Globalization and the welfare state: a retrospective

Abstract

There are basically three stories about the globalization-welfare state nexus. The first story argues that globalization is the cause of the chronic crisis of the welfare state. As national economies open to the international market, governments are forced to adapt to the imperatives of global competition, and this means cutting cost-intensive welfare programmes (globalization theory). The second story argues that, whatever the cause of the welfare state crisis, globalization is not part of it. There is neither theoretical reason nor empirical evidence to believe that national policy autonomy has decreased owing to increasing economic interdependencies (globalization sceptics). The third story holds that globalization, far from causing the welfare state's troubles, is a consequence of these troubles, and part of their solution (revisionism). The paper reviews each of these stories, and counterposes them to simple descriptive statistics on Organization for Economic Co-operation and Development (OECD) countries.

Keywords:

• Globalization
• Macroeconomic Policy
• Social Policy
• Taxation
• Unemployment
• Welfare State