Welfare States And Their Classification - Book Report/Review Example

The study of welfare s and their ification within the last twenty years has been dominated by Gsta Esping-Andersen whose work, "The Three Worlds of Welfare Capitalism," influenced much of the welfare policies in the economically powerful Europe. Esping-Andersen's theory and classification of welfare states has become a classic and his 'Three World' theoretical framework has been the basis of subsequent welfare state classification by other scholars. However, not only has the popularity of Esping-Andersen's work been under attack, other experts in this area of study have also closely scrutinized the viability of Andersen's controversial categorization which has provoked criticisms from different sectors of society including economists and feminists. This paper will carefully examine Esping-Andersen's welfare state models and the criticisms afforded to them and evaluate the feasibility of these classifications especially the social democratic model towards which Esping-Andersen has revealed his proclivity. In his book, "Three Worlds of Capitalism," Esping-Andersen put forth the foundational dimensions of capitalist welfare states as viable 'systems of stratification' (1990: 69-77) which comprise of three dimensions: Social democratic, liberal and conservative. The social democratic model measures universality of public welfare entitlements, frees citizens from their reliance on the market and 'decommodifies' labour. Esping-Andersen refers to the term 'decommodification' as the extraction of an individual from dependency on the market. This is founded on his contention that "social rights push back the frontiers of capitalist power" (Esping-Andersen 1990: 16). The liberal model of welfare states, the second model, allows the market to be the prime mover of income distribution. In this classification, the 'state encourages the market' - and the decommodification of labour through welfare benefits is controlled to a minimum (Esping-Andersen 1990: 26-27). On the other hand, the conservative categorization is an 'undecided regime' (Manow 2004) as it embraces some aspects of the social democratic categorisation but mainly considers the status of the individual as the major basis of welfare entitlement. Esping-Andersen considers this regime unfavourable as it maintains inequality in the society and limits the liberalising prospects of the welfare state to decommodify its citizens especially its labour force (Manow 2004). The substance of Esping-Andersen's classification is founded on the assertion that the theoretical models of the welfare state are insufficient and fail to adapt with the world's changing conditions. He opines that past research heavily depended on state expenditure as an indicator to measure the viability of the state welfare program. The assumption of experts rested firmly on the idea that spending and industrialisation could define a welfare state. Esping-Andersen, however, believes that this presumption is insufficient as solely considering this aspect of the welfare state cannot be understood through the measurement of levels of expenditure. He asserts that expenditures are minor corollary of the theoretical framework of the welfare system. Hence, broader variables must be introduced (Esping-Andersen 1990:19). He adds that the emphasis on spending is deceptive as it assumes that the state's expenditures on various welfare programs will have positive outcome. On the contrary, however, we can observe states which allocate much of their expenditure to payment of government welfare workers and the privileged class while in other nations budget on welfare programs is allotted to social support. Not many policymakers would deem this as acceptable welfare state policy (Esping-Andersen: 1990:19-20). On the contrary, Esping-Andersen contends that social rights, stratification and state-market connection are the characteristics that welfare states should be founded upon. He asserts that social rights hold the most dynamic potential for the decommodification of the citizens. The most doable gauge for social rights, he believes, is "the degree to which they permit people to make their living standards independent of pure market forces. It is, in this sense, that social rights diminish the citizens' status as commodities" (Esping-Andersen 1990:3). Esping-Andersen lists social stratification as the second salient feature of a welfare state. Even though the prevailing rationale of social welfare policies is to provide solutions to the problem of social inequality, Esping-Andersen notes that social policies also aggravate dilemmas in social stratification and inequality as the welfare state "is an active force in social relations" (1990:23). The state- market nexus is also an essential aspect in the effective policy formulation of the welfare state. As the state and the market work together, they also continuously define social rights and stratification (Esping-Andersen 1990:80). However, these assertions and classification were bombarded with criticisms mainly because Esping-Andersen utilised a non-definitive scoring system which he correspondingly assigned to the countries included in his study. These scores became the basis of categorisation of a country's regime typology. Hicks (2003) contend that an unequivocal distinction of one type of regime as compared to the other does not subsist, as for instance the minimal opposing correlation that exists between the social conservative model and the liberal model of classification; hence, the factor analyses of Esping-Anderson's study should be put to a test. He fails to substantiate, for instance, the categorization of Germany and Portugal which he believed to have a parallel classification. Nevertheless, for other scholars, the two regimes illustrate obviously diverse welfare policies. However, Esping-Andersen refused to heed the calls for an introduction of a new type of regime in that he strongly insists on considering Southern European countries and Japan a separate problem. Other experts believe that a comprehensive investigation of the aforementioned countries' type of regime, which considerably emphasised the significance of the family, necessitates a new typology. Although he admits that the aforementioned countries are in fact familialistic, he is doubtful if these countries require a distinct regime model. Evidently, he showed that other continental countries such as Netherlands, Belgium and Germany likewise exhibits familialistic dimensions and stood by his tripartite welfare state model (Esping-Anderson 1999a). Hence, for others, the categories constructed by Esping-Andersen are too broad in their definitions and scope (Alber 2001). This is supplemented by studies of other scholars who argue that the classification of regimes in Southern Europe should be distinct as these regimes depict unique features (Ferrara 1997). Other subsequent data which utilised cluster analysis to categorise capitalist regimes (Wagschal & Obinger 1998) substantiates these claims. Critics likewise point to the lack of geographical scheme when Esping-Andersen compares two distinct geographical groups such as the Scandinavian social democratic regime and the Western Anglo-Saxon liberal classifications (Baldwin 1997:95) and thus the classification of the welfare states was dismissed as highly suggestive and far from definitive. Other notable scholars argue that Esping-Andersen has failed to validate his three-fold regime classification through systematic and objective methods to institute his regime typology although in his work, he has put emphasis on the 'analytical necessity' of an interactive approach which is essential to the understanding of welfare states and their corollaries (Esping-Andersen 1990:32). A number of feminist scholars on the subject also question the strength of Esping- Andersen's hypothesis in relation to gender issues as when the idea of gender is integrated into the investigation. Feminists dispute the dimensions which comprise of decommodification, stratification, and the state-market nexus - the main features of Esping-Andersen's welfare state theory. They observed that his work's accentuation on labour-market indicators was misleading and that the emphasis on decommodification is an unsuitable gauge of welfare entitlement for citizens whose main vocations fall beyond the scope of the formal labour market (Orloff 1993). Feminist scholars also observe that Esping-Andersen's evaluation of welfare states' endowments neglected to consider the social reality that is, entitlement varies if gender is taken into account. The significance of this contention does not only apply to males and females. This is also of consequence to the female workforce, mothers and married women. Studies which integrated gender within the regime categories proposed by Esping-Andersen resulted to variations that do not fall within the regime model. Lewis (1992) emphasised her studies on the male-breadwinner regime and found out that countries take in clusters that do not correlate to Esping-Andersen's categorization. Entitlements which abet the employment of women and the economic reliance of women in the family, if included in the classification scheme, divergent clusters are formed which are included in a distinct category of Finland and Sweden- countries that strictly fall under the social democratic model of Esping-Andersen's proposed regime (Lewis 1992). For his part, Esping-Andersen responded to this criticism in his 1999 work Social Foundations of Industrial Economies in which he incorporated gender in his study. In this work, Esping-Andersen brought the role of women and the family to light, emphasising the transformation in family arrangement which in turn affects the life conditions of people more specifically women (Esping-Andersen 1999b). What is interesting to note, however, with regards the tripartite welfare state model, is Esping-Andersen's obvious preference to the social democratic regime. He considers this model the most favourable, the liberal model as unfavourable and the conservative model unfeasible and hideous. He asserts that the welfare state is the source of the market's erosion as captured in the phrase he coined 'politics against markets.' This contention is supported by his belief that the increase in labour activity should be balanced out by policies which minimises the inequalising consequences of the market to free the labour force from its reliance on the market. He argues that workers want to be liberated from the market, a process he referred to as decommodification. On the other hand, most corporations and companies oppose this action. Basing on the Scandinavian model of social democracy, particularly Sweden "frequently singled out as the paradigmatic example of social democracy," (James 1997:33) Esping-Andersen argues that these welfare states are decommodifying in that, citizenship instead of market involvement "forms the basis for entitlement to income or publicly provided goods and services" (James 1997: 36). He notes that in this type of regime, citizens do not undergo a painful process of losing incomes when they provisionally or permanently depart from employment (James 1997: 36) as this institutionalized regime coalesce 'equal' citizenship entitlements for all individuals with income safety net for the labour force whenever they suffer from illness, retire, or when they lose their jobs (James 1997: 34). This is evident in Scandinavia's promulgation of citizenship pensions, which, according to Esping-Andersen and his advocates, are efficacious in reducing poverty among aged individuals (James 1997:34). During the last decades, however, OECD (2007) reports that the Scandinavian welfare states of Sweden and Finland faced a protracted period of decline, nearly bankrupt in the 1990's and encountering a five-fold unemployment increase rate. Scandinavian welfare states have failed to improve their economic prosperity level which continually faces economic recession. Current data shows that other countries in Europe such as Ireland and Belgium have taken over Scandinavian states in terms of prosperity index (OECD Eurostat 2007) and worse, welfare states in Scandinavia were unable to generate new jobs within the last twenty years. However, Esping-Andersen dismisses this decline to be brought about by welfare state policies as he contends that welfare entitlements had indiscernible "if any direct contribution to the current economic problems of Scandinavian countries" (James 1997:33). This argument, however, is very flimsy in that governments rely heavily on private sources to fund public expenditures especially their welfare entitlements. The fallacy in Esping-Andersen's arguments lies on its prospect to 'liberate' and decommodify workers from the claws of the market, giving markets an unfavorable stigma. But this is akin to biting the hands that nourish you. This contention is easy to comprehend even by ordinary individuals: Labour dependency on the markets, even if markets spur public welfare funding, commodifies workers and hence, workers need to be freed from the markets by endowing them entitlements which the welfare state has accroached from the markets. Most will find this argument ridiculous as the consequence of this process is the 'commodification' of both the welfare state and the labour force which likewise result to the increased dependency on the welfare state entitlements and further 'commodifies' the individual and even the state. What Esping-Andersen neglected to recognise is that inequality sometimes spur economic growth. Because the wealthier entities have higher savings rate as compared to the savings rate of the poor, national income is allocated more equally resulting to higher capital investments and growth rate (Lewis,1954; Kaldor, 1956, 1957; and Stiglitz, 1969). If welfare entitlements discourage citizens from working, the quantity of labour contributed to the economy decreases which then cause the decrement of output, investments and economic growth. The same entitlements could also hamper the proclivity to save and thus, if public funds do not increase in order to re-compensate this loss, capital which can be reallocated for investment will significantly be curtailed. Lindbeck (1975), after his assessment of the Scandinavian proposition to social protection, asserts that institutionalisation of the Scandinavian welfare program has 'politicised' the economic enterprise, promoting the pursuance of materialism through the political process by the promulgation of redistributive laws rather than through economic activity. This results to the decline of entrepreneurial and innovative ability of the state. On the other hand, social protection is advantageous only if a social security system enables citizens to acquire insurance against risks which private entities find difficult to administer. The proliferation of this security measure allows individuals to take more risks in their economic activities. This in turn could foster economic growth if the return rate in exchange of the risk is positive and beneficial (Ahmad et al 1991). Nevertheless, this type of social protection is divergent as compared to the regimes proposed by Esping-Andersen in that this emphasises 'employment oriented social policies' which foster increased employment rather than pure transfer of expenditure from one social group to another in monetary form or services (Arjona et al 2002:9). Research by Forbes (2000) states that the narrowing of income distribution in a country or in an economy results to lower and not higher economic growth rate (Forbes 2000 in Arjona et al 2002:9). Moreover, as companies have played a big role in the development of social policy. Studies done by Swenson (2002) argue that in very competitive labour markets, companies try to formulate and introduce a national social insurance system. Similar research by other scholars verifies previous study. Isabela Mares (1998) observes that corporations and employers that are immensely in high risk position will support a social insurance system in order to temper risks and are more likely to favour a universal accident and unemployment insurance coverage. Mares also asserts that corporate social protection can promote skills acquisition in the workforce and improves the ability of private businesses to compete in the global market. This has resulted to the private firms' introduction of generous unemployment insurance (Mares 1998). Thus, it is apparent that Esping-Andersen has downplayed the role of the market in protecting the welfare of labour and skills. Companies rely heavily on the importance of human capital. When human expertise is of considerable value to a particular firm, the firm faces risks and thus employs a 'non-market' form of protection akin to public welfare benefit. The importance of these assets is virtually absent in the current rationalizations of the welfare state particularly Esping-Andersen's theory on welfare regimes. Hence, in order to fully understand and classify welfare states, further research is necessary. As many countries in Europe tend to apply Esping-Andersen's theoretical foundations in the legislation of welfare entitlements and protection, this inclination to the dominant theory deserves further scrutiny and re-evaluation in the light of Scandinavia's fiscal crisis and failing economy. In the end, it will not be Esping-Andersen or his detractors who will reap the benefits in the overhauling of a seemingly flawed policy - rather, it will be the citizenry. BIBLIOGRAPHY AHMAD, E., J. DREZE, J. HILLS and A K. SEN [eds.] (1991), Social Security in Developing Countries. Oxford University Press: Oxford. ALBER, J. (2001). Die Modernisierung des Wohlfahrtsstaates: Eine Neumischung moderner undtraditionaler Elemente in: Karl-Ulrich Mayer et al. (Hg.): FS fr Wolfgang Zapf (im Erscheinen). ARJONA, R., LADAIQUE, M., & PEARSON, M. (2001). Growth, inequality and social protection. Labour market and social policy occasional papers, no. 51. Paris, Organisation for Economic Co-operation and Development. BALDWIN P. (1997). State and Citizenship in the Age of Globalization. S. 95-118 in: PeterKoslowski (Hg.): Restructuring the Welfare State. Berlin: Springer. ESPING-ANDERSEN, G. (1990). The three worlds of welfare capitalism. Princeton, N.J., Princeton University Press. ESPING-ANDERSEN, G. (1996). Welfare states without work: The impasse of labor shedding and familialism in Continental Europe. S. 66-87 in: Ders. (Hg.): Welfare States in Transition. NationalAdaptions in Global Economies. London: Sage, 66-87 ESPING-ANDERSEN, G. (1999). Social Foundations of Postindustrial Economies. New York: OxfordUniv. Press. ESTEVEZ-ABE, M. (1999). Comparative Political Economy of Female Labor ForceParticipation. Paper presented at the 95th American Political Science Association Meeting in Atlanta. FERRARA, M. (1997). Introduction gnral. S. 15-26 in: MIRE (Hg.): Comparer les systmes de protection sociale en Europe du Sud. Paris. FORBES, K. (2000).A Reassessment of the Relationship Between Inequality and Growth, American EconomicReview, Vol. 90, No. 4. HICKS, A & KENWORTH L. (2003). Varieties of Welfare Capitalism. Socio-economic Review. Department of Sociology Emory University, Atlanta, Georgia JAMES, S. (1997). GOSTA ESPING-ANDERSEN (ed.), Welfare States in Transition: National Adaptations in Global Economies, Sage, London, 1996, vii + 276 pp., paper 13.95. Journal of Social Policy. 26, 267-299. KALDOR, N. (1956). Alternative Theories of Distribution. Review of Economic Studies, 23(2), pp. 83-100. KALDOR, N. (1957). A Model of Economic Growth. Economic Journal, 67, pp. 591-624. LEWIS, J. & OSTNER , I. (1994). Gender and the Evolution of European Social Policies. Arbeitspapier No. 4,Zentrum fr Sozialpolitik der Universitt Bremen, Bremen. LEWIS, J. (2001). The decline of the male breadwinner model: implications for work and care, Social Politics 2, 152-169. LEWIS, W.A. (1954). Economic Development With Unlimited Supply of Labour". Manchester School, 22, pp. 139-191. LINDBECK, A. (1975). Inequality and Redistribution Policy Issues (Principles and Swedish Experience), in Education, Inequality and Life Chances, Vol. 2, OECD, Paris, pp. 229-385. MANOW, P. (2004). Max Planck Institute for the Study of Societies, Cologne."The Good, the Bad, and the Ugly: Esping-Andersen's Regime Typology and the Religious Roots of the Western Welfare State." Lecture: Harvard University. Available online at http://www.hks.harvard.edu/inequality/Summer/Summer04/papers/Manow.pdf MARES, I. (1998). Negotiated Risks: Employers' Role in Social Policy Development. Cambridge: Cambridge University press. OBINGER, H. & WAGSCHAL, U. (1998). Drei Welten des Wohlfahrtsstaates DasStratifizierungskonzept in der clusteranalytischen berprfung. S. 109-135 in: Stephan Lessenich/Ilona Ostner (Hg.): Welten des Wohlfahrtskapitalismus. Der Sozialstaat in vergleichenderPerspektive. Frankfurt a.M.: Campus. OECD, Eurostat (2007). Purchasing Power Parities and Real Expenditures 2005 Benchmark Year, 2007 Edition . Published by: OECD Publishing ORLOFF, A. (1993). Gender and the Social Rights of Citizenship: the Comparative Analysis of Gender Relations and Welfare States. AmericanSociological Review 58(3), p.303-328. STIGLITZ, J. (1969).The Distribution of Income and Wealth Among Individuals. Econometrica, 37(3), pp. 382-97. SWENSON, P. (2002). Employers Against Markets. Cambridge: Cambridge University Press. Read More