Theoretical Conceptualization Of Welfare State Regimes Economics Essay


In an epoch of free motion of capital and perpetually- increasing economic mutuality, neo-liberalism predicts the convergence of other welfare-state governments along the broad orientation. Condemning the social-democratic public assistance government ( SDWR ) patterns, neoliberal minds declare that the universalistic, equality oriented and market intrusive features of the SDWR will take to a comparative disadvantage and unsustainable costs, which will in bend lead to welfare province retrenchment and, hence a convergence along the broad public assistance government. Simply stated, the convergence premise goes like this: If globalisation takes topographic point, so other public assistance governments ( particularly the SDWR ) will meet towards the broad public assistance government type.

The chief intent of this paper is hence, to analyze this prophetic neo-liberal premise of welfare-regime convergence. In order to make this, the paper will size up the SDWR within the surroundings of the European Union ( EU ) integrating, specifically concentrating on the Lisbon Strategy. By look intoing the significance of the Lisbon scheme in the visible radiation of Esping-Andersen ‘s categorization of the SDWR and the Liberal public assistance government, the paper hope to be able to demo whether or non the European brotherhood ‘s economic-political integrating ( which in the most portion, is neo-liberal in nature ) since the Maastricht agreement in the 1990s, is doing the SDWR to meet towards the broad public assistance government type. Consequently, the paper revolves around the inquiry of whether the neo-liberal premise of welfare-regime convergence can be confirmed or rejected by an analytical enquiry into the development of public assistance provinces in the European context.

The paper is divided into four subdivisions. Section one sets the tone by supplying the theoretical model based on Esping-Andersen ‘s conceptualisation of capitalist public assistance governments. Section two will supply a brief analysis of the neo-liberal convergence premise and compare it to the world of public assistance province development in the European context. In subdivision three, the chief characteristics of the Lisbon Strategy in footings of public assistance governments will be critically and extensively analyzed. The paper will so turn to the analysis of the Lisbon Strategy in dealingss to Esping-Andersen ‘s public assistance regimes in order to set up the overall way of societal policy development within the EU. Section four concludes

Theoretical conceptualisation of Welfare province Governments

Esping-Andersen ‘s categorization of public assistance province government typologies trades with the constructs of commodification/de-commodification and the degrees of stratification. In his authoritative work ” Great Transformation ( 1944 ) Karl Polanyi argued that the industrialisation which took topographic point in the 19th century has provoked a structural displacement from a system whereby the economic domain was a map of the societal domain to a system whereby the societal domain is now subordinated to the economic domain since “ a market economic system can merely be in a market society ” ( Polanyi, 1944: 71 ) . Polanyi argues that land, labor and money are fabricated trade goods inasmuch as their value can non be detached from their signifier, and as such the province must build and retrace labour power through societal policy. By commodification Esping-Andersen explains the development in the pre-capitalist period where labor was non commodified because persons ‘ nutriment was non dependent on the sale of his labour power in the market, to an industrialised period where persons now became progressively dependent on the market for their endurance and their labour power was hence commodified. With this development the possibility for persons to last independent of the market was constrained ( Esping-Andersen 1990:35 ) . Consequently, Esping-Andersen recognizes decommodification as a state of affairs where persons no longer hold to depend on the market to hold a nice life. In relation to province public assistance, de-commodification is to be assumed as go oning “ when a service is rendered as a affair of right, and when a individual can keep a support without trust on the market. ” ( Esping-Andersen 1990:22 ) .

With respects to the degree of stratification, Esping-Andersen claims that it is of import to understand welfare-policy structuring merely as a agency of province interfering and correcting of inequalities, it should besides be understood as a force capable of stratifying and telling societal dealingss ( Esping-Andersen 1990:23 ) . Hence, even if “ inequalities in life criterions diminution, it may still be the instance that indispensable category and position differences persist. ” ( Esping-Andersen 1990:57 ) .

Stressing the importance of de-commodification and stratification, Esping-Andersen identifies three different bunchs of public assistance governments, viz. the broad public assistance government, the social-democratic public assistance government and the conservative public assistance government. It is the first two of the public assistance government bunchs that will be the object of our analysis, the latter ( the conservative theoretical account ) falls outside the range of our steering inquiries and for that ground will be ignored.

1.1 The Liberal Welfare Regime

The broad public assistance government ( UK ) revolves around the thought that equality and prosperity should be pursued by leting the market to self-regulate itself while leting merely a lower limit of province intervention ( Esping-Andersen 1990:10 ) . Indeed, province ‘s intercession in the market economic system is allowed when it is to procure a contributing concern environment for net income potency ( something the market is unable to make on its ain ) and to rectify the market in footings of failure. The overall guesss of the broad public assistance can be summarized as follows “ the market is emancipatory, the best possible shell for autonomy and diligence ” ( Esping-Andersen 1990:42 ) . This means that, if non interfered with, the market economic system will accomplish the optimum resource allotment, supplying work to those ready to work, hence, authorising them to procure their ain public assistance commissariats without resort to the province public assistance commissariats.

With respects to de-commodification, the broad public assistance governments are of the position that a pledge of minimal societal security would increase the flat unemployment and poorness rate, alternatively of cut downing them. Therefore, the commodifying logic is given higher precedence against the decomodifying logic, since the province is expected to interfere merely on juncture of market failure. And when there is a market failure, means tried proviso is provided so as to “ vouching that public income is kept for those persons who for some grounds are incapable of partaking in the market ” ( Esping-Andersen 1990:43 ) .

As a consequence, the lone acceptable signifier of province intercession in the broad market economic system is directed to agreements in relation to rectification of market failures, to cut down the impact of outwardnesss on the underprivileged. The deduction of this is that, the association of societal benefit to the really hapless has led to a state of affairs where societal policies are being socially stigmatized with respect to dependent on province public assistance commissariats, hence, stratifying the societal dealingss of the society ( Esping-Andersen 1990:62 64 ) .

In amount, the broad public assistance government type is “ residuary in nature, in that the market tends to predominate at the disbursal of societal security ” ( Esping-Andersen 1990:86 ) .

1.2 The Social Democratic Welfare Regime

The social-democratic public assistance government type ( Denmark and Sweden ) is predicated on the rules of decommodification, universalism and classlessness. It is cosmopolitan in that the insurance systems extend to the full population, though they are graduated in conformity with taxed incomes. In add-on, it is committed to the attainment of full-employment. While on the one manus, the right to work has equal position to the right of income protection, on the other manus, the immense costs of keeping a solidaristic, universalistic, de-commodifying public assistance system means that it must slake societal jobs and maximise gross income. Indeed, the lone manner to accomplish this, is by holding a state of affairs where a big portion of the public are gainfully employed, thereby go forthing the fewest possible sum of persons to depend on state/public societal transportations. ( Esping-Andersen 1990:28 )

Put otherwise, the social-democratic government finding to cut down market dependence or decommodification vis-a-vis hazard coverage and generous benefit commissariats places great force per unit areas on the economic system in times of economic downswing and high rate of unemployment. Consequently, in order to avoid the consequence of unemployment the societal democratic governments comprise a policy of full employment through active labour market policies with the expressed intent of guaranting that persons are equipped with the appropriate resources and motive to seek a paid employment while besides supplying employment chances ( Esping-Andersen 1999:80 ) .

With respects to the degree of stratification, the social-democratic public assistance government is best understood through its aforesaid committedness to cosmopolitan coverage of hazard and insurance. Endeavoring for category equality and parliamentary bulks, the construct of universalistic solidarity has developed to be a formidable tool as can be seen in the effort to unify a “ well differentiated and segmented working category ” ( Esping-Andersen 1990:68 ) . Therefore, by prehending parliamentary power the societal Democrats intends to mobilise the labour motion and its political cabal to exert political authorization over economic power, so that the stratifying effects of market capitalist economy can be contained.

A brief expression into Neo-liberal convergence premise

The neo broad convergence premise contends that the increased liberalisation of capital markets has diminished the ability of provinces ‘ to trust on revenue enhancement gross to finance the high degrees of societal security systems in the societal democratic states. Due to economic and capital markets globalisation, the planetary economic system has entered an epoch of “ erratic capital ” , where transverse national flows of capital are going progressively unconstrained. This will do states to run and vie for all sorts of capital investings chances, thereby taking to a command war where the rate of revenue enhancement and revenue enhancement funded public assistance outgo will be well reduced ( Lindbom 2001:172 ) . Harmonizing to Mosley aˆzCapital market openness provides national authoritiess with greater entree to capital, but it besides commits authoritiess to fiscal market subject. For case, in a globalized capital market, national authoritiess must sell their policies non merely to electors but besides to possible international investors ” ( Mosley 2000:738 ) . Therefore, seen in dealingss to conventional bargaining scheme in dialogues, the globalisation of capital markets has equipped proprietors of capital with the possibility of doing believable menaces of issue, as a effect beef uping their bargaining place ( Hopmann 1996:108-9 ) . This chance has so altered the power relation between policy shapers and capital proprietors. In the visible radiation of the foregoing, it becomes of import that we highlight some of the chief differences between the societal democratic public assistance government and the broad public assistance government.

Whereas the societal democratic government purposes to function all its citizens harmonizing to generous benefit criterions, the broad government provides agencies tested support merely to those in demand while paving the manner for the in-between category to utilize the private insurance strategies for their coverage. The divergency in range between the two public assistance government bunchs is reflected in their divergent degrees of public disbursement. Whereas the societal democratic public assistance depends on imposing high revenue enhancement on labour and capital in order to finance the greater portion of its outgos. Indeed, when it comes to pulling capital investing into the state, the broad public assistance government has a comparative advantage, as it offers lower revenue enhancements and greater returns on investing. For this ground, it is assumed that the free motion of capital will train all universally oriented public assistance regimes vis-a-vis revenue enhancement equivocation, thereby seting the generous public assistance province under tremendous force per unit area.

Analysis of the Welfare Regime Orientation of the Lisbon Strategy

The intent of this subdivision is to confirm the significance of a social-policy analysis on the EU intergovernmental cooperation. The EU member provinces dealingss in the country of societal policies are predicated on common labor-market jobs ( due to economic integrating ) that needed corporate actions in order to safeguard the smooth operation of the Single market, e.g. to banish societal dumping or to procure free mobility. This limited function of the EU in the preparation of societal policies is farther highlighted by Art. 129 EC declaring that actions taken by the Council of Ministers in relation to employment policies shall non try to harmonise Member States ‘ employment policies, hence, overlooking one of the cardinal constituents of societal policies from EU jurisprudence. However, Member States have worked their manner around these regulative hindrances in an attempt to beef up the fight of the part through corporate actions coordinated at the supranational degree, viz. the Lisbon Strategy of 2000.

In a corporate finding to beef up employment, achieve sustainable economic growing and societal coherence the European Council in March 2000 implemented the so called Lisbon Strategy. Given that the Council of Ministers is non equipped with the competency it needs to pass on societal policy following the aforesaid regulative hindrances ( of Art 129 EC ) , a new method of coordination ( OMC ) was introduced that is constructed around the impressions of soft jurisprudence, peer review/-pressure, name naming and dishonoring, benchmarking and best pattern.

This allows the Council to follow guidelines ( although non-binding ) on societal policy issues, through qualified bulk ballots. With these guidelines each member province can so put up a national action plan for the attainment of the corporate ends. The coordination is hence constructed around the construct of ‘soft jurisprudence ‘ , and ‘voluntarism ‘ , since the execution of the guidelines is to be seen as voluntary and hence is non of a legitimately binding character. To do a corporate advancement on these policy issues without haling member provinces to follow, other sorts of control- and surveillance setups have been introduced. The aim is to exercise force per unit area on the Member States through the usage of Open method of coordination ( OMC ) and ‘peer force per unit area ‘ , i.e. through the iterated procedure of exchange of thoughts, larning by illustration, in combination with rigorous agendas and iterated followups. It is hence obvious that the Lisbon Strategy has been granted the agencies to accomplish its marks and as a consequence, the Lisbon Strategy is best seen as a positive integrating undertaking with elements of negative integrating particularly in relation to the completion of the Single market. At this occasion, the paper turns to the inquiry of what aims are to be achieved and how these aims are positioned in the Lisbon Strategy in dealingss to Esping-Andersen ‘s public assistance government typologies. We will utilize the Integrated Guidelines for Growth and Jobs’6 and the Presidency Conclusions from the March 2000 acme of Lisbon as the footing of our analysis.

Aims to be achieved in dealingss to Welfare governments

The general strategic aim as stated in 5A§ is “ to go the most competitory and dynamic knowledge-based economic system in the universe, capable of sustainable economic growing with more and better occupations and greater societal coherence ” ( Presidency Conclusions 2000 ) . While this declaration does non place the Lisbon Strategy in dealingss to Esping-Andersen ‘s public assistance regimes ; it does nevertheless provides some indicants of what is to come. Undoubtedly, the papers perceives the planetary economic system as going progressively competitory, and is as such, concerned for the fight of the EU Member States. Therefore, the paper will now try to nail the agencies and guidelines of the Lisbon Strategy so as to joint the general public assistance government orientation of the Strategy. This will be done utilizing the sum-up of public assistance governments in table 1, concentrating on the function of the province versus the market ; the chief manner of solidarity ; the chief agreements of solidarity ; and the extent of de-commodification.

Equally far as the Lisbon Strategy is concerned the cardinal function of the provinces is that of heightening the fight of the part, through intensifying integrating of the Single market, stressing the demand for farther negative integrating, promoting efficient resource allotment ( Integrated Guidelines no 3 ) . The province does in this mode have an indispensable function to play, but this function is determined and constrained by the demands of the market. From this position, the province is embedded into market economic system by being reduced to playing the minimum function of keeping a competitory market that is based on market demands. The market economic system on the other manus, has been touted as holding solutions to jobs of unemployment and societal exclusion. Spillover effects from a competitory market, it is said, “ will be capable of bettering citizens ‘ quality of life ” ( Presidency Conclusions 2000 no 8 ) . Therefore, every bit far as the functions of provinces and markets are concerned the Lisbon Strategy is designed along the line of the broad public assistance government orientation.

With respects to the chief manner of solidarity the state of affairs equivocal, as there are cosmopolitan every bit good as single constituents of the Strategy. Although the chief manner of solidarity is cosmopolitan given its focal point on achieving full employment, cut downing illiteracy and exclusion, it can besides be argued to single as it chiefly targets those populating below the poorness line. Indeed ” the new knowledge-based society offers enormous potency for cut downing societal exclusion, both by making the economic conditions for greater prosperity through higher degrees of growing and employment. At the same clip, it brings a hazard of an of all time widening spread between those who have entree to the new cognition, and those who are excluded. To get away this menace and maximise this new potency, attempts must be made to better accomplishments, promote wider entree to knowledge and chance and fight unemployment: the best precaution against societal exclusion is a occupation. ” ( Presidency Conclusions 2000, no 32 )

Consequently, even if granted that the Lisbon scheme has some universalistic public assistance orientation, it accentuates hapless alleviation and gives precedence to poverty decrease. As a consequence, public assistance commissariats must be agencies tested and individualized so as to insulate qualified from disqualified public assistance receivers, thereby rendering the Lisbon Strategy the chief manner of single solidarity and from that point of position Liberal ( oriented public assistance province ) .

As pointed out elsewhere in the paper, with respects to solidarity, market is the chief ways of organisation. This is made clear in point 20 of the Presidency decisions where it was declared that: “ efficient and crystalline fiscal markets promote growing and employment by better allotment of capital and cut downing cost. Against the background of the aforesaid strong belief in spillover effects from the passage to a knowledge-based society, well-organized markets seem to be the prima beginnings of public assistance commissariats with respects to the Lisbon Strategy.

The dominating function of markets in public assistance governments is farther accentuated by the grade of de-commodification nowadays in the Lisbon Strategy. Because the Strategy chiefly depends on markets to supply for resource allotment and public assistance benefits if implemented, the grade of decommodification would be low. Given that the acceptable function of province is focused merely on beef uping the fight of its market and rectifying market failures, so as to keep a high degree of employment and, therefore, lower degrees of poorness and exclusion, through “ doing work wage for job-seekers ” ( Presidency Conclusions 2000 ) , the public assistance proviso on behalf of the province in footings of decommodification will be diminished. Therefore, the Lisbon Strategy, in footings of de-commodification, is to be understood as sharing many similarities with the Liberal public assistance government. Harmonizing to Esping-Andersen ‘s categorization of public assistance regimes the general nature of the Lisbon Strategy resembles the Liberal public assistance government type, although with some social-democratic constituents.


In amount, it is evident that the demands for social-policy convergence as stipulated by neo-liberalism are fulfilled in the European context, doing the instances of Denmark and Sweden as parts of the social-democratic public assistance government in a neo-liberal context, ‘most likely ‘ instances of the neo-liberal convergence premise. With respects to the Lisbon Strategy, it is clearly in harmoniousness with the Liberal public assistance government.

Reasoning the above analyses, it is now apparent that the free-market commercial neo-liberal welfare-regime convergence hypothesis could non foretell the development of neither the EU social-democratic public assistance provinces nor the EU societal democratic public assistance government. Rather than demoing marks of convergence in a context carry throughing the structural stipulations of globalisation, the execution, or deficiency thereof, of the Lisbon Strategy exhibits reverses on polar issues such as negative integrating, state-aid and welfare-expenditure reform. Therefore, to utilize the words of Karl Popper, this swan turned out to be black, seemingly corroborating the negation of the original premise that globalisation will do welfare-regime convergence.

Endeavoring for a theoretical account capable of bring forthing dependable anticipations free-market commercial neo-liberalism simplifies the world to the extent that the anticipations have really small, if any, value in analysing the political economic system of societal policies within the EU. Having said that much, this decision does non connote that societal policy convergence will non go on, merely that it has non happened this far in the context of the EU cooperation. It may really good be that convergence will happen if policy shapers deem it necessary, therefore, doing it a self-fulfilling prophesy. What this analysis has shown, so, is that during the investigated clip period and within the analyzed context, convergence has, as of this yet, non occurred. That is, even though the instances of Denmark, Finland and Sweden constitute ‘most likely ‘ instances and as such have terrible deductions on behalf of the hypothesis ‘ dependability and cogency, entire defense is non provided for, as this analysis can merely account for the analyzed context. However, this disproof should hold far-stretching deductions for the dependability of anticipations made using free-market commercial neo-liberalism in relation to social-policy development.

Furthermore, what is of import to admit is the defective nature of the deterministic logical thinking that distinguishes the convergence theory and causes the implying ‘de-politicization ‘ of the social-policy country through depriving agents of the ability to take and impact, and in this I believe one portion of the job with free-market commercial neo-liberalism prevarications. Would the integrated rational-choice theoretical account be modified to integrate the existent ability to take, so the structural prejudice would be removed, the anticipations would be less deterministic and the division between the economic and political domains would be more obviously excess as the political characteristics of economic system per Se would go more seeable. Furthermore, I believe the doggedness of modern-day constructions is underestimated, pretermiting the inactiveness frequently attach toing alterations of present establishments and the adapting nature of the really same, rendering public assistance regimes difficult to transform. Therein lies another word of cautiousness. As establishments are difficult to transform it might be that alteration is go oning, merely non every bit immediate as the neo-liberal propositions.