The welfare state and its distributive effects: part of the problem or part of the solution?

In the first part of this article, the author presents (1) a discussion of some of the major arguments against the welfare state put forward by neoliberal forces on both sides of the Atlantic, and (2) empirical information that shows the ideological rather than scientific nature of those arguments. The author also questions the widely held belief among European neoliberal (and even on occasion progressive) forces that the Reagan Administration policies have been (1) very successful in stimulating employment and economic growth, and (2) neoliberal rather than Keynesian. The empirical information presented in this article shows that these Reagan Administration policies have followed a military Keynesianism rather than social Keynesianism, which is responsible for a rather poor economic and social performance. In the second part, the author presents alternatives to the austerity policies advocated by the anti-welfare state forces, policies based on an expansion of the universalist character of the welfare state and its democratization, with active participation of the municipalities in the administration of the welfare state services and in the development of reflationary policies aimed at guiding production and stimulating consumption. The author also shows that the full development of the welfare state is a precondition for the needed restructuring of the economy, labor mobility, and technological innovation. The welfare state, rather than being the cause of the economic crisis, is part of the resolution of this crisis. The article ends with a discussion of the political conditions for the expansion of the welfare state and for the resolution of the economic crisis.