Introduction

The comparative literature which analyzes the fate of the welfare state in our economically ‘dire times’ started with the assumption that an increasingly internationalized market will force the generous welfare states of the Western world in a common, downward direction. Yet, today it seems that the advanced OECD economies have maintained their ability to ‘tax and spend’ to a surprising degree. What is most remarkable from the viewpoint of the early pessimistic predictions is that the welfare state has basically survived (Kuhnle 2001) rather than outlived itself.

One of the most prominent explanations for the resilience of the welfare state in our times of austerity has been put forward by Paul Pierson (Pierson 1994; 1998; 2001b). For Pierson , welfare states are by and large ‘immovable objects’ due to electoral ‘short-termism’ combined with the political support that social spending programs generate among those that benefit from them – an argument that follows the Olsonian diffuse costs/visible gains logic. If we were to follow Pierson 's arguments, however, we would generally expect welfare retrenchment to be unlikely given that cuts in spending programs are always very unpopular. Yet, in the wake of the economic pressures and challenges of the 1980s and 1990s we did observe instances of substantial welfare retrenchment that – from time to time – even saw impressive electoral approval (Hausermann 2010b). To put it bluntly: while welfare retrenchment may be unpopular, the ever increasing tax-or debt-burdens caused by uncontrolled spending dynamics may be just as unpopular. It seems that we need much more fine grained ‘blame avoidance’ arguments if we want to account for the varying reform trajectories in the OECD since the mid-1970s.

Since it is variance, not overall downward convergence or general inertia, which calls for an explanation, I propose to look at different political opportunity structures that have made retrenchment in some places more likely than in others. This, as we will see, helps us to better understand the specific reform trajectory of Bismarckian welfare systems. I follow Paul Pierson in counting the welfare state itself among the dominant features of advanced democracies and industrialized countries so that the ‘new politics of the welfare state’ are strongly determined by the political options that the welfare state itself provides.