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As I argue in the next section, theoretical discussions of the welfare state have failed to take this point sufficiently to heart. The Limits of Existing Theories Each of the main theories of welfare state expansion--arguments about economic development, arguments about the power of the left, and arguments about institutions--has been loosely appropriated for discussions of the contemporary welfare state.

In this section I make explicit the kinds of claims that an inversion of existing theories of expansion might suggest for a theory of retrenchment. While each perspective [End Page ] contains insights, my main contention is that a convincing analysis of retrenchment must move beyond these formulations. A New "Logic of Industrialism"? The earliest well-developed theory of welfare state growth, associated particularly with the work of Harold Wilensky, stressed the relationship of welfare state expansion to processes of economic growth.

Nonetheless, versions of economic determinism have been prominent in discussions of the contemporary welfare state. The claim that a new "logic of industrialism" encourages a convergence of national social policy models is based on asserted consequences of global economic change.

However, as Garrett and Lange have persuasively argued, while monetary and fiscal policies may face new restrictions, there is little evidence that supply-side policies of transfers and services need be constrained, so long as tax bases remain sufficient to insure relatively low deficits. A related argument is that heightened economic integration will result in what Europeans call "social dumping.

In extreme scenarios these actions could fuel a downward spiral in social provision, eventually producing very rudimentary, lowest-common-denominator national welfare states. The social wage is only one factor in investment decisions, and firms will not invest in countries with low social wages unless other factors for example, infrastructure, worker productivity justify such investments.

Even if a high social wage were associated with poor economic performance, the assumption that downward adjustments in social policy would necessarily follow is unjustified. As North has recently reminded us, countries have maintained widely different levels of economic performance for very long periods of time, without marked pressures toward convergence.

Politicians in democratic systems generally worry first and foremost about getting elected. Helping improve the economy may make that easier, but not if it requires hugely unpopular policies, and not if the economic benefits are likely to appear at some point in the distant that is, postelection future. Thus, even if social dumping arguments proved valid--a big if--much would still depend on the balance of political forces favoring and resisting a substantial restructuring of the welfare state.

Tendencies toward fragility must be weighed against the considerable sources of welfare [End Page ] state stability. In short, policy outcomes cannot be derived directly from economic trends. The new logic of industrialism suffers from many of the defects of the old one.

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Expansive claims of economic determinism pay insufficient attention to the politics of policy change. The same cannot be said about power resource and institutionalist arguments, to which I now turn. Left Power Resources and the Politics of Retrenchment The power resources perspective, which attributes cross-national variations in social provision largely to differences in the distribution of political resources among classes, has been the leading approach in comparative politics to explaining patterns of welfare state expansion.

Many social programs limit the economic vulnerability of wage earners and increase worker solidarity. According to power resource theorists, strong unions and left parties contribute to the growth of these programs. The power resources approach has had considerable success in accounting for cross-national variations in social provision during the three decades following World War II.

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Furthermore, the replacement of crude social expenditure data with more fine-grained distinctions among patterns of social provision has greatly improved the model's explanatory power. The power of organized labor and left parties has shrunk considerably in many advanced industrial societies. As I will argue in Section III, however, there is very little evidence that this decline has had a fundamental impact on welfare states. Cutbacks in social programs have been far more moderate than the sharp drop in labor strength in many countries might lead one to expect, and there appears to be little correlation between declines in left power resources and the magnitude of retrenchment.

The shift in both context and goals that characterizes the new politics of the welfare state helps to explain why this is so. Analysis of the contemporary welfare state's supporters must include not only organized [End Page ] labor and left parties but also the more varied constituencies of individual programs. Interest groups linked to particular social policies are now prominent political actors. The rise of these interest groups is one of the clearest examples of how policy feedback from previous political choices can influence contemporary political struggles.

Groups of program beneficiaries did not build the welfare state, but the welfare state contributed mightily to the development of these groups. By the time a politics of austerity began to emerge in the mids, most welfare state programs were connected to extensive networks of social support. Most prominent were the recipients of the various benefits--pensioners, the disabled, health care consumers. The providers of public services also had a major stake in sustaining expenditure and were usually well organized.

Indeed, even when groups of recipients are not particularly well organized, politicians may have reason to be attentive to their concerns. Cutbacks, if recognized, are likely to incense voters, and political competitors stand ready to exploit such opportunities. The possibility of exacting punishment at the polls means that the potentially mobilized influence policymakers even in the absence of ongoing organized activity. The diminished relevance of power resource arguments reflects the fact that welfare states are now mature and that retrenchment is not simply the mirror image of welfare state expansion.

In a context where public social provision is just emerging, the existence of very broad organizations pushing an expansionist policy agenda may be crucial. However, the unpopularity of program cutbacks and the emergence of new bases of support will give politicians pause even where unions and left parties are weak. Equally important, maturing social programs develop new bases of organized support that have substantial autonomy from the labor movement. This shifting base of support may have consequences for the dynamics of policy development, but the weakening of organized labor need not translate automatically into a commensurate weakening of the welfare state.

The "new institutionalist" resurgence in political science reflects a renewed appreciation of how relatively stable, routinized arrangements structure political behavior. Institutions establish the rules of the game for political struggles--influencing group identities, policy preferences, and coalitional choices, and enhancing the bargaining power of some groups while devaluing that of others. Institutions also affect government capacities--their administrative and financial resources for fashioning policy interventions. In the field of comparative social policy, the claim that political institutions must be considered consequential structures has been developed primarily in the work of Theda Skocpol and her collaborators.

The new institutionalist research agenda, however, has centered on explaining "American exceptionalism"--the belated and halfhearted development of social welfare policies in the United States. Just as a focus on Sweden was central to the development of the power resources model, concentration on the United States has underscored the importance of political institutions. Institutionalists make two broad claims about welfare state development.

First, strong states are likely to produce strong welfare states, with state strength defined in terms of governmental administrative capacities and institutional cohesion. Extensive administrative and financial resources make it easier to build expansive social policies. Although much of the work on institutions and welfare states has been based on comparative historical case studies, this claim about formal institutional veto points has recently received support in an important quantitative study as well. Arguments about policy feedback are essentially arguments about the consequences of big government.

As policy decisions have had increasingly pervasive effects on economic and social life, their impact on political processes has expanded.

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Given that the welfare state is at the very heart of big government, it should come as no surprise that studies of welfare state development have generated some of the most persuasive arguments about policy feedback. The possible consequences of preexisting policy structures for welfare state politics are quite diverse. Programs may provide the basis for processes of social learning that affect prospects for future program expansion, whether negatively or positively. Policies can create long-term commitments--such as the pay-as-you-go intergenerational contracts common to public pension systems--that lock in particular paths of policy development.

Again, there is no reason to assume that claims for earlier periods can simply be turned on their heads. For example, there is little reason to expect that bureaucratic capacities will be particularly important in an age of retrenchment. Can we administer it? Closing offices, curtailing services, and cutting benefits do not require formidable administrative capacity. Arguments about the consequences of governmental cohesion also need to be reappraised in this new context.

Because retrenchment is generally unpopular, however, there are compelling reasons to question this expectation.

While cohesive systems concentrate authority, they also concentrate accountability. The former tendency facilitates retrenchment, but the latter impedes it. Where authority is centralized, the public knows that the government of the day can prevent groups from suffering cutbacks. Strong governments, anticipating the high political cost of retrenchment, may forgo the opportunities provided by concentrated power.

Thus, the theoretical basis for believing that government cohesion facilitates retrenchment is weak. We are left with the empirical question of whether concentration of power effects outweighs concentration of accountability effects. There are, however, two quite different ways to apply policy feedback arguments to retrenchment. First, one could develop nuanced arguments that emphasize the distinctive characteristics of individual programs and their implications for successful retrenchment.

Alternatively, one could present arguments about the overarching structures of particular welfare state regimes, suggesting that they are likely to promote a particular kind of politics. The first approach has promise but is difficult to carry out in practice. Previous policies help shape the distribution of political resources. Preexisting policy designs may influence interest-group networks, the extent of long-term commitments, the rules governing programmatic reform, and the availability of techniques to reduce the visibility of cutbacks.

These kinds of arguments have been used in qualitative case studies of both welfare state expansion and retrenchment. The alternative of developing broad arguments about how welfare state regimes affect contemporary politics is more easily applied to cross-national comparisons. Esping-Andersen has developed propositions that link welfare state structures to cross-national variation in occupational [End Page ] structures and, in turn, to contemporary political cleavages. Unfortunately, the argument does not work. As I will document in the next section, the hypothesized political cleavages emerge in only muted forms and have failed to generate a sustained backlash against the welfare state.

The flaw in these broad arguments about welfare state regimes is that they greatly underestimate the difficulty of assembling and sustaining proretrenchment coalitions. New institutionalist arguments have contributed greatly to our understanding of welfare state politics. Moreover, unlike arguments about the role of organized labor, there is no reason to think that the importance of institutional structures and the legacies of previous policy choices has declined.

These arguments cannot simply be transferred from one context to another, however; they must be recast to apply to the specific settings and strategic problems that are characteristic of retrenchment politics. From Theories of Expansion to Theories of Retrenchment It is commonly maintained that our knowledge of welfare state expansion provides us with considerable insight into the new politics of the welfare state.

Although this view is rarely stated explicitly, it undoubtedly explains why political scientists, who are usually preoccupied with understanding contemporary or rather recent events, have become so interested in historical studies of social policy. The presumed similarity of expansion and retrenchment is evident in some of the most important work on comparative social policy. In their sophisticated quantitative investigation of welfare state effort from to , for example, Huber, Ragin, and Stephens acknowledge that their use of a pooled cross-sectional time-series model assumes "that causal processes are uniform through time.

Retrenchment is not simply the mirror image of welfare state expansion. Why should we assume that theories designed to explain outcomes in a particular context and involving the pursuit of particular goals will still apply once the political environment and the goals of key actors have undergone radical change? The question of whether theories of welfare state expansion offer insights into the retrenchment process is still open, but this preliminary discussion suggests that major modifications are probably required.

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In the following section, I draw on evidence from Great Britain, the United States, Germany, and Sweden to demonstrate the distinctiveness of retrenchment politics. Of declining importance are some formerly critical factors, such as the role of organized labor. Others, such as the design of political institutions, are of continuing significance but in new ways. Yet a crucial emerging factor is the mature welfare state itself, and its broad and deep reservoirs of public support.

Retrenchment Politics in Four Countries To what extent have welfare states undergone retrenchment? What countries and programs have been most vulnerable to retrenchment initiatives and why? In this section I address these questions by reviewing the evolution of welfare states in four affluent democracies since the late s.

The evidence supports a number of claims. And 4 far from creating a self-reinforcing dynamic, cutbacks tend to replenish support for the welfare state. Quantitative indicators are likely to be inadequate for several reasons. First, pure spending levels are rarely the most politically important or theoretically interesting aspects of welfare states. As Esping-Andersen put it in his analysis of welfare state expansion, "It is difficult to imagine that anyone struggled for spending per se. Second, spending estimates will fail to capture the impact of reforms that are designed to introduce retrenchment only indirectly or over the long term.

Analysis must focus on qualitative and quantitative changes in programs and on prospective, long-term changes, as well as on immediate cutbacks. My investigation therefore relies on a combination of quantitative data on expenditures and qualitative analysis of welfare state reforms. These would include 1 significant increases in reliance on means-tested benefits; 2 major transfers of responsibility to the private sector; and 3 dramatic changes in benefit and eligibility rules that signal a qualitative reform of a particular program.

The cases vary widely in the structure of political institutions, the extent of shifts in the distribution of power resources, the design of preexisting welfare states, and the severity of budgetary crisis. Beginning with the quantitative evidence, aggregate measures provide little evidence that any of the four welfare states have undergone dramatic cutbacks.

From through the expenditure patterns across the four cases are quite similar, despite widely different starting [End Page ] points. As Tables 1 and 2 show, social security spending and total government outlays as a percentage of GDP are relatively flat over most of the relevant period. The exception is the recent surge in Swedish expenditures, which will be discussed below.

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There is a slight upward trend overall, with fluctuations related to the business cycle. Table 3 , which tracks public employment, reveals a similar pattern although the expansion of Swedish public employment from an already high base stands out. For none of the countries does the evidence reveal a sharp curtailment of the public sector.

Table 4 offers more disaggregated indicators of shifts in social welfare [End Page ] spending among the four countries; spending patterns are reported for what the OECD terms "merit goods" primarily housing, education, and health care as well as for various income transfers. The figures suggest a bit more divergence among the cases, with the United States and Germany emerging as somewhat more successful in curbing spending.

A very few program areas--notably British housing and German pensions--experienced significant reductions. Nonetheless, similarities across countries remain more striking than differences. None of the cases show major rises or declines in overall effort, and there are few indications of dramatic change in any of the subcategories of expenditure.

The data suggest a surprisingly high level of continuity and stability. Policy reforms could have imposed lagged cutbacks that do not show up in spending figures. Furthermore, many other features of programs, not just spending levels, are of significance. To investigate these issues and to get a better sense of the processes that generated these aggregate outcomes, we turn to a more detailed investigation of the four cases.

Great Britain By the mids Britain had developed a midsize welfare state with a mix of fairly modest income transfer programs and relatively extensive [End Page ] [Begin Page ] and interventionist policies in health care and housing. The past fifteen years of Conservative rule represent a powerful test of a number of claims about retrenchment.

There are few if any cases within the OECD of such a radical swing to the right in the distribution of power resources. A balanced two-party system gave way to Conservative hegemony, as reflected in four consecutive electoral victories. If a strong state with few internal veto points is the key to reforming the contemporary welfare state, the British Conservatives were in an unusually favorable position.

In short, a simple inversion of welfare state expansion arguments would suggest that Britain should have been fertile ground for social policy cutbacks. The evidence does not support such a conclusion. The British welfare state, if battered, remains intact. As Table 4 indicates, social expenditure merit goods plus transfers as a share of GDP remains almost unchanged after more than a decade of Conservative governance. It is worth starting with the two cases of retrenchment success, because these experiences are instructive.

One of the triumphs of the Thatcher government was the privatization of public council housing. The sale of roughly 1. The liquidation of extensive public sector assets created a rare opportunity for credit claiming rather than blame avoidance, offering considerable benefits for both home purchasers and taxpayers. Public sector tenants, who under other circumstances would have fought the government, became disinterested or divided.

Forced into an embarrassing retreat, the government introduced more modest but nonetheless substantial changes in SERPS, which will gradually expand private pensions while reducing public sector benefits. These changes, though criticized, failed to generate the kind of outcry that often led the government to back off from other reforms.

Offering the carrot of personal pensions diminished the pain of the cuts in public pensions although the required tax incentives also diminished the government's budgetary savings. More important, the government's use of incremental and seemingly technical reforms limited the emergence of opposition. Careful political planning in the context of programs that were either weakly institutionalized SERPS or offered rare opportunities for credit claiming council housing protected the Thatcher government. These cases were exceptions, however. On the whole, the British Conservatives found the welfare state to be a political minefield, as popular support for social spending remained strong.

In fact, British public opinion regarding social policy reveals the same pattern found elsewhere: a modest decline of support for the welfare state preceded the arrival of the Thatcher government but rebounded at the first hint of serious retrenchment. Public opinion in Britain has run strongly, and increasingly, in favor of maintaining or even expanding social provision.

Preserving the National Health Service, for example, became far and away the Labour Party's best issue in the s. Initial exploration of various options for privatization provoked public outrage. The Thatcher government repeatedly backed off [End Page ] from plans for fundamental restructuring of the system. The universal Child Benefit, frequently rumored to be in jeopardy, survived although at a somewhat reduced level , due in part to well-organized lobbying efforts.

A massive and highly publicized social security review promising to offer a "new Beveridge" ended up making modest adjustments to programs for low-income groups. The tremendously unpopular poll tax--designed to cripple the social spending of local governments by cutting their financial legs out from under them--was a major source of the downward spiral in the polls that forced Thatcher's resignation.

Her successor, John Major, followed a more moderate course. While attempting to consolidate Thatcher's least unpopular reforms, he launched few initiatives of his own and retreated on unpopular issues like cutbacks in Child Benefit. Parts of the Conservative record demonstrate that major retrenchment is not impossible.

Where a government can obscure the consequences of reform--or better yet, turn reform into a source of tangible benefits--the welfare state may be vulnerable. Had the entire British welfare state resembled council housing, the Conservative agenda would have succeeded. Yet the government's record reveals more cases of incremental adjustments or failed attempts to restructure programs. Overall social expenditure remains almost unchanged; housing and pensions aside, the government paid a significant price for the cutbacks it was able to impose.

This outcome stands in sharp contrast to the Thatcher government's remarkably successful efforts in other policy areas, such as its overhaul of Britain's industrial relations system and its privatization of publicly owned industries. Like Britain, the United States experienced a significant rightward shift in power resources during the s. Republicans captured the presidency in as well as the Senate until Union power--never that extensive to begin with--continued a seemingly inexorable decline.

The American welfare state was already fairly modest in scope, suggesting to some observers that public support for maintaining it would be weak. Unlike Thatcher, however, retrenchment advocates in the United States operated in a context of severely fragmented political authority. The combination of weak parties, separation of powers, and federalism created an institutional environment that was in many respects the polar opposite of that in Britain. Yet at least through the American story reads like the British one, minus most of Thatcher's sporadic successes. Reagan's first year was the exception.

Riding the antitax wave that had helped to elect him, Reagan was able to cobble together a loose coalition of southern Democrats and Republicans in his first year to pass some cuts in social programs, especially those affecting the poor. A decade-long expansion of low-income housing programs was rapidly reversed. The Reagan administration successfully exploited the fact that responsibility for these two programs was shared with fiscally strapped state governments. Both fared poorly in the s, although many of the cutbacks occurred at the state level. The Reagan assault petered out in , when further budget cuts were overwhelmingly rejected.

Reagan's single major reform initiative, the New Federalism proposal, would have transferred responsibility for AFDC and food stamps to the states in return for the federal government's assumption of complete control over [End Page ] Medicaid. The proposal was so unpopular, however, that it could not find even a single congressional sponsor and died without ever being introduced. Trust fund difficulties forced significant reforms of Social Security, and there was a series of efforts to trim Medicare's exploding costs mostly through cuts in provider compensation.

In all these efforts, however, Republicans fearful of the electoral consequences of retrenchment refused to move forward in the absence of bipartisan agreement. The need for consensus in turn assured that reforms would be acceptable to program defenders within the Democratic Party.

This was most clearly evident in the Social Security amendments, where the reliance on a bipartisan, quasi-corporatist commission assured that radical reforms would be rejected. Declining support for social programs preceded Reagan's election. From onward--that is, immediately following the first round of budget cuts--polls revealed growing support for the welfare state. Reagan became much more hesitant as popular enthusiasm for retrenchment faded. In any event, the fragmented nature [End Page ] of American political institutions assured that plans for further cutbacks met a hostile reception in Congress.

To be sure, with both the emergence of a large structural budget deficit during the s and resistance to tax increases, little room was left for social policy expansion. The American welfare state moved into a zero-sum era, in which gains for some programs often came at the expense of others. This atmosphere continued when the Democrats returned to the White House in , although social spending for the poor was a prime beneficiary of the budget agreement. From the late s through the situation was one of reallocation within an essentially stagnant budget.

Republicans had learned important lessons from past defeats. Social Security was taken off the table. The issue was carefully framed as a matter of controlling the deficit and bringing government "closer to the people. To diminish visibility, most of the major cuts were scheduled for the year and beyond. If fully implemented, the Republican budget proposals introduced in would represent a fundamental reform of American social policy. It will, however, be several years before the outcome of this latest battle is clear. Republican cutbacks are only now being formulated, and it will take some time for their impact to register with the electorate.

While the current political environment poses a major test of the resilience of the welfare state, both American precedent and the experience elsewhere cast doubt on the proposition that Republicans will discover a deep reservoir of public tolerance for sharp cuts in social programs. Germany Germany, like Sweden, has a very extensive welfare state, though the German system is geared toward transfer payments rather than public services, and toward redistribution over the life cycle rather than across income groups.

As in Britain and the United States, there has been a considerable swing to the right in elections during the period of austerity. A right-of-center coalition has been in office since In recent [End Page ] years, however, the Social Democrats, with their majority in the Bundesrat, have gained considerable influence. And although Germany's powerful unions have been under pressure, compared with unions in other countries their organizational strength has held up quite well. The German welfare state is based, not on maximizing employment, but on providing subsidies to the "outsiders," who are encouraged to leave the labor market to those who are highly productive.

Esping-Andersen has speculated that the result is likely to be an "insider-outsider" conflict in which the employed along with employers increasingly balk at the cost of subsidizing a large and growing "surplus population. The fiscal pressures facing Germany are evident and are unlikely to go away. Demographic shifts will increase costs even if expenses related to unification begin to subside.

This line of potential cleavage is based largely on age, with by far the largest and most expensive group of outsiders consisting of former insiders: pensioners and early retirees. There are formidable barriers to the development of political cleavages along generational lines. This is likely to temper any tendency toward a polarization between "them" and "us. While some critics pressed for a rethinking of the entire scheme, the Kohl government instead searched for consensus among experts and the social partners, and eagerly sought support from the opposition Social Democrats.

Union and business representatives submitted joint statements on pension reform. Combined with earlier cutbacks, these reforms have generated substantial budgetary savings. The basic structure of Germany's generous pension system remained unaltered, however. In the case of health care reform as well, corporatist accommodation of entrenched interests and a search for cross-party consensus has been the rule. Most affected were welfare and unemployment insurance benefits that could be considered a hindrance to labor market flexibility. While these benefits were relatively well protected under the SPD-led coalition of the late s, they experienced disproportionate reductions after As Offe has argued, moderate cutbacks were carefully designed by a " de facto bipartisan coalition" and orchestrated to prevent a political outcry.

Germany's worsening fiscal situation, combined with concern about industrial competitiveness, generated growing criticism [End Page ] of the welfare state. Yet the response to unification emphasized continuity: East Germans were brought into the West German social policy regime on extremely generous terms. In response to budgetary pressures since then, a series of cuts have been introduced in major social programs, and more cuts are probably on the way. The recent ambitious expansion of long-term care covering in-home and nursing-home services is clear grounds for skepticism about the prospects for radical retrenchment or a generational backlash against the German welfare state.

Its introduction at a time of budgetary stress and widespread discussion of high social wage costs indicates the continuing political attractiveness of social programs, as well as the electoral clout of the elderly. Concern about mounting unemployment rates and labor market inflexibilities point in the same direction. The Kohl government's recent proposals for cuts in social expenditures do indeed concentrate on unemployment and welfare benefits. Sharp cuts, however, will provoke a strong challenge from the SPD and unions, since the conditions of the unemployed have significant implications for workers.

Furthermore, the force of demographic demands is such that even these politically difficult reforms would have only a limited effect on the long-term budgetary situation. Demographic and budgetary pressures assure that an atmosphere of austerity will continue to surround the German welfare state. Check system status. Toggle navigation Menu. Name of resource. Problem URL. Describe the connection issue. SearchWorks Catalog Stanford Libraries. A new politics of identity : political principles for an interdependent world. Responsibility Bhikhu Parekh.

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