Transformations of the Welfare State: Small States, Big Lessons

Transformations of the Welfare State gives a new twist to the longstanding debate on the impact of economic globalization on the welfare state. The authors focus on several small, advanced OECD economies in order to assess whether (and how) the welfare state will be able to compete under conditions of an increasingly integrated world economy.

Small states can be seen as an 'early warning system' for general trends, because of their dependence on world markets and vulnerability to competitive pressures. The book's theoretical part innovatively integrates the literature on the political economy of small states with more recent research on the impact of globalization on social policy to generate a set of ideal-typical policy scenarios. In the main body of the book, the authors systematically test these scenarios against the experience of four countries: Austria, Denmark, New Zealand, and Switzerland.

The comparative, in-depth analysis of reform trajectories since the 1970s in four key policy areas; pensions, labor market policy, health care, and family policy provides, according to the authors, substantial evidence of a new convergence in welfare state patterns. They go on to argue that this amounts to a fundamental transformation of the welfare state from the old Keynesian welfare state positioned 'against the market' to a new set of supply-side policies 'with' and 'for' the market. Yet one of the big lessons to be learned from this timely study is that the transformation does not match the doomsday scenario predicted by neo-classical economists in the 1990s. There is no evidence of a 'race to the bottom' of social expenditure and standards of social protection, nor of a convergence towards a 'liberal' social policy model. Looking to the possible future of the welfare state in an era newly marked by profound uncertainty, the authors sound an optimistic note for states of any size.