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About this book

A state-of-the-art assessment of welfare provision, policy and reform at national and at EU level which spans the whole of Europe - East, West and Central. Uniquely broad-ranging in scope, and covering the latest research findings and theoretical debates, it provides a genuinely comparative overview text for students of twenty-first-century Europe.

Table of Contents

Introduction

Abstract
The welfare state is deeply embedded and institutionally entrenched. Yet it is at the same time under constant and seemingly ever growing pressure to justify its very existence. The consequences of the credit crunch, the global finance crisis and the ensuing period of low or no growth in which we are still mired have sharpened this paradox, posing with renewed force the question of the viability and sustainability of the welfare state in Europe. That question — our core concern in this volume — is, we contend, an urgent priority for social and political analysts as well as for politicians and policy-makers more generally. We believe that making sense of it requires a fundamental rethinking of the conventional wisdom about the political economy of European welfare capitalism. This is as true, we argue, for the social systems of southern, eastern and east-central Europe as it is for the much-studied welfare states of northern and western Europe. We argue, in effect, for the development of a new political economy of European welfare capitalism — a political economy grounded in the analysis of the past yet sensitive to the contingency of current trends, a political economy which shows the continued centrality of the welfare state to Europe’s social, political and, above all, economic futures.
Colin Hay, Daniel Wincott

Chapter 1. European Welfare Capitalism in Good Times and Bad

Abstract
In 2005 the prospects for the global economy seemed bright. Over the previous decade and a half, banks and financial institutions had made increasingly large profits from a fiendishly complex system of credit, debt and risk — and the continued growth of the world’s leading economies seemed guaranteed. But by 2008 financial markets were in turmoil and the international banking system itself seemed to be on the brink of collapse. Indeed, already in 2007 it was clear that a bubble in the US housing market had burst and that this was likely to have global ramifications. The expansion of ‘sub-prime’ mortgage lending had helped to inflate house prices, and these loans had become tightly woven into a complex fabric of financial instruments and deals. This fabric unravelled in 2008, with the value of key financial assets collapsing at precisely the same time as the liabilities of financial institutions grew. But, unable to calculate the extent of their losses, they sought to limit (and, failing that, to disguise) their exposure. The strategies they adopted to do so dramatically worsened the overall problem. The mutual trust essential for the operation of these markets evaporated, as the very viability of the global banking system came into question for the first time since the 1930s. The usually smooth transactions that make up the profitable routines of the sector slowed down and seized up. To prevent the ruin of banks and other financial institutions deemed ‘too big to fail’ — and consequently the possibility of the annihilation of the entire banking system — governments across the western world intervened on a massive scale supplying liquidity to ease the workings of the financial machine.
Colin Hay, Daniel Wincott

Chapter 2. Varieties of European Welfare Capitalism

Abstract
Set in any long-term historical perspective, it is clear that the roles and responsibilities of western European states have been transformed with the development in each of welfare states in the century or so after 1880. While particular countries took the lead during specific historical periods, states came to share a common broad developmental trajectory in this overall historical process that encompassed ‘an explicit redefinition of what the state is all about’ (Esping-Andersen 1999: 34). In such a contest it is hardly surprising that the concept of convergence has become such a leitmotif of welfare state research (Wilensky and Lebeaux 1958; Wilensky 1975, 1976), whether seen as the product of more or less functional adaptation to common pressures or as a product of diffusion of ideas and ideals between countries.
Colin Hay, Daniel Wincott

Chapter 3. Globalisation, Europeanisation and the Welfare State

Abstract
In this chapter we present a detailed assessment of the extent to which exogenous pressures — principally globalisation and European economic integration — might be seen to create distinct pressures for welfare reform and retrenchment in contemporary Europe. We review the theoretical arguments that posit a connection between the globalisation of trade, finance and foreign direct investment on the one hand and the need for welfare reform on the other, before examining in empirical detail the claim that European economies have been globalised and that this has served to reward (in terms of economic performance) welfare residualism. We present a similar analysis of the process of European economic integration, arguing on the basis of the empirical evidence that European integration is a rather more significant factor in the process of contemporary welfare reform in contemporary Europe than globalisation, but that neither can account for observed welfare retrenchment. This suggests the significance of a range of endogenous factors, considered in Chapter 4.
Colin Hay, Daniel Wincott

Chapter 4. Competitiveness and the Welfare State

Abstract
In this chapter we turn directly and in some detail to a complex set of issues present but largely undeveloped in the preceding chapters, namely the relationship between welfare provision and economic competitiveness. The welfare state — in the advanced liberal democracies in general and in Europe in particular — is increasingly judged in economic terms. For, in an era of economic interdependence 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 powerful hold of such assumptions among policy-makers it is unremarkable that social policy goals are often subordinated to perceived economic imperatives — with, for instance, the reform of benefits and entitlements now routinely justified in terms of the labour-market incentives they generate. The more general privileging of economic considerations in social policy and labour-market reform is nowhere more clearly enunciated than in the so-called Lisbon agenda for the modernisation of the ‘European social model’. This ostensibly commits EU member states to a programme of reforms designed to ‘make Europe, by 2010, the most competitive and the most dynamic knowledge-based economy in the world’ (Presidency Conclusions, Lisbon European Council, 23–4 March 2000).
Colin Hay, Daniel Wincott

Chapter 5. European Integration and Welfare Capitalism

Abstract
That the European Union is — or should be — more than an economic entity has been a recurring ideal in the history of integration: aspirations for a ‘social Europe’ have long been articulated within the integration process, while the protection of the ‘European Social Model’ (ESM) has been an important theme over the past twenty years. For much of this period, the Commission and member states have also poured huge effort into benchmarking social policies through the ‘open method of coordination’ (OMC) and the Lisbon process — an effort continued through the ‘Europe 2020’ agenda. Although employment issues lie at the core of this ‘social dimension’, European integration also touches on other aspects of social and welfare policy, ranging over areas including poverty alleviation, education and health care. It also implicates more abstract issues like solidarity and equality. In their own terms they may be effective, but these processes, policies and engagements have not been the main influences on social provision in Europe.
Colin Hay, Daniel Wincott

Chapter 6. Convergence and Divergence in European Welfare Capitalism

Abstract
In this chapter we evaluate critically the literature that suggests that welfare regimes across Europe (and more generally) are converging, whether on a ‘best practice’ Anglo-US model of welfare residualism or on something altogether more encompassing and inclusive. We argue that such convergence theses tend to be characterised by the rather casual appeal to the concept of convergence — in which convergence and movement in a common trajectory are typically conflated — and by a tendency to ignore the ‘path dependent’ character of processes of welfare reform. Due recognition of such processes and greater conceptual precision, we suggest, may serve to diminish the expectation that common pressures should produce convergent outcomes. Indeed, as we show, there is plenty of evidence of path dependent institutions reinforcing diversity in welfare trajectories even in the face of ostensibly common challenges. We examine the means by which different welfare regimes respond to such common pressures for reform as they face. In the process, we consider the contribution to our understanding of convergence, divergence and diversity made by so called neo-institutionalist scholars. Finally, we consider a range of principally quantitative indices of welfare convergence, differentiating between aggregate indices of welfare effort and more disaggregated measures of welfare generosity and assessing, in conclusion, the developmental trajectories and viability of distinct welfare regime clusters today.
Colin Hay, Daniel Wincott

Chapter 7. European Welfare Capitalism in Hard Times

Abstract
If there a single core theme that has run throughout this volume it is the centrality of political economy — the attempt to capture the interaction between political and economic factors — to our understanding of welfare trajectories in Europe, as elsewhere. And if there is a central theme that has run through the wider literature on welfare reform in recent years it is surely the extent of the time-lag effects involved in translating political economic change into substantive welfare outcomes (see especially Korpi 2003; Pierson 1994, 1996, 2001, 2004).
Colin Hay, Daniel Wincott
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