed in the U.S. and British
governments for example, and based on non-state
intervention.
Other European Countries
• Germany was the first country to adopt a comprehensive
state health insurance.
• The law passed by Bismarck in 1883 may indeed be regarded
as the birth of the welfare state. Medical care was free from
that moment for workers first, and this privilege was then
progressively extended to the whole population.
• In Germany, the State appears as the ultimate instrument of
progress.
• Even today in Germany the reigning philosophies are those of
Kant and Hegel. In the first of these philosophies, the State
appears to be the cornerstone of civilization; in the second it
is the motor of history.
The Birth of the Welfare State
• The birth of the welfare state marks a break with the liberal
conception of the state as a state constable or night
watchman - giving a minimal role in the state.
• The welfare state gives the state an important role in the
social and economic life in the name of social imperatives. It
was that which intervened to ensure the collective ownership
of solidarity functions.
• It deals with the welfare of citizens. The birth of the welfare
state means that the redistributive state takes the place of
reciprocity and the market.
The Tradition of the Wefare State
• The creation of welfare states respond to both crises of
effectiveness of primary solidarities but also to the secularisation of
societies. The welfare state is a form of capitalism with a human
face in which man receives income replacement when he finds
himself out of the labour market or when his income does not
allow him to meet his needs.
• The welfare state is the final stage of democratic development, and
establishes a timeline that democracy has made ​century after
century.
• In the seventeenth century civil rights were established.
• In the eighteenth century it was universal civil rights and the rights
policies.
• Finally social rights are guaranteed under the welfare state in the
twentieth century.
The French Tradition 1
• In France, as in other countries, the welfare state can reduce
inequalities in income and wealth, which are now very
important in our society.
• To do this, it organises the redistribution of income, that is to
say, it takes a portion of the income of individuals for
redistribution to those in need, according to an organisation
very particular and specific to France based primarily on
worker status.
The French Tradition 2
• While traditionally the sphere of family took over the
solidarity between its members, the twentieth century saw
the birth of the welfare state, because of the emergence of
an industrial society based on values ​more individualistic than
communitarian.
• Indeed, it is now the State organizes solidarity and thus
tasked with reducing inequalities, including economic, taking
a role previously left to families.
• In France, the body responsible for social protection, Social
Security, was created at the end of the Second World War in
1945. It is a system based primarily on worker status.
The French Tradition 3
• According to the French theorist P. Rosanvallon, the Welfare
State makes up the division between political equality and
socio-economic inequalities.
• The crisis of the Welfare State.
• Considering the economic and political situations of the past
twenty years, we find that the welfare state has "failed "and
that the model it represents is now under reconsideration.
• From the 1980s with the arrival of Mrs Thatcher to power in
Britain in 1979 and Ronald Reagan in the United States in
1980, there has been a general decline in the industrialized
nations of the phenomenon of the welfare state.
The Aim of the Welfare State
• The welfare state is the welfare state for everyone.
• In 1942 the Beveridge Plan, which laid the foundations of the
welfare state in the UK, aimed to "put man to be finally free
from want”.
• In practice, Britain implemented the Welfare at the end of the
Second World War (the country was battered), and upon the
arrival of the Labour Party to power in 1945.
• It covered education, housing, health, old age pensions and
introduced the policy of minimum wage.
• The aim of welfare is to ensure that each member of the
community gets protection under the most advantageous
terms possible.
The Major Role of the State in France
• The state is responsible for the welfare of the whole nation,
through solidarity, social justice and a system of universal
protection.
• This centralist and hierarchical approach results in increased
state intervention in social and economic development and
the birth of a true bureaucracy.
The Crisis of the Welfare Model today
• Since the early 1980s, the crisis of the welfare state is one of
the recurring themes of political debate, each party trying to
find solutions to rising unemployment and social exclusion
despite increased government spending and taxes.
• To address the crisis of this model, another idea emerged in
the 1990s, especially the U.S., the “The Welfare Society”.
• It relies on civil society initiatives and is part of a civic
responsibility.
• The role of the state in managing social welfare is taken over
by individuals, by the people.
Back to Rawls…
• The establishment of Social Security, taking into account the
civic dimension of the welfare state, protection of individual
rights is a debt structuring the social contract.
• Today, the "veil of ignorance" which was functioning under
the welfare state is torn.
• The principle of insurance, which presupposes that individuals
are equal before the various social risks that may affect the
existence, no longer a fiction writing Rosanvallon.
The context of globalisation 1
• The impact of globalization on welfare state:
• Globalization is not simply a market-driven phenomenon but
also a political and ideological one.
• Globalization as the transnational ideology of neo-liberalism
and is strongest in those nations most strongly identified with
this ideology, namely the Anglo-Saxon countries.
• Globalization, as reflected in greater economic openness and
competition and the resultant increasing flexibilization and
downward pressure on wages, has undermined full
employment and traditional male, full-time well-paid
employment which formed the first line of defence against
poverty and dependence of the Keynesian welfare state.
The context of globalisation 2
• Social policy is in retreat in the Anglo-Saxon countries and the
welfare state is being hollowed out.
• This is reflected in the downsizing of social expenditure,
shrinkage of the tax base and the erosion of social citizenship
resulting in increasing inequality and a growing social deficit
in all the Anglo-Saxon countries with the UK, the US and New
Zealand to the forefront.
• The absence of a clear alternative to the neoliberal
management of the economy in conditions of globalization
• Organized labour could play an important role in opposing
welfare state retrenchment but to be effective in the longer
term an alternative strategy of employment and social
protection is required.
The context of globalisation 3
• Is it necessary to reform welfare state in the context of
globalization?
• Many reforms concern changes in the design of benefits, not
changes in terms of social objectives.
• The IMF as well as several other organizations, such as the
OECD, and the World Bank have, in recent years, identified
many possible reforms that would permit the reduction in the
cost of the welfare states without basically or fundamentally
changing the role of government.
• These are reforms that would reinforce rather than destroy
the welfare state, preserving its role as a guarantor of certain
basic or minimum standards.
The context of globalisation 4
• Globalization and social cohesion
• The welfare state and its constituent social policies hold a
somewhat paradoxical position in debates about
globalisation.
• On the one hand, the social policies that characterise modern
welfare states are perceived as luxuries which we can no
longer afford in a world of intensely competitive markets.
• On the other, these same policies are equally claimed as the
primary vehicle for governments to help people through the
process of adjusting to economic change, thereby maintaining
social cohesion.
The context of globalisation 5
• R. Mishra argues, in Globalization and the Welfare State, that
globalization limits the capacity of nation-states to act for
social protection. Global trends have been associated with a
strong neo-liberal ideology, promoting inequality and
representing social protection as the source of 'rigidity' in the
labour market. International organisations like the World
Bank and International Monetary Fund have been selling a
particular brand of economic and social policy to developing
countries, and the countries of Eastern Europe, focused on
limited government expenditure, selective social services and
private provision.
The context of globalisation 6
• Ramesh Mishra has observed, “it is not the economic facts
about globalisation but their political implications” that may
have prevented explicit policy debates about the costs of
globalisation and the social policy adjustments that might be
required to smooth the transition into the global economy.
• In many OECD nations we are now witnessing a period where
“new deals” are being struck to replace the post-war
Keynesian consensus that shaped the social policy directions
of these nations over the latter half of the 20th century.
Conclusion
• The Welfare State is in crisis throughout the world.
• Part of the reason is that we have an international
economic crisis.
• Fundamental concepts are being rethought and people
are considering de nuovo the role of the state and its
appropriate social policies.