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Globalization and European Welfare States: Challenges and Change [Robert Sykes, D. Bouget, Pauline M. Prior, Jo Campling, Bruno Palier] on leondumoulin.nl
Table of contents

The American version of the welfare state was always weaker than its European counterparts and the potential strength of labour devolved to the state level Hall and Soskice, This act let American states determine the legality of the union closed shop. As a result, closed shops were forbidden across large swathes of the South, the Plains and the Mountain states, paving the way for the shifting geography of manufacturing that would undermine labour Davidson, Moreover, the American labour movement was never a political or social movement in the European sense; more an interest group to which individuals attached themselves with a view to increasing wages but lacking a broader social vision.

This gave the USA not one but 50 welfare states. Western European countries have been more resistant to the neo-liberal nostrums. The weakest link is the UK, but even here there is more variation than captured in references to the Anglo-American forms of neo-liberalism. What the UK did share with the USA in the wake of the crisis was a relative competitive weakness in the global economy.

The shift to the money pole, though, would also allow a national revival — albeit one that was geographically unbalanced — based on the fortunes of the City of London. France and Germany have been much more resistant to the erosion of worker rights and privatisation and, in Germany at least, rule by the stock market.

However, this balance and the historic strength of the labour movement is under attack in Europe as well. The EU itself embodies many contradictions around labour. At the same time, numerous nations within Europe have tried to weaken labour rights. Thus, Macron in France was elected on the promise to reform labour law and his administration has decentralised collective bargaining and introduced measures allowing firms to close plants more easily.

In Japan, the productive pole of capital continued to prevail long into the s, protected by a distinct ensemble of institutions that insulate industry from short-termism and erosion by money capital in the interest of rent-seeking Dore, As a result, there has been a greater emphasis on governance through inter-firm networks than through the market.

Revenue, therefore, tended to circulate among the member firms, available for reinvestment and salaries and wages. The firm, relatively free from stock market pressure and able to adopt a longer term view, could invest in innovation, the fruits of which were shared with labour. As Ronald Dore argues, this system is breaking down in Japan, although the country remains a much more equal society. Like elsewhere, Dore argues that this model is breaking down in Japan — and that the weakness of the labour movement is a significant reason for the undermining of the Japanese model.

Recent changes in the state and its various forms of retreat have profound effects on specific places and populations.

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These include shifts in capacity and policy orientation that leave populations bereft of needed public services, increased inequality across geographic areas and sociodemographic groups, and political effects such as the growth of right-wing populism. Here we assess these and other impacts.

Changes in the scale and scope of the national state have often directed and limited the fiscal autonomy of lower scales of the state Kim and Warner, ; Peck, In many countries this has resulted in attempted reorientation of the state away from social welfare functions and presented a challenge to national redistributive policies. This shift away from redistribution is both intensified and enabled by the rise of the austerity or retrenchment policies across many European countries and in the USA.

The use of these policies has a long history, which predates the Great Recession, but the global financial crisis created a newer consensus among the financial and political elite around budgetary contraction. Austerity budget cuts were imposed upon some countries such as Greece, Italy and Spain by international financial institutions; but were actively pursued by other countries, such as Ireland, the UK and the USA, in a bid to reassure financial markets of the stability and basic strength of these economies Clifton et al.

Many argue that this is both a budgetary and a political project Jessop, ; Peck, ; Pike et al. Steinebach et al. Gray and Barford show that in addition to cutting redistributive programmes and services, some countries have also cut economic development and tax collection budgets, affecting the traditional capacity of the state to stimulate the economy and collect revenue. State capacity also has been compromised by generations of outsourcing, and a common impact of the Great Recession was to intensify the trend towards outsourcing public services Peck, The privatisation of public services has a long history in many countries, including the USA and UK, where neo-liberal solutions are less contested, but it is also becoming well established even in paradigmatic welfare states, such as Sweden.

As reductions in the capacity of the national and local state can be a by-product of outsourcing, the loss of capacity may increase in velocity in times of austerity. Failures in private sector provision of public services are increasingly common, as successful bids for contracts are often low cost — but come with a high price of reduced standards. The restructured public sector itself, reflecting the austerity budget cuts, often lacks the capacity for oversight and scrutiny of their private sector contractors.

For example, England and Wales closed its Audit Commission in , which was the public body that monitored value for money in public contracting. The Commission was largely replaced by a private sector regime of audit firms with a much reduced audit scope, leaving many areas of local public services operating without effective oversight Ellwood and Garcia-Lacalle, Thus, the work of the Audit Commission to oversee public-sector outsourcing was itself outsourced to the private sector. In the last decade, the UK has experienced numerous scandals with the private provision of public services from global corporations such as G4S, Serco, Capita and Carillion — with issues spanning poor value for spending, human rights abuses, non-delivery of services, collapse and fraud.

This reinforces Steinebach et al. Yet, despite its well-known problems, outsourcing remains an important and ubiquitous mechanism for providing public services indicating that potential declines in state capacity and the quality of service provision are likely to extend into the future. While reduced state capacity along with deteriorating public services is a central impact another important effect is distributional.

Cuts in public services, welfare and public sector employment may be pushed down to the local state where the effects are especially uneven — spatially and demographically Lobao and Adua, The uneven geography of state change has long been noted. For example, within the UK, Beatty and Fothergill , examining changes in welfare benefits, find that a key effect of welfare reform is to widen the gap in prosperity between the best and worst local economies across the country.

Similarly, Kitson et al. They find that the effects of austerity cuts are unevenly concentrated amongst regions and populations that are most dependent on government spending and public sector employment. Localities with the highest unemployment also have relatively high concentrations of public sector jobs and thus are particularly exposed to reductions in job opportunities in the public sector.

Thus, the poor recovery from the recession has meant that the largest negative effects have been felt in the economically weakest regions. State change and the resulting austerity policies also have been shown to have uneven demographic effects, where some social groups bear the costs more than others. Austerity policies have taken similar form in different countries of tightened eligibility requirements for state benefits, private provision of some benefits areas, lowered benefit rates — outright or by capping annual increases below the rate of inflation — and removal of some benefits altogether.

Other common austerity measures include declining social protection and reduced investment in health, education, housing, care and community development services. The social consequences of state change and resulting austerity policies have exacerbated existing gender and racial inequalities. Many scholars show that women are more likely to depend on public services, work in public sector jobs and need state benefits.

Panels and abstracts

MacLeavy highlights how cutbacks in state spending present a particular challenge to the financial security and autonomy of women in Britain, who are subject both to large benefit cuts and the changes to public services. In Ireland, Keane et al. The effects of marginalisation from changes in the welfare state are also bound up with race and it is often the extent of inter-sectionality between race, gender and class which shapes the size of the impact.

Many researchers examine the extent to which race, class and gender reinforce disadvantage in benefits, income and public services under a restructured welfare regime.

Crisis? What Crisis? The Future of the Welfare State - Ministry of Social Development

In the USA, changes to the benefit system, together with severe cutbacks in the public sector workforce, have a disproportionate effect on women, and particularly ethnic minority women who rely more on state benefits and comprise a larger share of the public sector workforce Christensen, Thus, many low-income minority women have experienced increased financial and social precarity.

Debates around race and changes in the welfare state go beyond the effects of cuts to spending on benefits and public services. Many scholars of the US political economy trace the roots of contemporary urban fiscal crisis to longer histories of persistent racial and class inequality, discrimination and deindustrialisation. For example, Hohle argues that due in part to the history of local struggles over race, the welfare state in the USA was displaced and rescaled upward from the state to the national level during the Keynesian period. Black residential clustering and spatial isolation are powerful predictors of foreclosures across USA Rugh and Massey, It has been argued that the financial crisis itself was a highly racialised process linked to histories of housing segregation and discrimination Wyly et al, Dymski et al.

Thus, race becomes an important lens through which to examine the shrinking state, the rise of neo-liberalism, and the fading of redistributive politics. Other impacts of changes to the redistributional state reflect the power, control and the nature of democracy. A number of scholars have pointed to the shift in power away from democratic control and public accountability under austerity policies Clifton et al.

Clifton et al. They highlight the constant tension between the ability of these institutions to demand austerity policies in return for financial aid versus the sense of imposition, lack of local autonomy and frustration of the local democratic process. The crisis in legitimacy and its urban nature is also illustrated in other cases. Although UK cities and regions cannot go through a legal process of bankruptcy, in , Northamptonshire County Council became the first local government in the contemporary era of austerity to issue a Section notice — which stops all spending at the local scale, except for statutory spending required by the national government — effectively going bankrupt.

The national government played a large role in this — both reducing grant support and capping council tax rises Gray and Barford, This in effect, replaces by national fiat, the complicated and contested nature of local spending priorities at the scale of local government, displacing local democratic processes with rule-based decisions limiting spending to the most basic level.

Many link globalisation and the uneven nature of the economic recovery to explain popular resentment and the legitimation crisis of the state: here, the failure of successive neo-liberal projects to deliver prosperity and the fading of the redistributive functions of the state play an important role Essletzbichler et al.

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Research on the rise of contemporary populism, outside of political science, is still dominated by economic explanations Gordon, While studies analysing the importance of regional GDP and regional unemployment rates as indicators of regional disparity are common, few scrutinise indicators of the changing functions of the state.

An exception is the study by Essletzbichler et al. The authors examine the interaction between the supply of and demand for public services and welfare benefits and their effects on the populist right-wing vote. They find that, along with migration, higher losses in benefits had one of the largest positive effects on the regional vote for Brexit. In summary, places and populations have been profoundly affected by the impacts of state change. The consequences range from growing economic hardships and socio-spatial inequalities to the more recent turn towards right-wing populism.

First, a more holistic understanding of the meaning and significance of recent changes in the state is needed to move research forward. As we show, studies addressing state-retreat are fragmented across different bodies of literature. While there is often empirical overlap, a unifying theoretical umbrella is yet to emerge, particularly as applied to the actions and impacts of the subnational state.

While radical political economy has long offered a base for such theorising e. Jessop, , it has only been integrated selectively into empirical accounts of state-retreat, and its insights are in continual need for updating as the path of contemporary capitalism becomes more convoluted. Second, new sources of data are needed to improve the current evidence base. Drawing any firm conclusions about state change is inherently limited by the lack of systematic, quality data, especially when applied to the subnational state.

The History of the Welfare State

As Gray and Barford note, the problem ranges from simple bureaucratic differences in how local government data are collected to potentially deliberate political efforts to obscure hardship and inequality generated by retrenchment and austerity. This makes it difficult to assess both trends and causal questions about state-retreat, including its geographic and political foundations. Bruch and White draw from original longitudinal data on US states to assess changes in social programmes; in contrast to assumptions about widespread spending cuts, they find cutbacks were largely confined to cash-assistance welfare, while other programmatic areas have changed little or even expanded.

In the case of the UK, Gray and Barford utilise a new series of data on local governments to identify systematic trends. They find that across-the-board national cuts in spending have geographically uneven effects, falling most heavily on local areas whose populations are more economically disadvantaged.

Nation-states are characterised by varying degrees of uneven development and historical paths of devolution which fragment the state as an institution and create divergence among local states. Gray and Barford , for example, note how the Scottish and Welsh national assemblies have been more successful in buffering local governments from central government cuts. Empirical accounts are needed that are sensitive to the nuances of state change and how local and regional political economic context can modify the degree of state retreat and its impacts.

In the case of the housing sector in the UK, for example, Murie explains that a complex pattern of change has emerged where there is a smaller but still significant degree of public sector involvement and an expanded voluntary sector involvement, with the result that the housing market remains relatively decommodified.

Finally, the forces that might counteract state-retreat need greater scrutiny. At present, there is much to be pessimistic about. In the USA, the labour movement has been in protracted decline and the promise of civil society long eroded. Yet, the nation is large and there are points of resistance such as among some local governments Kim and Warner, and states Bruch and White, There are also some glimmers of hope in the success of the Fight for 15 the movement for a 15 dollar-an-hour or living wage, which has been adopted by states, such as New York.

In the EU more enlightened governing elites and stronger unions still offer a broader geographic band of resistance.