One of the most influential writers on welfare states is Gosta Esping-Andersen. Back in 1989, he wrote a book called The Three Worlds of Welfare Capitalism in which he categorised welfare states into three kinds.
When I first heard about this book I thought it was a bad idea to put welfare states into abstract categories. The variations are too big. One country can have a similar kind of benefits system to another country but a different kind of healthcare system. And even if you have two welfare states that have, say, social insurance, the differences of detail are vitally important. Say, for example, one gives high benefits to lone mothers with children up to the age of 16 while the other gives nothing. A difference like that is far more important than the fact that both have a system of social insurance. Say one requires an unemployed person to take any job available before offering any unemployment benefit at all whereas the other lets you seek work at your previous salary for two years before requiring you to take anything. Such detailed terms make a huge difference. Broad categories can be highly misleading.
However, having read an excerpt from the book in The Welfare State Reader, I think his analysis does have value after all. It gives a broad-brush introduction to the different origins of a large batch of welfare states.
Here, then, are his definition of the three kinds:
1. Liberal welfare states
The main features are “means-tested assistance, modest universal transfers or modest social-insurance plans” “Benefits cater mainly to a clientele of low-income, usually working class, state dependants.”
In it, the “limits of welfare equal the marginal propensity to opt for welfare instead of work. Entitlement rules are therefor strict and often associated with stigma; benefits are typically modest.”
Examples: the United State, Canada and Australia. [He does not specifically mention the UK in this section but judging from other comments, the UK is probably close to this model.]
2. Conservative/corporatist welfare states
These feature social insurance more than social assistance [means-tested benefits]. In other words, most of the benefits for unemployment or sickness are entitlements based on insurance contributions previously made. Also the contributions made and the benefits received vary according to the income of the individual. This is known as the Bismark model – as opposed to the Beveridge model in which all contributions and benefits were to be at a flat rate.
“…the corporatist regimes are also typically shaped by the Church, and hence strongly committed to the preservation of traditional familyhood. Social insurance typically excludes non-working wives, and family benefits encourage motherhood.” “…the state will only interfere when the family’s capacity to service its members is exhausted”.
Examples: Austria, France, Germany and Italy.
3. Social-democratic welfare states
High levels of benefits and services provided by the state. “all strata are incorporated under one universal insurance system, yet benefits are graduated according to accustomed earnings. This model crowds out the market [meaning the private sector providing such things as pension plans]…”
“The ideal is not to maximise dependence on the family, but capacities for individual independence.” The state opts to “take direct responsibility of caring for children, the aged and the helpless.” It is committed to “allow women to choose work rather than the household” [presumably he means with lots of state-provided child-care from an early age.]
“The Scandinavian social democrats were…capable of building a welfare state with features of sufficient luxury to satisfy the wants of a more discriminating public [by which I think he means those who were better off].”
Examples: the Scandinavian countries.
Esping-Andersen admits that “there is no single pure case”. He also admits that the welfare states have changed and developed over the years.
The way the book was written, it seems as though he thought the Scandinavian ‘social-democratic’ model was best. It also seems as though he comes from a Communist perspective with a certain dislike of the ‘market’ and an assertion that having to sell one’s labour to earn a living makes people into ‘commodities’. But although I do not share his politics in the least, I can’t help respecting the extent of his knowledge and I also agree with some of his assertions. He is absolutely right, I think, to say that you should not judge the generosity of a welfare state by the amount spent on so-called ‘social protection’. In one country, the benefits might be low but the rate of unemployment very high. In another, the benefits might be ‘generous’ but the unemployment low. The cost could be the same in both. But taking just the overall amount spent would be totally misleading.
A few criticisms:
Like many Scandinavian thinkers on the subject, he seems to have no interest or concern about whether the state is a good parent. In fact, on the whole, he seems to think it is indeed a good parent and that a child does not really benefit from having a married father and mother. This issue just does not figure with him – at least in what I have read so far.
The book was written before the Scandinavian model which he appears to prefer hit the buffers. Sweden gave up on the model in the 1990s with a series of radical reforms which were prompted by the way it went bust. Sweden is now a world leader in expanding private provision of medical and educational services.
He believed that the Scandinavian model – because it gave generous benefits to the middle-classes, would continue to have the support of the middle-classes and that this meant the Scandinavian welfare states had better prospects. It is true, as far as I can tell, that in Sweden (the only Scandinavian country I have looked at in detail) the welfare state still has widespread support. But it has been obliged to change a great deal.
I suspect, too, that all the countries of the Conservative and Social-Democrat sort are gradually, perhaps inevitably, sliding towards more social assistance (means-tested benefits). ‘Hard cases’ arise which are not covered by social insurance. So a call goes up for more means-tested benefits. Gradually they assume greater importance. Then, when money is short, people say, “let’s put the money where it is most needed – for the poor”. That is what happened in Britain and I have heard of signs of this happening in Sweden, Italy and Japan. The results could be bad, as they have been in Britain.
To put it bleakly, the Conservative/Corporatist and the Social-Democratic welfare states may gradually slide into being Liberal welfare states – probably the most damaging kind.
He seems, from what I have read, to miss out much comment on social housing. This can make a big difference to how a welfare state works. It certainly has in Britain.
There is also no mention that I have seen – and perhaps this is because it was written quite a while ago – of the interesting models that have developed in Singapore, Switzerland and Chile.
He rather assumes that the Scandinavians can arrange for full employment - as if it were a decision rather than a result of policies that work. This has turned out not to be the case.