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.

This book is the result of a joint project that began in 2001. After having collaborated on a paper on the problem of welfare without work in continental Europe (see Hemerijck, Van Kersbergen, and Manow 2000), we began discussing some intriguing and unresolved big issues in welfare state research, particularly the incomplete – and therefore unsatisfactory – manner in which the role of religion in welfare state development had been studied. Although early work on the history of the welfare state had included illuminating analyses of the pro-welfare role (e.g., via democratization) of Protestantism, later work had primarily focused on the positive impact of social Catholicism as politically represented by Christian democracy on the European continent. We started to consider the possibility that it had been an unfortunate omission not to consider the impact of (social) Protestantism on the development of the European and the American welfare state more generally.

We took as our example the German case, and we argued that in the beginning the German welfare state seemed to have been a Protestant project. This project was then ‘ursurped’ and expropriated by Social Democracy and social Catholicism, as a result of which the bourgeois Protestant middle class, the initial reform faction, was alienated from the welfare state venture. The Protestant middle class responded, among other things, with the development of a new ‘Sozialreform’ doctrine, ‘Ordoliberalism’. However, Ordoliberalism – despite the label – was not a simple embracing of the liberal doctrine but contained substantial elements of interventionism with a social reform purpose. Ordoliberalism was concerned with social equality, social harmony, and decent living.

INTRODUCTION

In many respects, the French welfare state resembles the Bismarckian blueprint of a conservative regime type: wage-deducted contributions and wage-related benefits, a fragmentation of social insurance schemes along occupational lines, and the predominance of funds (caisses) managed according to principles of self-administration (gestion par les intéressés, démocratie sociale), with the prominent participation of unions. The French É tat-providence also shares many of the problems that plague the continental welfare state today: runaway costs; adverse labor market effects due to high nonwage labor costs leading to poor job growth, especially in low productivity services; and low employment ratios as a result of generous early retirement schemes. Like its continental counterparts, the French welfare state is also often perceived as being ‘immovable’ and ‘frozen’ because it largely resists any political attempts at reform (but see Palier 2000).

In the comparative literature, the French welfare state has usually been classified as a conservative, continental, Catholic, or Bismarckian regime (Esping-Andersen 1990; Huber et al. 1993; Huber and Stephens 2001; Scharpf and Schmidt 2001; Palier and Martin 2007). However, it sits somewhat uneasily with this classification. In fact, the French Étatprovidence is not particularly conservative, patriarchic, or Catholic when it comes to family policy (Morgan 2002, 2003, Chapter 3, this volume; Talmy 1962), and its strong emphasis on universal social assistance has a much more ‘Beveridgian’ than ‘Bismarckian’ flavor to it (Levy 2000: 312–313).

INTRODUCTION

Most comparativists who study welfare state development agree that religion has played a role in the development of modern social protection systems. The early protagonists of the power resources approach, however, had only stressed the causal impact of Socialist working-class mobilization on modern social policy (see Esping-Andersen and van Kersbergen 1992). In their view, it was the working class and its Socialist organizations that had been the driving force behind the ‘social democratization’ of capitalism via the welfare state. To them, it came as a surprise that both Social Democracy and (social) Catholicism promoted welfare state development. John D. Stephens (1979: 100), one of the leading spokesmen of this approach, put it in prudent terms when he argued that ‘it seemed possible that anti-capitalist aspects of catholic ideology – such as notions of fair wage or prohibitions of usury – as well as the generally positive attitude of the catholic church towards welfare for the poor might encourage government welfare spending.’ Similarly, Schmidt (1980, 1982) asserted that Social Democracy and Christian Democracy were functionally equivalent for welfare state expansion, at least during periods of economic prosperity. Wilensky (1981) argued that the two movements overlapped considerably in ideological terms and that Catholicism indeed constituted an even more important determinant of welfare statism than left power did. Catholic social doctrine called for a correction of the most abhorrent societal effects of the capitalist order. The Catholic principle of subsidiarity, moreover, posited that in the last instance the (nation-) state had a duty to intervene to correct for morally unacceptable market outcomes.

Introduction

Conventional wisdom strongly suggests that federalism is inimical to high levels of social spending. Two arguments are prominent in this context: a veto point thesis and a ‘competition of jurisdictions’ thesis. The veto point thesis is quite straightforward: federal systems have more veto points than unitary systems ceteris paribus. This increases the probability that groups opposed to welfare state expansion can exert some influence in the legislative process. Veto points would then give these groups the opportunity to block or substantially water down redistributive legislation. ‘Competition of jurisdiction’ arguments hold that welfare redistribution is limited in federal systems because those who would pay more than they would gain in a given jurisdiction (high income earners, ‘capital’) can credibly threaten to exit highly redistributive jurisdictions and join those that are less égaliste. At the same time, those who gain more than they would pay (e.g. low income earners) are attracted to regions with higher levels of redistribution and these would therefore develop into ‘welfare magnets’. Thus, a redistributional policy stance is self-defeating in a federal context.

Indeed, many econometric studies of the determinants of welfare state spending have found that federalism exerts a statistically significant, stable and negative influence on social spending. Prominent country cases are Switzerland and the United States, both strongly federalist countries and historically, prominent welfare ‘laggards’ (although since 1980 Switzerland has moved rapidly from laggard to leadership status).