People have accidents. They get old. They eat too much. They have bad luck. And sooner or later, something will be fatal. It would be a better world if such things did not happen, but they do. There is no use arguing about it. What is worth arguing about is whether it makes for a better world when people have to pay for other people's misfortunes and mistakes rather than (or as well as) their own.

The social-welfare world of the poor has changed considerably since the turn of the century. It is not difficult to find dramatic evidence of progress. Most obviously, there has been a substantial reduction in the percentage of Americans who are poor. Even in 1929, about 40 percent of the population still lived in poverty. The corresponding figure for 1993 was 15.1 percent. The poor have also enjoyed notable material and physical gains in terms of income, diet, health, and housing conditions.

The history of the welfare state is not only or even primarily a story of men and measures but also one of concepts and social ideals. Over the last hundred and twenty years or so, the body of policies, rules, and practices which we collectively term the welfare state has become the most prominent feature of politics and state activity in every developed country. This reflects not only institutional and procedural pressures on the political process during this period, but also the gradual permeation (to use a term employed by one prominent advocate of the welfare state) of all parties and arguments by a particular conception of welfare which has determined and limited the range and terms of debate. Both theoretical debate and concrete measures reflect pervasive assumptions and generalized arguments about the nature and content of collective and individual welfare, their preconditions, and their consequences.

In considering the development and course of the American welfare state, there are some places which are better starting points than others. One such place is the State Street corridor, the series of high-rise Chicago Housing Authority public-housing projects which loom over Lake Michigan. Most Chicagoans, like their counterparts in other cities, have become inured to conditions there: a murder rate far in excess of that of the city as a whole, a society of unemployed single mothers, deferred maintenance that makes stairwells, plazas, and elevators places of danger. Author Alex Kotlowitz decribes the situation of a mother of two boys in Chicago's Henry Horner Homes: “She lived in daily fear that something might happen to her young ones.… Already that year, 57 children had been killed in the city, five in the Horner area, including two, aged eight and six, who died from smoke inhalation when firefighters had to climb the 14 stories to their apartment. Both of the building's elevators were broken.”

The fiftieth anniversary of the death of President Franklin Delano Roosevelt arrived only months after the 1994 U.S. elections brought to power conservative Republican congressional majorities determined to reverse key legacies of Roosevelt's New Deal. At this juncture of special poignancy for many of those assembled at the “Little White House” in Warm Springs, Georgia on April 12, 1995, President Bill Clinton offered remarks on “Remembering Franklin D. Roosevelt.” “Like our greatest presidents,” Clinton eulogized, Roosevelt “showed us how to be a nation in time of great stress” and “taught us again and again that our government could be an instrument of democratic destiny.”

While in America most people think of “welfare” as means-tested programs such as Aid to Families with Dependent Children, in reality in the United States and other affluent democracies the heart of the welfare state is social insurance programs, such as health insurance, old-age or retirement pensions, and unemployment insurance. They are insurance programs in the sense that they protect against common risks of a loss of income if and/or when certain events come to pass (illness, old-age or retirement, unemployment); they are “social” because unlike market insurance they are not run on a sound actuarial basis, the premiums are not voluntarily incurred but compulsory, and there is very limited choice or flexibility concerning the type of policy one can purchase. Why have social insurance rather than market insurance? In this essay, I take up this question with regard to old-age or retirement pensions, which at present absorb around 9 percent of the gross domestic product (GDP) and 25 percent of government spending of the affluent industrial countries comprising the Organization for Economic Cooperation and Development (OECD). My aim is to show that old-age or retirement social insurance (henceforth “SI”) is worse in virtually every relevant normative respect than its alternative, some form of market or private pensions. By relevant normative respect, I mean those values or principles which are used by contemporary political philosophers in their discussions and justifications of welfare-state policies, and which are applicable to assessments of different systems of old-age or retirement pensions. (Although they are applicable, almost no contemporary political philosophers have in fact applied them—an amazing state of affairs which I hope to remedy here.)

The possible privatization of Social Security has long been a matter of theoretical interest to those who ideologically favor free markets and maximum personal autonomy. But in the spirit of an age when the Berlin Wall fell and the totalitarian Soviet empire collapsed through a peaceful revolution from within, the politics of Social Security has been remade in recent years in a similarly dramatic fashion.

To commence any answer to the question “Can democracy promote the general welfare?” requires attention to the meaning of “general welfare.” If this term is drained of all significance by being defined as “whatever the political decision process determines it to be,” then there is no content to the question. The meaning of the term can be restored only by classifying possible outcomes of democratic political processes into two sets – those that are general in application over all citizens and those that are discriminatory.

In his 1993 health-care reform proposal, Bill Clinton offered health care as a civil right. If his proposal had been accepted, all Americans would have been guaranteed a basic package of health care. At the same time, they would have been forbidden to provide or purchase better basic health care, as a cost of participating in a national system to which they were compelled to contribute. A welfare entitlement would have been created and an egalitarian ethos enforced. This essay will address why such egalitarian proposals are morally unjustifiable, both in terms of the establishment of a uniform health-care welfare right, and in terms of the egalitarian constraints these proposals impose against the use of private resources in the purchase of better-quality basic health care, not to mention luxury care.

T. H. Marshall, a British sociologist, gave a series of lectures in 1949 under the title “Citizenship and Social Class.” To many American intellectuals, his analysis still offers a persuasive account of the origins of the welfare state in the West. But Marshall spoke in the early postwar era, when the case for expanded social benefits seemed unassailable. Today's politics are more conservative. In every Western country the welfare state is under review. Yet Marshall's conception can still help define the issues in social policy and the way forward.

Motivated by a deep sense that injustice and inequality are wrong, liberals and reformers in the Western political tradition have focused their energies on policies and programs which seek inclusion: extending the suffrage to those without property; seeking to treat women the same as men, and blacks the same as whites; trying to ensure that as few as possible are excluded from economic opportunity due to lack of resources. Under current conditions, such demands for inclusion take two primary forms, especially in the United States. One is a commitment to using the state to equalize the life chances of individuals. The other is a call for treating groups which have experienced discrimination with full respect. The former leads to the welfare state, while the latter is produced by, and in turn produces, what is commonly called identity politics, the politics of recognition, or the politics of presence.

Political theory has a good deal to say both for and against the establishment of the modern welfare state. As one might expect, most of that discussion is directed toward the expanded set of basic rights that the state confers on its members. In its most canonical form, the welfare state represents a switch in vision from the regime of negative rights in the nineteenth century to the regime of positive rights so much in vogue today. Negative rights—an inexact and somewhat misleading term— stress the right of an individual to be free from certain kinds of external interventions. These rights arrange themselves on two basic lists. The first list generates a set of civil capacities that all individuals enjoy over their own labor and property: the right to contract, to make wills, to sue and be sued, to give evidence, and the like. The second list, from which the term “negative rights” derives, protects all persons from interference, either by force or by fraud, in the conduct of their own affairs. The resulting set of rights is short, snappy, and knowable; it is internally consistent; and it prepares the stage for productive human behavior (exchange) while limiting destructive forms of behavior (theft). Even though it is not couched in explicit utilitarian language, it can surely be defended on general functional grounds.