The Future of the Welfare State. Vol. I

The welfare state is a form of economy with a human face. It is based upon the symbioses of a market economy and a socially acitve state. The two can survive only if they are compatible. That perhaps is the basic problem of the welfare state.

The welfare state as we know it in most western European nations is still wrestling with the consequences of the recession. Macro-economic data shows that nations with very different shares of government expenditure, such as Switzerland, Sweden and Norway and to a certain extent the United States, are able to keep a reasonable level of full employment. Why? Is it due to the demographic thrust, is it the sectorial distribution of economic activities, the lack of wisdom in wage negotiations, that makes welfare states fail?

The seventies and eighties saw in the first place the collapse of economic growth. There is no doubt that the welfare state did play at least part of its role as an economic stabiliser. In the thirties unemployment led immediately to poverty and widespread poverty deepened the depression. In the seventies incomes did not decrease so much and economic activity did not fall to such an alarming depth as during the thirties.

The Conference from which these papers were taken has left a lot of questions, to which there are no simple answers. Western Europe is not yet one economy. This might be one reason for our relative stagnation. At the same time Europe is a laboratory where different forms of social policies can be experienced.