Which of the following describes a major contradiction faced by developed democracies in their attempts to maintain the welfare state?

A welfare state is a state that is committed to providing basic economic security for its citizens by protecting them from market risks associated with old age, unemployment, accidents, and sickness. The term ‘welfare state’ first emerged in the UK during World War II. It has since been used much more broadly to describe systems of social welfare that have developed since the nineteenth century. Welfare state studies have sought to create typologies that group countries into categories based on variations in the role that state, market, and family play in ensuring well-being. A second line of research has sought to account for welfare state development and variation, by examining economic, political, institutional, and ideological factors. These studies are broadly cross-disciplinary. Contemporary research examines welfare state restructuring as economic globalization, and changes in the family and gender roles have placed new pressures on welfare states.

3.1 Crisis of the Welfare State

Welfare states throughout Western Europe have cut their benefits, and face fiscal and demographic crises of varying degrees. Aging populations create a shift from system contributors to recipients, deindustrialization and ‘Eurosclerosis’ have produced high unemployment, and the labor market has been transformed by the growing proportion of nonstandard work and the mass entrance of women into the workforce.

Central to recent literature on the welfare crisis are issues of gender and family. Feminist scholars have criticized the political economy approach to welfare state studies because in concentrating its attention on the state and market, it ignores the family and the structural ramifications of women's unpaid domestic work, and in focusing on ‘equity’ without considering gender, it falsely universalizes equality. At an even more fundamental level, Orloff (1993) asks whether welfare state scholarship is correct to assume that welfare states actually promote overall social well-being and security, since its premises are putatively sexist.

Because of two trends, even ‘mainstream’ Europeanist welfare state scholars must now acknowledge the issue of women's role in the labor market and the family. First, many women entering the workforce take part-time or fixed term employment, and are penalized because benefits are geared toward men working full time (Rhodes and Mény 1998). Non-standard work is also becoming more common among men. Second, fertility rates have plummeted since the 1960s. Rates are lowest in countries with low levels of female employment and stingy welfare benefits (e.g., Italy and Spain). From a rationalistic economic point of view, argues Becker (1981), families decide to have fewer children as it becomes more expensive to raise them. By extension, in Scandinavia, where the welfare state is supportive of women's work and child rearing (through day-care facilities, healthcare, etc.), fertility rates have not dropped as dramatically through the late 1990s.

1.1 Typologies of the Welfare State

Esping-Anderson focuses on the ways in which ideas and beliefs regarding welfare and the state's role in meeting economic needs have shaped the form of welfare provision. He identifies three basic ‘welfare state regimes’:

Liberal welfare states respond to market and labor force imperatives. Many benefits, such as health insurance and pensions, are linked with employment. Means testing is used to determine eligibility for state services, and relatively modest cash and voucher benefits are provided for those deemed eligible.

Conservative/corporatist welfare states rely on state provision of services, rather than on market or private provision. These states often manifest normative ideals of a nuclear family characterized by a male breadwinner and a woman who tends to the family.

Social democratic welfare states promote a vision of the state as the guarantor of social rights. These states promote equality of benefits at high levels as a way of minimizing the effects of social class and income. Welfare benefits are used to equalize the ability of all citizens, regardless of income, to participate in the political community.

This study was based on 18 countries characterized by advanced market economies in the 1980s. As such, it reflects a tendency in the literature to conceptualize welfare states as being limited to industrialized democracies, rather than to consider the welfare apparatus in all countries. It is unclear, then, whether this typology will hold for countries at different stages of development or undergoing transition to market economies. This typology also assumes countries develop their welfare apparatus in response to national political cultures, ideologies, and internal political pressures. The experience of countries beyond the 18 studied is clearly at odds with that assumption, as the development of their welfare policies and institutions is shaped by external influences from international aid and lending organizations and by a globalized economy dominated by transnational corporations. As such, the typology developed by Esping-Anderson may not fully describe the geography of the welfare state.

Sainsbury's study is significant in helping to understand the differential impacts of the welfare state on citizens and in understanding the ways in which gender ideologies shape the structure of social provision. As noted by Esping-Andersen, some welfare state regimes are based on normative ideals of family and gender roles. Sainsbury's framework clarifies the bases of entitlement to welfare provision under different regimes, drawing on her characterization of gender ideologies within countries. From this starting point, she traces the effects of welfare regimes on gender relations and the gendered division of labor in the family and society. As with Esping-Andersen, Sainsbury's research is based on developed, Western countries. Sonia Alvarez (1998) extends this approach in her analysis of gender policies in Latin American countries. Both studies demonstrate that the effects of gender equality reforms in welfare policy vary widely from country to country based on the ways that gender ideologies are embedded in their political economies, creating a differentiated geography of welfare provision and well-being.

2 Explaining Policy Divergence

The great vitality of comparative welfare state research comes from its address to central theoretical issues in the social sciences. Existing reviews of the literature usually distinguish two broad explanatory thrusts: the convergence thesis that derives from theories of industrialism and modernization, and the ‘politics matter’ thesis that derives from theories of conflict and power mobilization (Shalev 1983, Esping-Andersen and van Kersbergen 1992, O'Connor and Olsen 1998). In addition, some theorists emphasize the process of nation building and democratization (Flora 1986, Flora and Alber 1981), nations' position in, and response to, the world economy (Cameron 1978, Katzenstein 1985), and also the policy-making role that state bureaucracies exert (Skocpol and Amenta 1986).

29.10.3.3 The welfare state

The expansion of welfare state, in particular social assistance to single mothers with children, has often been pointed to as another important force that has shaped U.S. families. There are mixed views about this idea. The empirical evidence in favor of the idea, which relies on cross-time and cross-state variations in welfare policies, has been weak–see Moffitt (1992) for an early review and Moffitt et al. (2020) for a more recent analysis. Structural models such as Aiyagari et al. (2000) and Greenwood et al. (2000) predict that less generous welfare payments should reduce the number of single women. In line with this prediction, Low et al. (2018) show that the 1996 welfare reform did result in more married women.

In England the term ‘welfare state’ dates from the 1940s. It has stronger associations of paternalism in American English. How is ‘welfare state’ translated into German? Conflict exists between the terms and Sozialstaat. The definition as per Briggs is influenced by the events of the 1940s. The history of the ‘Origins of the Welfare State’ is illustrated by two versions, the British and the German, that indicate differences in periodization and focus, and suggest the influence of political considerations. A brief reference to the Swedish version illustrates the same point. A general history of ‘the welfare state,’ as distinct from the history of individual welfare states follows. Is it located in the wider context of the history of the state? Points considered are: unification of the law, establishment of bureaucracies, elimination or control of intermediate forms of authority, but also its characterization by new systems of domination peculiar to it. The role of representative democracy is also considered. The connection with the development of industrial capitalism is analyzed in terms of the problem of ‘externalities’ as well as the role of combinations and transfer payments, of public provision of goods and services, and of regulation. The history of welfare states since 1945 with a few generalizations is followed by a look at the effect of major changes in the international economy. The article concludes with an examination of recent influences on the historiography of welfare states such as a gender conscious historiography, welfare state history ‘from below,’ studying the ‘mixed economy of welfare,’ and comparative studies.

33.2.2 Deteriorating employment security

The key characteristic of the Japanese welfare state is that it has provided life security through the market sector. During the period of economic growth from the mid-1950s to the early 1970s, Japan nearly achieved full employment.2 In addition, to generous seniority-based wages, companies provided various benefit packages such as a housing allowance and a sustenance allowance for male workers’ wives and children. Also, they paid part of individual workers’ social insurance premium for the national health and pension insurance.

However, only regular employees, almost entirely men, received the benefits offered by this system. Since the bursting of the economic bubble in the early 1990s, companies reduced the employment offers for new graduates. Many young people could not get stable jobs; the period was referred to as an “employment ice age.” One of the most urgent social issues is that the youth who didn’t get regular jobs at the time, are still engaged in unstable jobs or unemployed.3 In the worst cases, people in their 30s and 40s are staying at home without any social relations except for their parents (the so-called Hikikomori, social recluses).

At the same time, the deregulation of the Worker Dispatching Act was implemented, making it easy for companies to employ nonregular workers. When the world economic crisis broke out in 2008, many “disposable” workers were “thrown away” by companies; some workers, including young people, were ousted from the company dormitories where they lived and were forced to live on the street.

This symbolized the fact that the social safety net failed and nonregular workers were forced to “slide down” into extreme poverty when they were fired by these companies. The overall unemployment rate was 2.1% in 1991, but it rose to 4%–5% in the later 1990s and early 2000s. The rate of nonregular employment (part-time employees, “arbeit” workers, dispatched workers, etc.,) was about 15% of the total workforce in the mid-1980s, growing to 20% in the mid-1990s and 37% today (half of all female workers are employed in nonregular jobs).4

The solutions to the problem of the failure of the safety net are either to correct the disparity between regular and nonregular workers or to create alternative workplaces where people are equally included. Cooperatives’ key function in society is in providing a solution to economic and social problems. Japanese workers cooperatives have engaged in the latter, creating workplaces for unemployed people and for people who have some difficulties in working in the regular labor market.

10.6 From the market to the company, from the company to the market

The civil economy conceives of the market as a large scale cooperative operation. Cooperation, collaboration, and mutual assistance are what comprise the basic characteristics of the market culture in this thought tradition, rather than competition and greed.

In this ancient tradition the market is a way of properly compensating the virtues, rewarding human cooperation, and thus creating the common good; it is critical of and in polemic with the human relationships that were typical of the feudal world. In the 18th century there was no theoretical reflection on the firm, but when the topics of the firm and of entrepreneurs became central in the 19th and 20th centuries, the civil economy tradition gave a great deal of attention to cooperation and cooperative enterprises, which were seen as a means for cooperating, just as in the market.

The current CSR debate expresses and incorporates all these old cultural tensions.

As we have already noted, the tradition originating from Smith, the founder of the theory, rests its theoretical underpinnings on separating the market from society and on market exchange as based on self-interest and immunitas; that is, the company is seen as a small societas. Instead, the civil economy denies the need to separate the market from society, since it sees the economic sphere as a place to exercise the civil virtues and reciprocity as a foundational principle in economics as well; the company is seen as a little communitas.

These different principles endure even today in the two cultures of social responsibility under discussion.

The liberal-capitalist tradition starts from the market based on the contract, seen as the locus of civilization because it is based on horizontal and symmetrical relationships, and imports the virtuous, horizontal, contractual, anonymous, and impersonal relationality of the market into the firm. In this sense it leaves communitas to move toward societas.

The tradition of the social-cooperative economy does exactly the opposite: it starts from cooperation and from associations based on the principle of reciprocity, understood as communities composed of equal persons in solidarity with each other, and it seeks to export the virtuous sociality of the cooperative into the market and the civil society, to “commonize” the market and the civil society.

The basic tendency of the CSR movement in liberal capitalist culture is to extend the contract, the typical instrument of the market, into the company; this is the basic idea of those today who see the company as a multi-stakeholder liberal society arising from a Rawlsian social contract under a veil of ignorance. The entry of the contract – the sole truly civil, egalitarian, and modern form of relationality, because it is based on free consent – into the company complicates and undermines the centrality of the hierarchy. In general, all of stakeholder theory (which not by chance is of North American origin) moves exactly in this direction.

The social-cooperative tradition has instead sought to democratize the operation of the market by utilizing, for example, the principle of redistribution (the tax system of the European welfare states) to realign the starting points of market contracts; the market is not seen as a naturally free and equal environment, but rather as based on asymmetrical relations of power, exactly as in the capitalist firm. With this we can understand how for this cultural tradition there is no substantial contradiction between the market and the company, as is typical of the liberal tradition. Rather, the only form of good, civilized production is cooperative and associational.

The typical cultural products of this tradition are the welfare state at the level of both society and the market, and trade unions at the level of the capitalist enterprise. Both of these are expressions of the intent to obstruct and correct the unjust social relationships concealed in capitalist market relationships, both inside and outside the firm,1 as well as to address the “hand-to-hand combat” of a painful one-on-one mediation (as was, and still is to some extent, typical of mediation by trade unions).

The relationship between trade unions and businesses, for example, is not primarily contractual, but in the language of Albert O. Hirschman (1970), of voice, or protest, that traditionally is typically a tool used in politics rather than in the market economy (Crivelli, 2009). In other words, where it could the civil economic tradition (which in this aspect is in league with the social economy tradition) sought to create solidarity-based egalitarian organizations, such as cooperatives, associations, and so forth. With regard to the market and the capitalist firm, it sought to restrain their operation by inserting elements such as taxation and unions, which are typically political, into capitalism. The social state emerges from the social critique of capitalism, both from its starting points and the failure of the logic of the contract, rather than from an internal development within capitalism itself, as happened with philanthropy (which, not by chance, is typical of the North American model).

The development of the cooperative movement in consumption on one hand, and in savings on the other, is exactly the expression of a cultural action plan designed to bring cooperation into the market and the economy in the three macro areas of production, consumption and savings. The theorists of the cooperative movement envisioned an entire economic system based on the principles of cooperation and association: here it still retains its prophetic voice, though also the fragility of a construction that is too large and complex.

6 The Rise of the Internet

Since the early 1990s the most important change to the political communication process has occurred through the rise of the Internet, particularly in postindustrial societies that are at the forefront of the information society such as the USA, Australia, and Sweden. Networked computing and computer-mediated email have existed for the scientific elite since the early 1960s but the number of users was too small to monitor through mass surveys. The key historic development transforming the Internet into the world's favorite virtual reference library, post office, and shopping mall was a series of rapid innovations: the birth of the World Wide Web (in 1990) and the launch of popular browsers to access materials including those by Mosaic (1993), Netscape Navigator (1994), and Microsoft Internet Explorer (1995) (see Berners-Lee 2000). Subsequent technological applications, like the easy transfer of .mp3 music files and video formats, and WAP-enabled digital telephony, while representing important innovations, cannot yet claim to have had an impact equal to the basic invention of point-and-click browsers.

As yet no official government statistics on the online population are collected by international agencies like UNESCO and the International Telecommunications Union (ITU), although many indirect measures of technological diffusion are available, including investment in scientific Research and Development, the spread of computer hardware, and the rate of telephone density. The most comprehensive worldwide guide estimating the size of the online population is provided by NUA. This organization regularly monitors and collates survey results conducted by different market research companies in each nation. The surveys ask a representative sample of the public in each country about use of the Internet from home, work, or elsewhere during the previous three months. NUA's database ‘How Many Online’ (http://www.nua.ie) currently collects data from 179 countries, covering 5.7 billion people.

The NUA evidence highlights the dramatic rise in popularity of the Internet in recent years: between 1995 and 2000 the total number of Internet users surged from about 26 to 377 million worldwide, an explosive jump within the space of a few years. The Internet became a truly global phenomenon as more and more users came online from around the world and the proportion of Americans in the online community dropped from 70 to 40 percent in 1995–2000. Despite this remarkable expansion, about one in 20 of the world's population was online in 2000, with highly uneven diffusion globally.

According to NUA estimates, in Spring 2000 Scandinavia and North America led the world in rates of Internet penetration, with one-third or more of the population online, followed by Western Europe, with about one in 10 online. Central and Eastern Europe, Asia, the Middle East, and South America fall below the world average, all with less than one in 20 online, while minimal diffusion is evident in Sub-Saharan Africa, with only 36 users per 1,000 people. In terms of levels of human development, there are stark contrasts between rich and poor nations. Most of the world's online community (87 percent) lives in highly developed nations, as measured by the UNDP index (see UNDP 1999). In comparison, the 35 societies classified by the UNDP with low levels of human development, like Nigeria, Bangladesh, and Uganda, contained only 5 percent of the online population, although home to half a billion people.

A finer-grained comparison of countries ranked by the online population reveals a pattern of widespread adoption in four clusters of societies:

(a)

Throughout the smaller Nordic social democratic welfare states, especially Sweden, Norway, Iceland, and Finland;

In larger Anglo-American and English-speaking nations including the USA, Canada, Australia, and the UK;

In the Asian ‘tiger’ economies of Singapore, South Korea, and Taiwan, as well as Japan; and lastly,

In a few smaller European nations with above-average Internet use such as the Netherlands, Belgium, Switzerland, Slovenia, and Estonia.

At the bottom of the national rankings, with less that 0.5 percent of the population online, few Internet users are found throughout most of the poorer countries of sub-Saharan Africa (with the exception of South Africa), as well as in many states in central Europe, the Middle East, Asia, and Latin America.

Yet at the same time if technological diffusion can be achieved in poorer societies, and it is a big ‘if,’ then many observers hope that the Internet will provide multiple opportunities for socioeconomic and democratic development. Digital networks have the potential to broaden and enhance access to information and communications for remote rural areas and poorer neighborhoods, to strengthen the process of democratization under transitional regimes, and to ameliorate the endemic problems of poverty in the developing world. With connectivity as the umbilical cord, enthusiasts hope that the Internet will eventually serve multiple functions as the world's favorite public library, school classroom, and medical database; post office and telephone; marketplace and shopping mall; channel for entertainment, culture, and music; daily news resource for headlines, stocks, and weather; and heterogeneous global public sphere. In the heady words of the G-8 Okinawa Charter:

Our vision of an information society is one that better enables people to fulfill their potential and realize their aspirations. To this end we must ensure that IT serves the mutually supportive goals of creating sustainable economic growth, enhancing the public welfare, and fostering social cohesion, and work to fully realize its potential to strengthen democracy, increase transparency and accountability in governance, promote human rights, enhance cultural diversity, and to foster international peace and stability.” (G-8 Okinawa Charter on Global Information Society 23 July 2000. http://www.g8kyushu-okinawa.go.jp/w/documents/it1.html)

The Internet may allow societies to leapfrog stages of technological and industrial development. On the production side, if Bangalore companies can write software code for IBM or Microsoft, and if Costa Rica can manufacture chips for Intel, then potentially entrepreneurs can offer similar services from Malaysia, Brazil, and South Africa. The Internet encourages market globalization: small craft industries and the tourism industry in Bali or the Maldives can deal directly with customers and holidaymakers in New York and London, irrespective of distance, the costs of advertising, and the intermediate distribution chains of travel agents and retail businesses (International Telecommunications Union 1999, p. 7, Dugger 2000).

The Internet also offers promise for the delivery of basic social services like education and health information across the globe, a function that may be particularly important for middle-level professionals serving their broader community (Hayward 1995, Wresch 1996). Potentially, local teachers or community officials connected to the digital world in Lagos, Beijing, or Calcutta can access the same electronic journals, books, and databases as students at the Sorbonne, Oxford, or Harvard. Distance learning can widen access to training and education, via open universities in India, Africa, and Thailand, and language websites for schools (Arunachalam 1999). Networks of hospitals and healthcare professionals in the Ukraine, Mozambique, and Stockholm can pool expertise and knowledge about the latest research on AIDS. Peasant farmers using village community centers can learn about storm warnings and market prices for their crops, along with employment opportunities in local towns. Where peripheral regions lack access to the traditional media, the convergence of communication technologies mean that potentially the Internet can deliver virtual local newspapers, streaming radio and television video, as well as other services.

Numerous examples can be cited to show the potential of digital technologies for fostering new opportunities for development in societies around the world (World Economic Forum 2000). Many South East Asian nations seek to emulate the Japanese model of development in the postwar era of reconstruction, and the knowledge-based economy in Singapore, South Korea, and Taiwan. In Malaysia, for example, the Multimedia Super Corridor has been developed to bring investment from telecommunications, multimedia, and electronics companies, and the production of silicon wafers and software. The corridor has attracted major players such as Microsoft, Sun Systems, and NTT (Japanese telecom). Under the ‘Vision 2020’ plan, Malaysia now boasts cellular telephone penetration rates of one in every 10 people, more and more wired schools, and 21 Internet hosts per 1,000 people. Revenue generated by the production of information and communication technology goods, like office equipment, telecommunications, and consumer audiovisuals, shows that the USA leads the world but many Asian countries are close rivals, including Japan (second), Korea (third), Singapore (fourth), Taiwan (seventh) and Malaysia (eighth) (OECD 2000, p. 24, Table 2).

Southern India is most often cited as an important area of software development, producing an estimated $3.8 billion in revenues, with this figure doubling in the last years of the 1990s. Over one-half of India's software services are exported to the USA (OECD 2000). The Bangalore area has attracted inward investment from many major corporations, not least from the diaspora of the Asian dot.com entrepreneurs thriving in California's Silicon Valley and Cambridge's Technology Park (for a discussion see Yourdon 1996). In rural Bangladesh many isolated communities lack landline telephones. An innovative program by Grameen Telecom supplies cellular mobile phones to village women, who rent calls in their community to repay the loan and sustain thriving micro enterprises. (By Spring 2000, over 1,000 phones had been provided, serving 65,000 people, and the eventual target is 40,000 phones. See Richardson 2000, see also http://www.grameenphone.com.). With this service, local communities benefit by direct links to job, weather, and health information, as well as more efficient markets for their produce. Village telecom centers are being developed with email and fax services, along with computer literacy projects in selected schools.

In Central and Eastern Europe, Slovenia, Estonia, and Slovakia have made great strides in moving their populations online, moving well ahead of Portugal, Greece, and Austria in levels of connectivity. Hungary's ambitious Schoolnet program has allowed students in two-thirds of all secondary schools to browse the Web from their classrooms, with extensive teaching resources, interactive discussion forums, events, and competitions (see http://www.SuliNet.hu). In the Baltic, the Estonian government has provided public access points for the Internet throughout the country, using schools, post offices, community centers, libraries, police stations, and health clinics. The program has been highly successful; today more than one in 10 Estonians is online, with personal computer ownership well above average for Central and Eastern Europe (UNDP 1999, p. 64).

Progress has been slower in Africa, but nevertheless plans have been announced by Global Crossing, Lucent Technologies, and Africa One for an ambitious $1.9 billion project to link up the whole continent by 2002 through a high-speed underwater fiber optic cable, with interior countries connected through terrestrial cables, microwave, or satellite facilities, overcoming many of the current problems of the inadequate telephony infrastructure (Wired News 2000. For further details see www.AfricaOne.com). Given a high-speed backbone, and market liberalization of telecommunication services, African nations may also be able to ‘leapfrog’ stages of industrialization through new technology by investing in fully digitized telecommunications networks rather than outdated analog-based systems. Cellular telephony is rapidly expanding as an alternative to conventional network services; the number of subscribers in the OECD region reached almost one-quarter of the population in 1998 (OECD 2000, p. 81). This growth has had even greater impact in the developing world. In postindustrial economies there were 20 times as many mobile phones in 1998 as there were in 1990, and in developing economies there were 160 times as many, an astonishing rise (World Bank 2000, p. 299). Over a third of all telephone subscribers in Cote d'Ivoire, Cambodia, and Paraguay, for instance, are now connected via mobiles, a far higher proportion than in the USA (International Telecommunications Union 1999).