• The European Welfare Models: Changes, Prospects and Strategies

  • By Stefan Sjöberg | 27 May 09
  • This is the title of a Transform! workshop to beheld in Stockholm on June 13-14. Its aim is to contribute to the analysis of the changes in European welfare states, both in terms of empirical reports and theoretical analysis, that may point to a progressive strategy beyond the welfare state. At the empirical level, we seek information on what occurred in the last 15-20 years, as far as basic features and characteristics of different welfare states are concerned. The focus, however, will be on the theoretical analysis of these processes, as well as the bases for a strategy aiming beyond the achievements of the universal welfare state.

    An important cross-border factor contributing to the way in which welfare states have changed may be termed the “negative integration” of Europe. This is meant to indicate the pressure being put on the extant European social systems by neoliberal globalisation and market-led European integration. It is a negative integration resulting in the dissolving of nation-based social systems, without being replaced by European welfare systems (for discussions, see Transform 1/2007).

    What have been the social effects of these processes on equality, gender relations, public ownership and so on? Is it correct to say that we are moving toward one European social model? What are the basic features of such a model? Is it possible also to identify elements of a process of “positive integration” of Europe? What are the prospects for alternative linkages between national and European welfare policies? How can the struggle over the welfare state today best be incorporated into a strategy aimed at strengthening broad and progressive social and political alliances, even pointing beyond the universal welfare state? What basic elements of a new radical subjectivity – a new hegemonic force –, directed to transforming the capitalist mode of production and regulation, are possible to identify? These are crucial questions that the workshops’ papers and discussions will address.

    A point of departure for the discussions would be the categorisation of “welfare regimes” elaborated by Gösta Esping-Andersen (1990). In his famous categorisation, expounding Titmuss’s earlier work (1974), three different welfare regimes were identified; a general/universal, a selective/marginal, and a corporatist model. In his study of “The Three Worlds of Welfare Capitalism”, Esping-Andersen gives examples of the “continental” models by citing France, Italy and Germany (in a tradition going back to Bismarck), and of the marginal by citing the USA. The corporatist (also called the conservative) model, with traditional family values, is tied historically to the church. The state is strong in this welfare system, but normally does not intervene as long as the family can provide the care needed. In the marginal (also known as the “Anglo-Saxon”, “liberal”) model, social security is selective and low-income beneficiaries receive low-level treatment. The state intervenes in a limited way in the market mechanisms, and the model has (especially compared to the universal model) a low degree of redistribution among the population.

    It is of great importance empirically and theoretically to analyse how these different models changed in the last decades. This is the premise of the Stockholm workshop.

    The Nordic welfare models will be a specific focus. They are of special interest since they express the balance of class interests in a society with a strong social-democratic labour movement. They can be regarded as the most progressive social models resulting from social-democratic power. The Swedish welfare state, with the most egalitarian social structures in the Western world, as regards, for example, class and gender, was the most famous example of what Esping-Andersen called the Nordic or the social-democratic Universal Welfare Regime. Like other welfare models, it has changed in many ways in the last two decades, and it would seem important that the European left analyse and learn from this experience, in order to elaborate strategies for a future welfare model and the struggle beyond it.

    The Case of Swedish “Welfare Capitalism”

    In Sweden the Social Democratic Party (SAP) led the government for more than four decades, from 1932 to 1976. This long period of a solid power base made it possible to implement a whole range of social reforms, to build what is often called the ”people’s home”.1 A fundamental part of this social-democratic welfare regime, according to Esping-Andersen and others, was a redistributive tax system which was able to finance a large public sector with universal welfare programmes covering the whole population. Swedish social democracy, supported and pushed by the Communist Party, implemented a sophisticated social insurance system which included more or less the whole population, in order to gain its support for the system and bridge gaps between different classes and segments. In this way, it was, in a Gramscian sense, a hegemonic formation, meaning that social democracy was the dominant actor in the political, ideological and cultural fields (but not in the economic sector).

    The model guaranteed almost full-income compensation for child-care, unemployment and sickness. The social democrats built public hospitals and health care, elder care, schools, child-care, new houses, etc. In the late 1950s the labour movement in Sweden also succeeded in implementing a beneficiary pension system, after long and hard struggles against unified bourgeois forces (Olson 1990).

    One of the cornerstones of this Swedish model was the social-democratic labour-market policy, based on active measures for full employment combined with a solidary wage policy. The basic feature of this policy was the holding back on the part of workers and unions in high-profit companies and branches of their wage demands in solidarity with workers in low wage branches, who were, on the other hand, able to raise their demands and wages. (Clement & Mahon 1994) In this way the income gaps within the working class decreased and, with full employment, wage earners became a stronger and more united force in the hegemonic struggle with the employers.

    In comparison with other countries in Western Europe exhibiting other forms of welfare capitalism, as Esping-Andersen puts it, this welfare model resulted in Sweden becoming the most just and egalitarian society. This applied to class, for example as regards income and living standards, and also in many ways to gender. The universal welfare services (e.g. public child care) and social insurances (e.g. maternity leave) made it possible for women to take part in working life and other public fields. The large public sector and the active labour-market policy meant a very high degree of employment among women as well as decreasing income gaps between men and women.

    However, from the beginning of the 1990s the Swedish welfare model has been experiencing huge cutbacks. The public sector share of GNP has decreased from 2/3 to about 1/2 within the last 20 years. In monetary terms this means a loss of about 20 billion Euros per year in public expenditures, which is a great deal for a rather small economy. This has caused problems in the public health sector. The cutbacks have been combined with the market philosophy of “New Public Management” and privatisations, and today big stock companies are important actors on the health ”market”. In the elder care sector for instance, the share of private actors has increased from 3% to 13% between 1993 and 2000 (Szebehely 2005). The share has been continuously growing ever since. Only 15-20 years ago private entrepreneurs were barred from the health care sector.

    There have also been cutbacks in the social-security systems. Full-income compensation no longer exists; today the level is at most 80% for unemployment (if one is in the system), sickness and child care. One very important change is the new pension system, established in 1994 and then implemented by four bourgeois parties together with the social democrats. This means that the public pension system is now combined with a private sector with hundreds of pension funds controlled by private banks, insurance companies, etc., among which the employees are free, as they are told, to choose. This new system was implemented by the same, or actually a rather different, social democracy that fought so hard to implement the public pension system in the 1950s.

    The fact is also that it was actually the social democrats who in the late 1980s first opened up to private alternatives in the public sector; a bourgeois government in 1991-94 could then go on and amplify an already initiated development. (Montin 1992) Since then this process has continued under social-democratic governments, and it has accelerated under liberal-conservative governments like the present one.

    The Post-Fordist Regulation System

    When it comes to the theoretical understanding of these processes of change in the Swedish welfare regime, and in other European ones, it makes sense to relate it the theoretical framework of the transition to a post-Fordist mode of production, accumulation regime, and – especially relevant to the Stockholm workshop and perhaps of most interest – regulation system. How can this theoretical framework help us analyse the changes of the welfare systems? What are the basic relations between fundamental changes of the mode of production and accumulation regimes, and the changes of the regulation systems and welfare models?

    The post-Fordist accumulation regime is a concept associated with the “Regulation School” (Aglietta 1979, Lipietz 1988, Boyer 1990). In his path-breaking study, Michel Aglietta turns against the equilibrium theory of neo-classical economics, which he finds divorced from reality. Instead of a harmonious, linear development of capitalism, Aglietta sees frequent crises and seeks to find the long-term sources of ruptures in the process of accumulation. This means a long-term perspective beyond, for instance, the scope of Keynes, and especially the concrete policies of Keynesianism aimed at mitigating conflicts and crises for a harmonious development of the mode of production. Aglietta identifies three different simultaneous patterns of capitalist development: paradigms of industrialisation, accumulation regimes and modes of regulation.

    These aspects are of course intertwined but the workshop will focus on the third, the modes regulation, which include laws, institutions, culture, behaviours and expectations corresponding to the accumulation regime. The Fordist mode of regulation is characterised by a bureaucratic welfare state on a national basis, social legislation, reformist mass parties, corporatism, and the “Fordist compromise” between labour and capital, with the state as an important helping hand. The Swedish model was perhaps the most notable example of that compromise.

    The Fordist compromise aimed at mitigating institutionalised conflicts, with the state in the role of a neutralising factor. It was a hegmonic structure of corporatist negotiations, social state and state intervention (Häusler and Hirsch, 1987). At the level of economic theory, Keynesianism functioned as the theory corresponding to this mode of regulation, and was used as an economic policy to mitigate and counteract the economic trends and crises of the mode of production. As the case of the Swedish social-democratic model showed, this helped the compromise to function and survive (while the unsolved latent conflict of property and capital concentration was left unsolved). The social-democratic model implied a “keynesianisation” of society (Buci/Glucksman & Therborn, 1981).

    The 1970s were a time of changes: oil crises, overproduction, lower profit rates, stagflation, unemployment, rationalisation and automisation through new technology, and at the same time a period giving rise to radical class struggles. The 1970s meant the crisis of Fordism and the breakdown of the Keynesian mode of regulation. An increasingly transnational mode of production, and a “transnational high-tech capitalism” (Haug, 2001) was emerging. The mode of capital accumulation burst out of the mode of social regulation in which it developed and worked (Häusler and Hirsch, 1987). A structural crisis of the accumulation regime means social and political conflicts and societal changes, a process of searching for a new accumulation regime and social structures.

    With this goes a post-Fordist mode of regulation with new forms of organisation of industrial/financial capital on an international level, internationalisation of the concentration processes, globalisation of previous national labour-capital relations, dissolution of the national Fordist corporatism and at the same time a more selective and decentralised corporatism, and a liberalisation and deregulation of capital and capital flows.

    These are processes of dissolution of the whole Fordist compromise and hegemonic structure, and it also means fundamental changes of the welfare states. The Swedish case is a clear example of these processes.

    Towards a New Social Model?

    The transition from a mode of production based on a national Fordist compromise to a post-Fordist mode of production driven by global financial capitalism is important in analysing the changes in European welfare models. And one question is whether this process contributes to the development of a new form of mode of regulation, a European welfare model. The Swedish example shows that the universal model has become weaker, and that elements from the marginal (and to some extent the corporatist) model are growing stronger. If that is an example of European integration of the welfare model, it is then, from a left perspective, a negative experience for Sweden, considering its class and gender effects. The process of post-Fordist modes of production, accumulation and regulation is an important factor underlying the transformation of the Swedish welfare model. Parts of European integration could also be explained in the same terms: the integration of the internal market and the integration of European policies are signs of new accumulation and regulation systems.

    This kind of European integration has contributed to the dissolving of the Swedish universal welfare model. In order to join the EU in 1994, Sweden had to adopt to different kinds of EU regulations e.g. the Maastricht treaty. In order to meet membership requirements Sweden had to shrink its level of public expenditures. Together with other factors like internal political issues, this negative integration led to severe cutbacks in, and damage to, the Swedish social model. To put it in a provocative way: For many European countries EU integration was a kind of rescue after World War II, but for Swedish society it was more disastrous than the war. One has to be aware of this in understanding the Swedish population’s negative attitude toward the EU.

    The Swedish universal welfare model has been, and still is for many leftists, a progressive example. Should we then try to reconstruct that model in Sweden, and perhaps in other European nations? Is that possible? Should the struggle continue on a national or on European basis? When it comes to the defence of the Nordic universal model, I believe the struggle should be based on the labour and left movements in the Nordic countries. That is where the concrete transformation takes place, that is where the actors have the knowledge, that is where the labour movement has a strong tradition of forming a hegemonic force, and that is the place to fight back. I think that in the post-Fordist mode of production there still exists a space for “relative autonomy” (Althusser 1971), for example in relation to the construction of welfare institutions. However, I am rather pessimistic as far as the level of that autonomy is concerned, and I do not believe that it is possible any longer, in a global post-Fordist mode of production, to construct a specific comprehensive regulation system like the Swedish welfare model, as different from the other European models was.

    Should that lead us to try constructing a Fordist universal welfare model at the European level? (I believe some of the contributions in Transform! 1/2007 pointed in that direction.) Of course it is good and necessary to elaborate European left strategies, including welfare policy. But it is not possible to construct a regulation model based on a new Fordist class compromise when we no longer live in a Fordist mode of production – and the Nordic universal welfare model was based on exactly such a class compromise. The Swedish “historic compromise” was established in a 1938 agreement between the social-democratic trade union and the employers’ federation. In this compromise employers got the right to lead and organise the work, while the unions got the right to organise and strike, etc. The very fundamental question of power and property conditions was omitted from the compromise; it was a forbidden and silent question, and it was implicitly understood that these conditions should not be questioned by the social-democratic labour movement. The compromise meant that Swedish society from the early 1930s to the late 1970s showed a remarkable increasing standard of living for the working class, while, at the same time, the fundamental power/ownership interests of big industry were never really threatened. One could say that political and social democracy were achieved, but not economic democracy.

    This compromise, which was the foundation of the Swedish model, was only possible in a specific historic period with specific economic, social and political conditions. When these conditions no not longer existed, and the Fordist mode of production was being transformed, the whole compromise began to dissolve. Within the and the labour movement, the class compromise was questioned because it did not seem fair that the solidary wage policy should result in higher profits for the owners of capital. The social-democratic trade union posed the issue of economic democracy, and launched a concrete proposal (Meidner 1978) to transform the economy in the direction of democratic socialism (Sjöberg 2007). When the profit rates fell, capital owners, employers and liberal/conservative political protagonists began to question the compromise on their side, and the employers left the central agreements with the trade union. The Fordist class compromise was an “historic parenthesis” (Ekdahl & Johansson 1996).

    A social formation with political and social democracy without economic democracy is a contradiction, which had prospects only during the specific conditions of a Fordist mode of production, accumulation regime, mode of regulation and class compromise. In the long run, social democracy is not possible without economic democracy. For a European left that considers itself socialist, it will be necessary once again to focus on the unsolved social conflict, the property issue. Therefore, the European left cannot aim merely at a universal welfare model but must also pose the issue of economic democracy. In a global post-Fordist mode of production and accumulation regime such a strategy cannot be based on the nation-state. This means that the European left has the task of both defending the welfare systems, and trying to build a new European hegemonic force aiming at a modern democratic socialism. That means moving beyond contemporary liberal hegemony as well as the social-democratic welfare discourse. Working out such system-transformative strategies is what the European left and the GUE/NGL, among others, should do. Hopefully, the Stockholm workshop can provide these strategic discussions with useful analyses.



    1 In a famous speech in 1928, SAP chair and later Prime Minister, Per-Albin Hansson, declared that the aim of social democracy was to build a people’s home, where no one was left out and where there no longer were divisions between classes and different parts of the population. By the beginning of the 1970s, the social democratic Secretary of Treasury, Gunnar Sträng, thought this had been achieved.



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