A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. The general term may cover a variety of forms of economic and social organization." The sociologist T.H. Marshall identified the welfare state as a distinctive combination of democracy, welfare, and capitalism.
Modern welfare states include the Nordic countries, such as Iceland, Sweden, Norway, Denmark, and Finland which employ a system known as the Nordic model. The welfare state involves a transfer of funds from the state, to the services provided (i.e. healthcare, education) as well as directly to individuals ("benefits").
The welfare state is funded through redistributionist taxation and is often referred to as a type of "mixed economy". Such taxation usually includes a larger income tax for people with higher incomes, called a progressive tax. This helps to reduce the income gap between the rich and poor.
The German term Sozialstaat ("social state") has been used since 1870 to describe state support programs devised by German Sozialpolitiker ("social politicians") and implemented as part of Bismarck's conservative reforms. The literal English equivalent "social state" never caught on in Anglophone countries, until the Second World War, when Anglican Archbishop William Temple, author of the book Christianity and the Social Order (1942), popularized the concept using the phrase "welfare state", contrasting wartime Britain's welfare state with the "warfare state" of Nazi Germany. Bishop Temple's use of "welfare state" has been connected to Benjamin Disraeli's 1845 novel Sybil: or the Two Nations (i.e., the rich and the poor), which speaks of "the only duty of power, the social welfare of the PEOPLE.'" At the time he wrote Sybil, Disraeli, later Prime Minister, belonged to Young England, a conservative group of youthful Tories who were appalled by what they saw as the Whig indifference to the horrendous conditions of the industrial poor and attempted to kindle among the privileged classes a sense of responsibility toward the less fortunate and a recognition of the dignity of labor that they imagined had characterized England during the Feudal Middle Ages.
The Italian term stato sociale ("social state") reproduces the German term. The Swedish welfare state is called Folkhemmet — literally, "folk home", and goes back to the 1936 compromise between Swedish trade unions and large corporations. Sweden's mixed economy is based on strong unions, a robustly funded system of social security, and universal health care. In Germany, the term Wohlfahrtsstaat, a direct translation of the English "welfare state", is used to describe Sweden's social insurance arrangements. Spanish and many other languages employ an analogous term: estado del bienestar— literally, "state of well-being". In Portuguese, two similar phrases exist: estado do bem-estar social, which means "state of social well-being", and estado de providência— "providing state", denoting the state's mission to ensure the basic well-being of the citizenry. In Brazil, the concept is referred to as previdência social, or "social providence".
Modern model 
Modern welfare programs differed from previous schemes of poverty relief due to their relatively universal coverage. The development of social insurance in Germany under Bismarck was particularly influential. Some schemes were based largely in the development of autonomous, mutualist provision of benefits. Others were founded on state provision. The term was not, however, applied to all states offering social protection. The sociologist T.H. Marshall identified the welfare state as a distinctive combination of democracy, welfare and capitalism. Examples of early welfare states in the modern world are Germany, all of the Nordic countries, the Netherlands, Uruguay and New Zealand and the United Kingdom in the 1930s.
Changed attitudes in reaction to the Great Depression were instrumental in the move to the welfare state in many countries, a harbinger of new times where "cradle-to-grave" services became a reality after the poverty of the Depression. During the Great Depression, it was seen as an alternative "middle way" between communism and capitalism. In the period following the World War II, many countries in Europe moved from partial or selective provision of social services to relatively comprehensive coverage of the population.
The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old-age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare services). Through these provisions, welfare states can affect the distribution of wellbeing and personal autonomy among their citizens, as well as influencing how their citizens consume and how they spend their time.
History of welfare states 
Historian Robert Paxton argues that the welfare state was created primarily by conservatives, and usually opposed by socialists and labor unions because they thought it would distract from their mission. He cites the German welfare state set up by Chancellor Bismarck in the 1880s, and the similar version set up by Count Eduard von Taaffe in the Austro-Hungarian Empire a few years later. The British welfare state originated with the Liberal party of David Lloyd-George around 1910. The French welfare state originated with the Vichy regime in the 1940s. ." Paxton goes on to argue: "All the modern twentieth-century European dictatorships of the right, both fascist and authoritarian, were welfare states…. They all provided medical care, pensions, affordable housing, and mass transport as a matter of course, in order to maintain productivity, national unity, and social peace." Paxton notes that, "The current American conservative agenda of the weak state associated with laissez-fair economic and social arrangements would have been anathema to them, as an extreme perversion of a despised individualistic liberalism (in that term's original sense)." 
Otto von Bismarck, the first Chancellor of Germany, created the modern welfare state by building on a tradition of welfare programs in Prussia and Saxony that began as early as in the 1840s, and by winning the support of business. Bismarck introduced old age pensions, accident insurance and medical care that formed the basis of the modern European welfare state. His paternalistic programs won the support of German industry because its goals were to win the support of the working class for the German Empire and reduce the outflow of immigrants to the United States, where wages were higher but welfare did not exist. Bismarck further won the support of both industry and skilled workers by his high tariff policies, which protected profits and wages from American competition, although they alienated the liberal intellectuals who wanted free trade.
United Kingdom 
The United Kingdom, as a modern welfare state, started to emerge with the Liberal welfare reforms of 1906–1914 under Liberal Prime Minister Herbert Asquith. These included the passing of the Old-Age Pensions Act in 1908, the introduction of free school meals in 1909, the 1909 Labour Exchanges Act, the Development Act 1909, which heralded greater Government intervention in economic development, and the enacting of the National Insurance Act 1911 setting up a national insurance contribution for unemployment and health benefits from work.
In December 1942, the Report of the Inter-Departmental Committee on Social Insurance and Allied Services was published, known commonly as the Beveridge Report after its chairman, Sir William Beveridge, proposing a series of measures to aid those who were in need of help, or in poverty. Beveridge recommended to the government that they should find ways of tackling the five giants, being Want, Disease, Ignorance, Squalor and Idleness. He argued to cure these problems, the government should provide adequate income to people, adequate health care, adequate education, adequate housing and adequate employment. It proposed that 'All people of working age should pay a weekly National Insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired or widowed.'
The basic assumptions of the report were that the National Health Service would provide free health care to all citizens. The Universal Child Benefit was a scheme to give benefits to parents, encouraging people to have children by enabling them to feed and support a family. One theme of the report was the relative cheapness of universal benefits. Beveridge quoted miners' pension schemes as some of the most efficient available, and argued that a state scheme would be cheaper to run than individual friendly societies and private insurance schemes, as well as being cheaper than means-tested government-run schemes for the poor.
The report's recommendations were adopted by the Liberal Party, Conservative Party and then by the Labour Party. Following the Labour election victory in the 1945 general election many of Beveridge's reforms were implemented through a series of Acts of Parliament. On 5 July 1948, the National Insurance Act, National Assistance Act and National Health Service Act came into force, forming the key planks of the modern UK welfare state. The cheapness of what was to be called National Insurance was an argument alongside fairness, and justified a scheme in which the rich paid in and the state paid out to the rich, just as for the poor. In the original scheme, only some benefits called National Assistance were to be paid regardless of contribution. Universal benefits paid to rich and poor such as child benefit were particularly beneficial after the Second World War when the birth rate was low. Universal Child Benefit may have helped drive the baby boom.
Before 1939, most health care had to be paid for through non government organisations – through a vast network of friendly societies, trade unions and other insurance companies which counted the vast majority of the UK working population as members. These friendly societies provided insurance for sickness, unemployment and invalidity, therefore providing people with an income when they were unable to work. Following the implementation of Beveridge's recommendations, institutions run by local councils to provide health services for the uninsured poor, part of the poor law tradition of workhouses, were merged into the new national system. As part of the reforms, the Church of England also closed down its voluntary relief networks and passed the ownership of thousands of church schools, hospitals and other bodies to the state.
Welfare systems continued to develop over the following decades. By the end of the 20th century parts of the welfare system had been restructured, with some provision channelled through non-governmental organizations which became important providers of social services.
United States 
Although the United States was to lag far behind European countries in instituting concrete social welfare policies, the earliest and most comprehensive philosophical justification for the welfare state was produced by an American, the sociologist Lester Frank Ward (1841–1913), whom the historian Henry Steele Commager called "the father of the modern welfare state". Paternalistic reforms, such as those associated with Bismarck, had been strongly opposed by Herbert Spencer and his American disciples, whose laissez-faire theories were quickly adopted by American businessmen. Spencer argued that coddling the poor and unfit would only encourage them to reproduce, obstructing the scientific progress of the human race. Ward challenged Spencer's contention that social phenomena are not amenable to human control. "It is only through the artificial control of natural phenomena that science is made to minister to human needs." he wrote, "and if social laws are really analogous to physical laws, there is no reason why social science should not receive practical application such as have been given to physical science." "The charge of paternalism" wrote Ward:
is chiefly made by the class that enjoys the largest share of government protection. Those who denounce it are those who most frequently and successfully invoke it. Nothing is more obvious today than the signal inability of capital and private enterprise to take care of themselves unaided by the state; and while they are incessantly denouncing "paternalism," by which they mean the claim of the defenseless laborer and artisan to a share in this lavish state protection, they are all the while besieging legislatures for relief from their own incompetency, and "pleading the baby act" through a trained body of lawyers and lobbyists. The dispensing of national pap to this class should rather be called "maternalism," to which a square, open, and dignified paternalism would be infinitely preferable.
Central to Ward's theories was his belief that a universal and comprehensive system of education was necessary if a democratic government was to function successfully. His writings profoundly influenced younger generations of progressive thinkers such as Theodore Roosevelt, Thomas Dewey, and Frances Perkins, among others. By 1918 all the states in the U.S. had passed laws requiring compulsory elementary education. Such laws, however, did not apply equally to whites and blacks. In Southern states such as Mississippi, for example, individual counties were allowed to "opt out" of compulsory education requirements.
The United States would be the only industrialized country that went into the Great Depression with no social insurance policies in place. It was not until 1935 that significant, if conservative by European standards, social insurance policies were finally instituted under Franklin D. Roosevelt's New Deal. In 1938, the Fair Labor Standards Act, limiting the work week to 40 hours and banning child labor for children under 16, was passed over stiff congressional opposition. The price of passage of the New Deal's Social Security and Fair Labor acts was the exclusion of domestic, agricultural, and restaurant workers, who were largely African-American, from social security benefits and labor protections.
In 1996, Massachusetts began a state-funded children's health insurance program that became the model for State Children's Health Insurance Program, sponsored by Senator Edward Kennedy and signed into law in 1997. Now known as CHIP, it provides matching federal funds to states for children's medical care.
Oil countries 
Saudi Arabia, Brunei, Kuwait, Qatar, Bahrain, Oman, and the United Arab Emirates have become welfare states exclusively for their citizens. All foreign nationals, including legal residents and legal long term employees are prohibited from partaking in the benefits of the welfare state.
China traditionally relied on the extended family to provide welfare services. In recent years the one-child policy has made that unrealistic, and new models have emerged since the 1980s. They have been incremental and fragmented in terms of social insurance, privatization, and targeting. In the cities, where the rapid economic development has centered, there are now lines of cleavage, between state sector and non-state sector employees and between labor market insiders and outsiders.
Three worlds of the welfare state 
Esping-Andersen categorised three different types of welfare states in the 1990 book 'The Three Worlds of Welfare Capitalism'. Though increasingly criticised (for a review of the debate on the Three worlds of Welfare Capitalism see Art and Gelissen  and Ferragina and Seeleib-Kaiser), these classifications remain the most commonly used in distinguishing types of modern welfare states, and offer a solid starting point in such analysis. It has been argued that these typologies remain a fundamental heuristic tool for welfare state scholars, even for those who claim that in-depth analysis of a single case is more suited to capture the complexity of different social policy arrangements. Welfare typologies have the function to provide a comparative lens and place even the single case into a comparative perspective (Ferragina and Seeleib-Kaiser 2011).
Esping-Andersen (1990) constructed the welfare regime typology acknowledging the ideational importance and power of the three dominant political movements of the long 20th century in Western Europe and North America, that is Social Democracy, Christian Democracy (conservatism) and Liberalism (Stephens 1979; Korpi 1983; Van Kersbergen 1995; Ferragina and Seeleib-Kaiser 2011; Vrooman 2012).
- The ideal Social-Democratic welfare state is based on the principle of universalism granting access to benefits and services based on citizenship. Such a welfare state is said to provide a relatively high degree of autonomy, limiting the reliance of family and market (Ferragina and Seeleib-Kaiser 2011). In this context, social policies are perceived as 'politics against the market' (Esping-Andersen 1985).
- Christian-democratic welfare states are based on the principle of subsidiarity and the dominance of social insurance schemes, offering a medium level of decommodification and a high degree of social stratification.
- The liberal regime is based on the notion of market dominance and private provision; ideally, the state only interferes to ameliorate poverty and provide for basic needs, largely on a means-tested basis. Hence, the decommodification potential of state benefits is assumed to be low and social stratification high (Ferragina and Seeleib-Kaiser 2011).
Based on the decommodification index Esping-Andersen divided into the following regimes 18 OECD countries (Esping-Andersen 1990: 71):
- Social Democratic: Denmark, Finland, the Netherlands, Norway and Sweden
- Christian Democratic: Austria, Belgium, France, Germany, Spain and Italy;
- Liberal: Australia, Canada, Japan, Switzerland and the US;
- Not clearly classified: Ireland, New Zealand and the United Kingdom.
But, since the building of the decommodification index is limited, these typology could be also criticized. Nevertheless, these 18 countries can be placed on a continuum from the most purely social-democratic, Sweden, to the most liberal country, the United States (Ferragina and Seeleib-Kaiser 2011).
Rothstein argues that in the first model, the state is primarily concerned with directing the resources to "the people most in need". This requires a tight bureaucratic control over the people concerned. Under the second model, the state distributes welfare with as little bureaucratic interference as possible, to all people who fulfill easily established criteria (e.g. having children, receiving medical treatment, etc.). This requires high taxation. This model was constructed by the Scandinavian ministers Karl Kristian Steincke and Gustav Möller in the 30s and is dominant in Scandinavia. The third model is similar to the one found in Britain (Beveridge model) and is based more on citizenship and a certain level of welfare 'as a right', which may then be modified according to needs.
Effects on poverty 
Empirical evidence suggests that taxes and transfers considerably reduce poverty in most countries, whose welfare states commonly constitute at least a fifth of GDP. Most "welfare states" have considerably lower poverty rates than they had before the implementation of welfare programs.
|Country||Absolute poverty rate (1960–1991)
(threshold set at 40% of U.S. median household income)
|Relative poverty rate
Welfare expenditure 
There is very little correlation between economic performance and welfare expenditure.
The table does not show the effect of expenditure on income inequalities, and does not encompass some other forms of welfare provision (such as occupational welfare).
(% of GDP)
(% of GDP)
|GDP per capita (PPP US$)|
|Republic of Ireland||13.8||18.5||$41,700|
Early conservatives, under the influence of Malthus, opposed every form of social insurance "root and branch", arguing, as U. C. Berkeley economist Brad DeLong put it: "make the poor richer, and they would become more fertile. As a result, farm sizes would drop (as land was divided among ever more children), labor productivity would fall, and the poor would become even poorer. Social insurance was not just pointless; it was counterproductive." Malthus, a clergyman, for whom birth control was an abomination, believed that the poor needed to learn the hard way to practice frugality, self-control, and chastity. Traditional conservatives also protested that the effect of social insurance would be to weaken private charity and loosen traditional social bonds of family, friends, religious, and non-governmental welfare organisations.
Karl Marx, on the other hand, famously warned against the paternalistic reforms advanced by liberal democrats in his 1850 Address of the Central Committee to the Communist League, arguing that measures designed to increase wages, improve working conditions, and provide welfare payments would be used to dissuade the working class away from the revolutionary consciousness that he believed was necessary to achieve a socialist economy.
Modern opponents of the welfare state have expressed apprehension about the creation of a large, possibly self-interested bureaucracy required to administer it and the tax burden on the wealthier citizens that this entailed.
See also 
- Anti-socialist laws
- Constitutional economics
- Corporate welfare
- Fifth power
- Free rider problem
- Hidden Welfare State
- Mixed economy
- Social democracy
- Nanny state
- Social protection
- Social security
- Social stratification
- Social welfare provision
- Social policy
- State Socialism (Germany)
- Unintended consequences
- Welfare capitalism
- Welfare reform
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