Too Important to Leave to the Economists? The Political Economy of Welfare Retrenchment

Abstract

The future of the welfare state in advanced liberal democracies is increasingly judged in economic terms. For, in an era of economic globalisation and heightened competition between economies, it is invariably suggested that the welfare state must prove its value in an exhaustive competitive audit if it is not to reveal itself an indulgent luxury and an unsustainable burden on competitiveness. Given the influence of such assumptions among policy-makers, it is unremarkable that social policy goals are increasingly subordinated to perceived economic imperatives. The critical dissection of the prevailing orthodox on the competitive-corrosive qualities of the welfare state in an era of (supposed) globalisation and welfare retrenchment is, then, a most urgent task for social policy analysts. In this paper I provide a review of the most recent comparative political economy of globalisation and regionalisation. This challenges, quite fundamentally, the view that globalisation is the proximate cause of welfare retrenchment in OECD countries and that high levels of welfare expenditure are incompatible with an open and competitive economy.