Welfare Capitalism - Modern Welfare Capitalism

Modern Welfare Capitalism

The original definition of welfare capitalism, as used by the 19th century German economist, Gustav Schmoller, called for government to provide for the welfare of workers and the public, via social legislation, among other means. (And not to rely on business to do this.) While Schmoller's work is little available in English, his influence can be seen in the modern European welfare states.

Western Europe, Scandinavia, Canada and Australasia are regions noted for their welfare state provisions, though other countries have publicly-financed universal healthcare and other elements of the welfare state as well. The United States, despite its Medicare, Medicaid and Social Security provisions, is not generally considered to have enough of a social safety net to properly be called a welfare-state; businesses provide more of these services.

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 arrangements. Welfare typologies have the function to provide a comparative lens and place even the single case into 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 Democratic: 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).