The Moral Economy of Welfare States: Britain and Germany Compared

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The Moral Economy of Welfare States

The Moral Economy of Welfare States investigates why people are willing to support an institutional arrangement that realizes large-scale redistribution of income between social groups of society. Steffen Mau introduces the concept of ‘the moral economy’ to show that acceptance of welfare exchanges rests on moral assumptions and ideas of social justice people adhere to. Analysing both the institutions of welfare and the public attitudes towards such schemes, the book demonstrates that people are neither selfish nor altruistic; rather they tend to reason reciprocally. Drawing on a wealth of empirical data and using the case studies of Britain and Germany, this important monograph examines the policy areas of redistribution, unemployment, poverty, pensions and health. Steffen Mau is junior professor in the Graduate School of Social Sciences (GSSS), University of Bremen, Germany.

Routledge/EUI Studies in the Political Economy of Welfare Series editors: Martin Rhodes and Maurizio Ferrera The European University Institute, Florence, Italy

This series presents leading edge research on the recasting of European welfare states. The series is interdisciplinary, featuring contributions from experts in economics, political science and social policy. The books provide a comparative analysis of topical issues, including: • • • •

reforms of the major social programmes – pensions, health, social security the changing political cleavages in welfare politics policy convergence and social policy innovation the impact of globalization

1. Immigration and Welfare Challenging the borders of the welfare state Edited by Michael Bommes and Andrew Geddes 2. Renegotiating the Welfare State Flexible adjustments through corporatist concertation Edited by Frans van Waarden and Gerhard Lehmbruch 3. Comparing Welfare Capitalism Social policy and political economy in Europe, Japan and the USA Edited by Bernhard Ebbinghaus and Philip Manow 4. Controlling a New Migration World Edited by Virginie Giraudon and Christian Joppke 5. The Moral Economy of Welfare States Britain and Germany compared Steffen Mau

The Moral Economy of Welfare States Britain and Germany compared

Steffen Mau

First published 2003 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group

This edition published in the Taylor & Francis e-Library, 2004. © 2003 Steffen Mau All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Mau, Steffen, 1968– The moral economy of welfare states : Britain and Germany compared / by Steffen Mau.— 1st published 2003 by Routledge. p. cm. Includes bibliographical references and index. 1. Welfare economics. 2. Welfare state. 3. Great Britain—Social policy. 4. Germany—Social policy. I. Title. HB99.3.M34 2003 330.12⬘6—dc21 2003003812

ISBN 0-203-59061-9 Master e-book ISBN

ISBN 0-203-33908-8 (Adobe eReader Format) ISBN 0–415–31754–1 (Print Edition)

Contents

List of illustrations Acknowledgements

vii ix

1

Introduction

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2

Self-interest and pocket-book attitudes Beneficial involvement 5 Rising demands and ungovernability 7 Legitimation crisis: value for meaning 9 The welfare backlash and a rational opposition 12 Entrenched interests and ‘varieties of capitalism’ 14 Policy reforms: designing institutions for knaves 17

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The admixture of motives: broadening the perspective Preference formation beyond self-interest 21 Institutions: material incentives and social norms 27 The moral economy of welfare state institutions 31 The homo reciprocus 35 Policy designs and the repertoire of motives 38 Summary 41

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An analytical framework Welfare institutions and public attitudes 43 Survey data and methods 47

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The state of welfare A comparative framework 55 The welfare legacy in Britain 60 The welfare legacy in Germany 71 Welfare regimes and their moral economies: some preliminary thoughts 81

55

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Contents

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The logic of popular support for welfare schemes and their objectives Redistribution in our heads: givers and takers 89 The two moralities of giving assistance to the poor 110 Unemployment provision: the messy contract 127 Old age: transfers from the active to the inactive 147 Health: risk distribution and cost sharing 166

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The moral economy revisited

185

Notes Bibliography Index

198 208 232

Illustrations

Figure 3.1

A moral taxonomy

38

Tables 6.1 6.2 6.3 6.4 6.5

6.6 6.7 6.8 6.9 6.10

6.11 6.12 6.13 6.14 6.15 6.16

Attitudes towards redistribution Attitudes towards redistribution by structural determinants: linear regression analysis Attitudes towards tax progression and redistribution Perceived tax burden and income groups: cross-tabulation and analysis of variance Attitudes towards redistribution by structural determinants and subjective tax burden: linear regression analysis Subjective tax burden and redistribution: correlation Perceptions of poverty and poverty relief Assumptions about the causes of poverty Causes of poverty and support for guaranteed minimum income: linear regression analysis Support for poverty policies: structural determinants and moral hazard problems: linear regression analysis, Britain Unemployment provision and spending Attitudes towards unemployment policy by social position: logistic regression Flat-rate or earnings-related benefits for the unemployed: Britain Unemployment benefits in Britain: too high or too low? Benefit system sets disincentives, Germany State responsibility for welfare structural determinants and the welfare disincentive issue: linear regression analysis, Germany

95 97 101 103

106 108 119 121 122

124 133 136 138 141 142

144

viii 6.17

6.18 6.19 6.20 6.21 6.22 6.23 6.24 6.25

Illustrations State responsibility for the unemployed, structural determinants and the welfare disincentive issue: linear regression analysis, Britain Pension evaluation by the retired Attitudes towards pensions policy by age cohorts Future expectations and solidaristic commitment by age Disapproval of the ‘generational contract’: Logit model Responsibility, user satisfaction and healthcare quality Spending preferences in the area of health Attitudes towards spending on health: linear regression analysis Sickness benefit: which system and how much should be paid out

145 153 157 161 163 175 177 180 182

Acknowledgements

Giving an account of the moral economy of welfare states means encountering the norm of reciprocity as one of the basic modes of social exchange. Since writing a book is not an isolated undertaking but involves numerous exchanges with others, some kind of moral economy that regulates giving and taking seems to be at work as well. However, authors tend to be parasitical. Often they draw on other people’s ideas for the sake of their own project. Writing the acknowledgements is the time to reciprocate. Reciprocation does not mean giving back the same currency and value as the benefit received. An acknowledgement cannot be more than a symbolic reciprocation that expresses the appreciation to those who have contributed to the project. I am indebted to a number of persons and institutions. First of all I would like to thank Richard Breen. As the supervisor of my PhD thesis, of which this book is the outcome, he has given me sustained encouragement and support. I also thank Colin Crouch, Stephan Leibfried and Karl Ulrich Mayer for the suggestions and comments they made that helped me to enhance the quality of the study. As an expert on gift exchange, Irma Thoen has always been a source of inspiration. My colleagues in the Interdisciplinary Social Justice Research group at the Humboldt University of Berlin, most notably Stefan Liebig and Holger Lengfeld, also deserve my appreciation of their support. Many other researchers who have commented on parts of the book are not mentioned by name but, nonetheless, their thoughts had a profound impact on the writing of my thesis. Some of them are honoured by being exhaustively used as bibliographical references. Drafts of some parts of this book were presented at various academic workshops and conferences and I must, therefore, thank the participants for their stimulating discussions. Special thanks go to the editors of the Routledge/EUI Studies in the Political Economy of Welfare series, Martin Rhodes and Maurizio Ferrera, who supported the publication of this study, and to Heidi Bagtazo from Routledge. With regard to the institutions that have provided the environment for my research, I have to thank the European University Institute in Florence, where this study was written to a large extent and, finally, awarded with a PhD, the Science Centre for Social Research in Berlin

x

Acknowledgements

(WZB); the London School of Economics and Political Science (LSE) and the Institute for Social Science at the Humboldt University in Berlin. The book has not only benefited from the many professional contacts I have had throughout the years, but also from the social and emotional environment of which the Moretti family was a large part. I will always remember the time we spent in our house in the Via Santorre di Santarosa 21 and the many evenings at Da Pepe. The other residence which I was privileged to share was the Via Lanza flat inhabited by Emma, Danny and myself, where I truly enjoyed a room with a view. I also thank my parents for their ongoing backing of my spatial, social and intellectual moves. Finally and most importantly, I express my gratitude to Iolanda who alone knows why. Amongst many other things, I learnt from her that emotional generosity does not survive without the triad of giving, taking and giving back.

1

Introduction

The drive to give is as important to an understanding of humanity as the desire to receive. Jacques T. Godbout

The welfare state can be regarded as the major institutional arrangement of western societies that contributes to a socially accepted allocation of resources amongst the members of a given society. It is a means by which the political sphere re-balances intolerable inequalities and outcomes that have occurred within the market. For this purpose, a significant proportion of income must be transferred between individuals and social groups. Most welfare measures, therefore, are redistributive measures that aim at achieving a distribution of societal resources that is preferable to the primary distribution of the market. However, raising money for welfare objectives needs to be justified, and governments constantly have to convince their electorate that the interventionist activities are in accord with their interests. Much of the theorizing about the welfare state has attributed the considerable degree of support for welfare states to the beneficial outputs of welfare schemes. Indeed, the expansionary course taken by most of the western welfare states since the Second World War has made the welfare arrangements attractive to the vast majority of people. The welfare state has established large-scale schemes that protect against life risks, supplement incomes when insufficiencies occur and provide independent means for distinct stages of life such as old age. However, welfare state activities do not only contribute to the provision of security, they also have a stake in the promotion of equality. Through taxation and income transfers from the better-off to the less well-off, the welfare state achieves an effective reduction of inequality so that it can be regarded as a system of stratification in its own right (Esping-Andersen 1990; Mayer and Müller 1989). Since the exchange of cash and benefits between private households and the welfare state has a substantial impact on people’s income

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Introduction

position, one can assume that those gaining from the welfare state are more likely to support the system while those who are the net losers tend to disagree with it. In a large part of the literature of political science, the ‘beneficial involvement’ of social groups has been taken as the best predicator of pro and con positions with regard to the welfare state. The basic assumption is that, whether people support the welfare system, or not, is largely dependent on whether they can, or can not, maximize their personal income through the redistributive impact of the tax and benefit system. Although the income position might explain some of the variance of attitudes towards welfare measures, it is surely not the whole story. The commitment to collective welfare arrangements, even among the well-todo constituencies, requires taking into account the normative notions of the welfare state. People may be willing to share their income with others if they regard the welfare policy objectives as worth pursuing. The prevention of poverty, the alleviation of hardship and public support for those in need, for example, possess a moral dimension that people may be inclined to support. Thus, preferences that encompass the regard for the well-being of others may also underpin attitudes towards collective welfare arrangements. Within this study a perspective will be taken that departs from the narrow self-interest account of individual motives and highlights the importance of the normative dimension. I will, therefore, advance an understanding of welfare transfers and their social acceptance in terms of a moral economy. By this it is meant that social transactions are grounded upon a socially constituted, and subjectively validated, set of shared moral assumptions. These background assumptions regulate which demands, needs and entitlements are regarded as justified. However, the moral economy entails not only the endorsement of certain welfare transfers by those who are asked to share resources; it also implies that certain actions and obligations are defined as ‘repayments’ for benefits granted. Thus, welfare exchanges are reciprocal exchanges that constitute a bilateral relationship between the giver and the recipient of welfare resources. As a consequence, the social acceptance of welfare measures also relies on the moral plausibility of welfare exchanges that safeguard people’s willingness to make costly contributions from which others may profit. The major focus of the research project will be on the formation and distribution of attitudes, on the one hand, and on the significance of the institutional architecture, on the other. This kind of framework challenges the top-down view of many political scientists with its strong emphasis on collective actors, institutions and procedures. It asks how the institutions are perceived and acknowledged ‘from the point of view of the actor’ (Campbell et al. 1960: 27). It also asks how institutional context factors shape the desires, preferences and motives of individuals and social groups. In order to strengthen this research perspective I will bring

Introduction

3

together two research traditions which are often kept apart, the analysis of public policy and the study of popular attitudes. The first will be carried out through an analysis of the welfare institutions and the way they entrench interests, stabilize expectations and incorporate moral conceptions. The latter will be covered by social survey data focusing on attitudes towards the welfare state in the policy areas of redistributive policies, social assistance, pensions, unemployment and health. Different data sets covering the policy areas of interest will be used for a secondary analysis. Empirically speaking, we talk about perceptions, evaluations and expectations of individuals concerning the welfare state programmes. According to the conceptional framework they blend an admixture of motives where self-interest as well as moral concerns can play their part. For this comparative research project two countries have been chosen, namely Great Britain and Germany. From the perspective of EspingAndersen’s (1990) typology of western welfare states, Germany represents the conservative, and Great Britain the liberal model. Both contain specific traditions of ideological patterns, social compromises and political ideas. They also stand for different institutional designs. The British model gives preference to anti-poverty measures with relatively meagre benefits and a striking role for means-tested benefits. The low level of state involvement is complemented by a greater degree of private provision. The conservative welfare regime in Germany is directed towards status security and derives many welfare entitlements from the claimant’s (former) labour market status. Core elements of the system are the social insurances which tie together contributions and benefits. Given the differences in the institutional designs, one can identify different ways in which the welfare models justify social transfers and gain social acceptability. The research objective is to reveal the patterns of correspondence between welfare institutions and attitudinal stances and develop an empirical understanding of how individual motives are conditioned by institutional settings, and how the social logic of popular commitment to the collective welfare arrangements operates.

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Self-interest and pocket-book attitudes

Welfare state theory is as old as the welfare state itself. As with the development of the welfare state, the development of welfare state theories is a history of waves and cycles. These theoretical shifts are partly induced by ‘material’ changes within welfare state institutions and partly by the rationale of the production of social science knowledge. Researchers have become interested in the welfare state because of the crucial role it has played within the process of economic, social and political modernization. Like no other institutional invention, the welfare state has taken on a bridging function between the economy, democracy and the social world. It is, in its own right, an ordering force of social relations and social stratification beyond the market. Through redistribution the welfare state has helped to heal social divisions or, at least, to mitigate social inequalities; not only in terms of material inequalities, but also in ideological and political terms. Although essential for the existence of the welfare state, society-wide support for the interventionist state cannot be taken for granted. Collective welfare arrangements need popular acceptance and recognition, i.e. people who are willing to contribute and to comply. In this respect Pierson (1994: 146) has stated that the ‘political health of the welfare state is dependent upon popular attitudes’. Early welfare state theorists of the social-collectivist provenance had little doubt that a sustainable welfare consensus is possible. In the Beveridge plan one can find an expression of the self-esteem of that time: ‘The capacity and desire of the British people to contribute for security are among the most certain and impressive social facts’ (Beveridge 1942: 119). Most of the intellectual architects of the welfare state thought of it in terms of social integration and cohesion (Marshall 1975). Due to the progress of the welfare state many of them assumed that people would perceive it as an arrangement of mutual advantage. It was supposed that critical views would diminish once the programmes proved capable of working and a growing number of citizens became dependent on them. They believed that the pro-welfare orientations would be generated as a by-product of the development of the welfare state and were, therefore, more concerned with social engineering

Self-interest and pocket-book attitudes

5

and less with the issue of legitimacy. Thus, the probity and moral superiority of the welfare state were taken as self-evident and so was its political approval (Culpitt 1992: 27). In this chapter it will be argued that many of the subsequent accounts of the political economy of the welfare state have been rather critical of the idea of the rise of a public-spirited citizen. Instead, they have built their arguments on a rather instrumentalist notion of the individual– welfare state relationship. Many theories were constructed around the core idea that the support for welfare state institutions derives more from its beneficial structures and outcome balances and less from its moral value. The material self-interest and self-regard of social groups have been served up as the master determinant for the analysis of welfare state stability and the political conflicts of welfare state restructuring. Subsequently, a brief survey of prominent contributions which have rather different theoretical backgrounds, but which are unified by the assumption of the self-interested citizen, will be provided. Starting with the theorem of ‘beneficial involvement’, there will be a continuation with the theories of ungovernability and the legitimacy crisis. Following this, the theses of a welfare backlash and a rational welfare opposition will be discussed. Next, a brief account of the view authors have taken on retrenchment as a political undertaking that has to be carried out against the entrenched interests of parts of the electorate will be given. Some of the arguments that are part of the ‘varieties of capitalism’ debate will also be presented because they assume a close relationship between the production regime and the support for the welfare state, especially unemployment provision. Finally, there will be a turn to actual policy changes showing that the rationale that underpins much of the refashioning of social policy assumes that people are driven by self-interest rather than by other concerns.

Beneficial involvement Within the debate about the functions and political determinants of the welfare state, theories conceptualizing the welfare state as a stabilizing factor for the democratic process have become highly prominent (e.g. Lipset 1993; Greiffenhagen 1997). Within this framework, welfare state policies are considered as integration policies which weaken the old social conflicts, prevent political radicalism and enhance social consensus. The historical record of the welfare state suggests that it was not high-minded reasons that were the driving force behind the expansion of state activities but political and pragmatic ones. The historical transformation of state activities, which resulted in an institutional commitment to welfare, was heavily influenced by the state structure and patterns of class–political coalition (Esping-Andersen 1990). The inclusion of large and politically strong groups into the welfare schemes was crucial since the promise of

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social security could ensure their political loyalty. Providing benefits placed the workers in direct dependency on the state and consolidated their allegiance to it. It was also stressed that the new social risks of industrialism engendered a popular demand for state intervention. The risk proneness of many social groups made them support the establishment of social insurance schemes which could protect them from life’s vicissitudes. Thus, it was the security interests of large social sections of the population that made them favour collective arrangements (Baldwin 1990; De Swaan 1988). Empirical studies have found a positive correlation between welfare state expansion and welfare state support. Furthermore, it has been highlighted that the widening range of welfare state activities has a positive effect on people’s attitudes towards the welfare state itself (e.g. Coughlin 1980; Goodin and LeGrand 1987; see also Kluegel and Miyano 1995). Esping-Andersen (1990: 33) claims that ‘anti-welfare state sentiments over the past decade have generally been weakest where welfare spending has been heaviest, and vice versa’. It was found that welfare state institutions were better accepted and supported if they included the wider society and not only the poor. By the same token, it was presupposed that a greater majority of people would support social institutions if they derived benefits from them. The hypothesis claimed that ‘the larger the number of groups who benefit from the welfare state in some tangible and salient way . . . the less likely it is that people will come to oppose government intervention to reduce inequalities’ (Kluegel and Miyano 1995: 87). Special attention has been given to the middle classes: ‘The idea here is that if the middle classes benefit from programmes, then they will use their not inconsiderable political skills to obtain more resources for those programmes or to defend them in periods of decline’ (Goodin and LeGrand 1987: 210). The inclusion of the non-poor has been viewed as crucial for the political support of the welfare state, as welfare state legitimacy is mostly ensured by ‘higher-tier benefits that accrue to the average worker and employee, rather than from benefits that go to the poor’ (Leisering and Leibfried 1999: 315). It is said that since residual welfare states in the middle classes are not ‘wooed from the market to the state’ (Esping-Andersen 1990: 31), are not able to forge political alliances between the poor and the working class, on the one hand, and the well-todo constituencies, on the other hand. Hence, residual welfare states are prone to middle-class reservations. It is, instead, comprehensive welfare states with a strong position of insurance schemes and earnings-related benefits that facilitate middleclass loyalties. Earnings-related insurance schemes provide security against the disruptions and exigencies in people’s lives and are, therefore, essential devices for stabilizing the fluctuating economic fortunes that might occur throughout the course of their lives. The policy objective of income

Self-interest and pocket-book attitudes

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maintenance relates the level of benefits to which the claimant is entitled to his past earnings and to the contributions he has made. Goodin (1990: 532) stressed the importance of earnings-related benefits for the political economy of welfare states: The pragmatic motivation underlying such practices is, perhaps, clear enough. Insofar as it is economically and politically necessary to bribe the non-poor into supporting social welfare programs by letting them benefit too, the bribe naturally needs to be larger, the richer the person who is to be bribed. Much in the historical record suggests that just such cynical logic led to the development of earnings-related components of welfare systems. The principal presumption of this account equates the political support for the welfare state with the degree of interest satisfaction it is able to achieve. For the stage of welfare retrenchment, when there are less resources at stake and the redistributive margin is growing smaller, this logic easily translates into a situation where cuts are directed at the groups with less electoral power, most notably the poor and marginalized. The well-off, in contrast, are likely to defend their stake in the welfare state. However, when they have to face less provision due to welfare retrenchment they might also be inclined to withdraw their support for the welfare institutions.

Rising demands and ungovernability One of the early accounts of the welfare state with a critical understanding of its political economy is the theorem of ‘ungovernability’ (see Bell 1975; Brittan 1975; Crozier et al. 1975; Luhmann 1990). This theoretical position is supported by a wide range of different arguments but the most common one suggests an overload of expectation to which the state and the government are exposed. Many Anglo-Saxon liberal and NeoConservative thinkers have postulated a structural incompatibility between liberal principles (e.g. private property) and welfare state principles, which are linked together by democratic institutions. At the centre of their arguments is a strong concern for the critical effects of an ‘excessive democracy’ which stimulates unlimited demands for governmental intervention. Since the government is in charge of the well-being of its citizens and an increased level of political participation allows the governed to impose their collective will on the government, the government risks running into a situation where too many responsibilities are being taken over and too many problems are being addressed. An argument which has been widely used in this context is that a ‘big government’ carries out too many functions, which affects the efficiency and effectiveness of its policies. Its agencies have a general tendency to grow exceptionally fast, to

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maintain obsolete functions and to serve too many contradictory interests at once. As a consequence, a ‘political bankruptcy’ will occur when a blown-up state bureaucracy consumes more money than it possesses. The conservative writers’ reasoning begins with the assumption that there is a positive interrelation between demands (or expectations) and the degree of fulfilment. The expectations of citizens towards the welfare state echo the level of welfare state provision which they already enjoy. It is assumed that the establishment of a comprehensive and security-guaranteeing welfare state has given the people the impression of an all-problem-solving state with extensive capacities for ensuring individual welfare. Therefore, a process of rising expectations is put into operation by which every increase in state responsibility is followed by a growing demand for more, in other words, a ‘dialectic of expectations’ (see Vobruba 1991: 72ff.). Governmental functions and responsibilities create a widespread belief about the universal responsibilities of the government. As soon as a social problem is ‘discovered’ and identified, people expect the government to do something about it. This, in turn, leads to an extension of expectations in general. As a result, the state is confronted with a positive feedback effect which is induced through its own range of activities. The principle of compensation tends towards universalism because: according to the way the problem is presented all differences can be compensated and yet differences always remain or new deficits appear that require compensation themselves. If everything has to be compensated, then this requires compensation, too. The concept and process of compensation become reflexive. But in this way the competence to compensate reaches both its conceptual and material limits and touches the problem of the competence to compensate for incompetence. (Luhmann 1990: 22–3) This diagnosis suggests that the welfare state is at the mercy of public demands. In grasping the general mechanism, Luhmann (1990: 27) uses the term ‘self-propelled, self-driven welfare state’ where too much support for the welfare state destroys its foundations and hence, in the long run, the welfare state institutions must fail. This means ‘that one cannot consistently count on a readiness to enjoy, and a gratitude for, this kind of state and an accompanying political “loyalty” from those who ought to welcome the welfare state’ (Luhmann 1990: 23–4). A number of authors have tried to predict the damaging effects for the political and social climate if the welfare state exhausts its resources on the basis of inappropriate demands. According to them, dissatisfaction goes hand in hand with a lack of confidence in the functioning of the democratic institutions (see Huntington 1974; Bell 1975). Thus, the state is

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faced with a political crisis associated with a growing distrust in the old political parties, a fragmentation and radicalization of political interests and a loss of authority. As a major consequence, a growing gap between government and citizens arises and people may be unwilling to pay for the welfare state. Hence, a vicious circle is formed: the government cannot perform its functions without the contributions of the people. Some authors have suggested very concrete solutions for these problems, such as a reduction of the burdens of the government (King 1975), a lowering of expectations (Bell 1975), or a reduction of government services and the costs of welfare (Rose and Peters 1978). Huntington (1974: 160) asks for a ‘more authoritative and effective pattern of governmental decisionmaking’, which makes it easier for the government to reject the demands of the electorate.

Legitimation crisis: value for meaning O’Connor’s The Fiscal Crisis of the State (1973) provided the most explicit Marxist account of the internal contradictions of modern welfare capitalism by linking two governmental tasks: accumulation and legitimation. The first refers to the task of securing conditions in which profitable capital accumulation is possible and the second to the necessity of maintaining the conditions for social harmony. The state can be seen as an agency which unifies the contradictory elements of the socialization of production and the privatization of appropriation. The role of the state is ambivalent because it has to assist the process of capital accumulation but cannot do so openly without the risk of drying up the source of its own power. The trap which the modern capitalist state falls into consists of a two-fold dependency: on the one hand, a growing demand for state intervention and spending for the promotion of social and political order; on the other hand, the necessity to respect the conditions of private accumulation. Like the conservative authors, O’Connor (1973: 1) believes in the demand-driven attitudes of social groups towards the state that tend to exhaust the fiscal capacities: ‘Every economic and social class and group wants government to spend more and more money on more things. But no one wants to pay new taxes or higher rates on old taxes. Indeed, nearly everybody wants lower taxes, and many groups have agitated successfully for tax relief.’ In correspondence with O’Connor’s inherent fiscal crisis, Offe (1984) has developed a concept of legitimation crisis by extending the model to include a third component, namely, the normative system. The relationship between the economic system and the politico-administrative system tallies with the above-mentioned idea of an economic system dependent on state intervention for the elimination of its malfunctions, and a state which acquires parts of the produced value in order to do so. For Offe, legitimation means the prevalence of trust in a given political system.

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The legitimation depends upon the justifiability of its institutional arrangements and political outcomes. The politico-administrative system is linked not only to the economic system but also to the normative system through expectations, demands and claims. The welfare state and its services are an institutional answer to these demands, which reinforce the acceptance of the legitimizing rules and ensure ‘mass loyalty’ through demand satisfaction. However, the positive feedback between system output and system support implies an inverse effect when citizens have negative output experiences. It is assumed that pro-welfare state orientations thrive under the conditions of a prospering welfare state, whereas they ‘tend to decompose under zero-sum conditions’ (Offe 1987: 530). In short, the loyalty and political support of the welfare state might be undermined and anti-welfare sentiments might rapidly gain ground if the welfare state fails to meet demands. This is simply because beliefs and attitudes are ‘rationally formed in response to perceived social realities as well as to the actual experiences with the practice of existing welfare states’ (Offe 1987: 535). In fact, the political system faces the problem of balancing regulatory services and fiscal inputs, on the one side, and welfare state services and the need for mass loyalty on the other. This two-sided responsiveness places the state in a position of conflict where it has to preserve the conditions of accumulation and search for its own democratic legitimation at the same time. Offe argues that the welfare state is a multi-functional set of institutions whose purpose is to manage the conflicting interests by performing functions which are essential for both sides of state responsiveness. However, although the welfare state raises money from the economic sphere to meet social demands, it must not violate the capitalist production mode. Given the fact that these interventions are necessary to meet public demands for welfare, the hybrid and structurally restrained character of the welfare state becomes clear. Or, in Offe’s (1984: 150) words: the welfare state, rather than being a separate and autonomous source of well being which provides incomes and services as a citizen’s right, is itself highly dependent upon the prosperity and continued profitability of the economy. While being designed to be a cure to some ills of capitalist accumulation, the nature of the illness is such that it may force the patient to refrain from using the cure. In later writings Offe has refined some of his assumptions and has placed a greater emphasis on the changes in the cultural values which endanger mass loyalty. He suggests (1987) that structural changes within modern societies are the underlying determinants for the loss of collective identities, solidarity and affiliation (i.e. categories of a self-perceived sameness). This ‘destructuration of collectivities’, therefore, is a result of a

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process of differentiation of the social structure and the decentring of social and economic life which, in the end, affects the willingness of the people to engage in collectivist arrangements. Where new forms of structural and cultural plurality emerge, the values of collectivism and solidarity evaporate. What this structural disintegration leads to is ‘an interpretative pattern that is deeply distrustful of social policies as “public goods”, and that tends instead to unravel such policies in terms of gains and losses, exploitation, free-riding, redistribution, and so on – that is, in individualist “economic man” categories’ (Offe 1987: 528). The Habermasian (1988) examination of legitimation crisis placed stress on the structural shifts of the cultural system, which he conceives of as being a fundamental factor in legitimization problems. He argues that the problem of the political system of ensuring mass loyalty is not solely a side-effect of unfulfilled promises or expectations but is, in fact, related to a process of cultural transformation. Because the modern state has swept aside the traditional value system and has introduced a normative system of higher rationality and political determination, the reservoir of takenfor-granted values has diminished. In modern societies the traditional mechanisms of transmitting cultural values, such as the family, local communities and religious institutions, have been weakened and the moral infrastructure has become more contingent. This process of destruction of old values is accelerated by state activities: as soon as it steps in and regulates society, the invisible hand of the market turns into a visible hand of the state. The state takes over responsibility for contradictory objectives and must, at the same time, maintain a certain level of loyalty from its citizens. Since administrative planning increasingly affects the cultural system by furthering the politicization of areas which were formerly assigned to the private sphere (and by affecting the related representation of norms and values), the normative substructure undergoes far-reaching changes. ‘Meaning’ is a scarce resource and is becoming even scarcer. Consequently, expectations to use values – that is, expectations monitored by success – are rising in the civil public. The rising level of demand is proportional to the growing need for legitimation. The fiscally siphoned-off resource ‘value’ must take the place of the scanty resource ‘meaning’. Missing legitimation must be offset by rewards conforming to the system. A legitimation crisis arises as soon as the demands for such rewards rise faster than the available quantity of value, or when expectations arise that cannot be satisfied with such rewards. (Habermas 1988: 73) The disappearance of a system of deep-rooted values, which were unquestioned and taken-for-granted, does not lead to a legitimation crisis

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Self-interest and pocket-book attitudes

as long as the level of demand is such that it stays within the limits of the existing mode of production. What produces the inherent tendency towards legitimation problems is, instead, the incorporation of the expectations and demands of the population into the political process. This form of procuring legitimation makes it necessary for competing parties to outbid one another in their programmes. Hence, it is likely that this causes a gap between what parties promise to their electorate and what they are able to achieve so that voters will frequently be left disappointed.

The welfare backlash and a rational opposition In the public discourse, especially in the USA and the UK, it was heavily discussed as to whether or not the median voter would endorse collective welfare arrangements and maintain his obligation to others in the face of the welfare state’s growing fiscal problems. The middle classes were especially conceived of as having a ‘positional awareness’ with regard to the cost and benefit structure they were affected by. In the 1970s Robson (1976: 34) was already suggesting that, ‘whether prevailing attitudes and outlook in Britain today are compatible with the principles and policies of the welfare state . . . is at once the most tangible and the most important issue of our time’. In order to win votes, political parties argued against wasteful public expenditure and adopted low-tax programmes, whereas the parties of traditional high social welfare commitments and progressive taxation had problems in setting out appealing strategies. Mishra (1984: 160) argued that many came to realize the political limits of egalitarian policies in the absence of ‘appropriate popular attitudes.’ It was also argued that the modern welfare state had trouble in terms of public support because it ‘was never firmly attached to popular consciousness’ (Golding and Middleton 1982: 205) as was hoped for by some of the founding fathers of welfare state theory. The break with the old welfare consensus was a major theme in the Wilensky paradigm (1975) of a welfare state backlash. Wilensky opposed the widespread belief that the more universalistic and generous welfare programmes are, the more popular they become. He argued with great clarity that the fundamental changes within modern societies have generated a higher level of mobility, a complex division of labour and the rise of individualistic values. This process will – especially in affluent societies – inflate the lower-middle class and the skilled workers to a middle mass, a social group which is squeezed between the upper-middle class, in a privileged situation, and the underclass. This social stratum is characterized by weak traditional identities, high fluidity and a strategic voting behaviour. Because members of the middle mass see themselves as societal victims, alienated from the better-off and milked by the ‘lazy and undeserving poor’, they develop an anti-welfare attitude. They reaffirm the virtues of

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hard work, self-discipline and a particularistic morality as a substitute for universal moral obligations of social help and solidarity. Taxes and welfare state expenditures are the symbols of their grievances. For this reason, the middle masses are likely to defect from collectivist welfare arrangements and become attracted by Neo-Conservative parties that have put retrenchment on the agenda. Another account, which is related to this issue and which centres around the idea that the welfare state is a political arena where different groups jostle for their share without being willing to commit themselves to the collectivist principles of the welfare state, is provided by Galbraith’s (1992) pointed description of the ‘culture of contentment’. He takes it as an invariant that individuals and communities that are favoured in their social and economic conditions attribute social virtue and political durability to what they themselves enjoy. On these grounds, a ‘content majority’ – the better-off middle class – has developed very protective social attitudes with regard to their well-being and economic prospects. He points out that ‘self-regard is . . . the dominant mood of the content majority’ (1992: 17). If the government, or the seemingly less deserving, threaten to intrude with their needs and demands, the ‘content majority’ reacts with undisguised anger and resistance. Galbraith aptly describes the emergence of a culture where a content majority adopts a highly selective perception of the role of the state; on the one hand, they still support the comfort and security they themselves enjoy, while on the other hand, they condemn the high tax burden and are increasingly reluctant to share their income with others. A quotation might illustrate this point: There is an even more urgent barrier to taxation in the political economy of contentment. That is the marked asymmetry between who pays and who receives. For a considerable, though by no means the entire, range of public services, the supporting taxes fall on the content, the benefits accrue to others. In particular, the fortunate in the polity find themselves paying through their taxes the public cost of the functional underclass, and this, in the most predictable of economic responses, they resist. (Galbraith 1992: 44) Rational Choice authors (e.g. Alt 1983) made a similar point by assuming a rational, self-interested individual who calculates the costs and benefits, and shifts from support for welfare state expansion to a more contractionist view in favour of lower taxes and fewer services. The higher status groups are especially likely to engage in a ‘rational choice revolt’ as paraphrased by Newton (1998: 107). Associated with this instrumentalism were a growing suspicion of social fraud, dissatisfaction with welfare state provision and the reluctance of well-to-do constituencies to shoulder the

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burdens of an increasingly costly welfare state (e.g. Glennerster 1983).1 In the extreme, the citizen is viewed as an output-oriented welfare consumer, searching for his own advantages and unwilling to contribute to the production of public goods. He is lacking a public spirit that would lead him to approve, or at least to accept, redistributive measures to his own disadvantage. Empirically, there are a number of observations in support of such an interpretation. For example, some scholars have asserted decreasing support for the welfare state, especially in areas which solely concern social minorities (Taylor-Gooby 1987; Offe 1987). Furthermore, it has been claimed that there is growing scepticism within large parts of the population because of the negative side-effects of welfare state activities (Ringen 1987). Other findings have shed light on the costs of social security, which are financed by the ordinary citizen through taxes or insurance contributions. It was shown that the loyalty of the better-off social classes lessens when they face rising burdens (see Marklund 1988: 78–9). This is especially true when people consider the welfare security load too high, or if the allocation principles are perceived as unfair (see Wilenski 1975). A deterioration of the quality of welfare services can also encourage people to shift towards private provision and to become more critical of the collective state welfare (Taylor-Gooby 1987). The New Right rhetoric has most explicitly made use of, and stirred up, the existing anti-welfare sentiments. Their strategy was one of populism, taking up the latent dissatisfaction and providing it with a political platform. Thereby they could orchestrate ‘a reversal in popular support for welfare riding on a longer term transition from consensus to conflict in the political climate of the welfare state era’ (Taylor-Gooby 1985: 14). Some of the signs of welfare state defection, therefore, are clearly the result of political attempts to exploit existing welfare state scepticism and promulgate it.

Entrenched interests and ‘varieties of capitalism’ In recent accounts of the policies of retrenchment within the welfare state it became clear that ‘there are significant dangers in generalizing about “the welfare state” ’ (Pierson 1994: 5). This is especially true with regard to writings on the political economy of the welfare state and issues of political support. Glancing at the theoretical literature, one has to concede that the vast majority of the works have their strength in explaining the dynamics of welfare expansion, especially the role of public demands, while they provide little insights for retrenchment policies. An analysis of retrenchment demands a disaggregation of different sets of existing welfare programmes and the political context in which decisions are made. Given this fact, it is obvious that the major theories of welfare development cannot easily be applied to the context of dismantling the traditional welfare insti-

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tutions. As a reaction to this shortcoming, scholars have taken up the issue and provided guidance through the cutbacks and political manoeuvres which set them in operation (exemplary are Mishra 1990; Pierson 1994; Borchert 1995). Within the literature, there is much agreement that Britain has experienced a remarkable change since Mrs Thatcher took office, while the accounts of the Kohl era are far from being unanimous (see Alber 2000). Not only was the institutional structure of the German welfare state relatively robust but also the German Christian Democrats were not a party of the same stamp as the conservative parties in the USA or in Britain. Pierson’s well-informed work on welfare state reforms suggests that retrenchment requires elected officials ‘to pursue unpopular policies which must withstand the scrutiny of both voters and well-entrenched interest group networks’ (Pierson 1995: 5). The bottom line is that it is a rather difficult and risky undertaking to disentitle those who are beneficially involved in the welfare schemes: The main source of durability comes from the high political costs associated with retrenchment policies. Despite scholarly speculation about declining popular support for the welfare state, there remains little evidence of such a shift in opinion polls, and even less in actual political struggles over social spending. On the contrary, efforts to dismantle the welfare state have exacted a high political price. The costs associated with cutbacks are concentrated and immediate, whereas benefits are likely to be diffuse and appear only over time. Furthermore, voters are generally quicker to respond negatively to losses than they are to laud commensurate gains. (Pierson 1994: 180–1) Since retrenchment requires a minimum of opposition to be successful, one of the central questions politicians have to face is: how can social reforms, which promise less generosity and hold out the prospect of cutbacks which affect the vivid interests of large parts of the population, be introduced without losing social support? In contrast to simple theoretical claims the empirical politics of retrenchment appear variable and specific, being determined by a combination of institutional factors, programme designs and organized interests (see Pierson 1994: 164ff.). Networks of supporters, clientele and advocacy groups have clustered around the existing programmes which defend the welfare state against retrenchment. The programmatic structure of the welfare institutions and the way it entrenches interests is accountable for the formation and the strength of these support groups. The programmatic institutional structure, therefore, determines the political vulnerability of welfare programmes (Kuttner 1988). Differences exist between targeted and universal programmes, services and transfers, the type of risk covered, and so on, which

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all have an impact on the resources of system support. Retrenchment occurred where supporting interest groups had a weak standing, or where the government was able to prevent the mobilization of these groups. Thus, the prospects of various strategies are determined by the institutional rules and the political resources as well as the benefits and costs of particular outcomes. In his work, Pierson (1994) uses the theoretical framework of the ‘institutionalist school’ and combines it with a rational choice account of political behaviour. His main focus is on how politics and politicians can enact reform programmes which are in conflict with the interests of the electorate. He is especially concerned with explaining how particular constituencies are linked with individual programmes, and how these interests are represented by important political actors. Political propositions of retrenchment face potential political hazards because people are likely to change their voting behaviour if they experience losses. Retrenchment policies have been inventive in making their achievements less visible by diffusing negative outcomes and minimizing the awareness of cutbacks. These strategies are metaphorically described as strategies of obfuscation, division and compensation (Pierson 1994: 19). Overall, Pierson presents a rather interest-based concept of ‘programmatic retrenchment’, where gains and losses are translated into stances of support or defection,2 and where retrenchment can only be put through if the political costs associated with changes can be contained. Another strand of writings has given the link between social policy preferences and the calculation of costs and benefits an even more prominent position for the explanation of welfare state support. The respective reasoning starts from the assumption that partisan governments and organized interests influence the social security arrangements in order to benefit their constituencies. It has also been pointed out that there is a strong link between the social location of the median voter and the degree of redistribution, since political parties tend to adopt policies that favour the median voter. Hence, the lower the income of the median voter and the greater the exposure to social risks, the greater the pressure for redistributive policies (Meltzer and Richard 1981). From a different angle, the ‘varieties of capitalism’ literature has provided a sophisticated framework, claiming that the welfare state does not always mean ‘politics against the market’ but rather that production regimes and welfare regimes are interlocked and complementary.3 Impressive efforts have been made to reconceptualize the relation between models of capitalism and models of welfare regimes (Scharpf and Schmidt 2000; Ebbinghaus and Manow 2001; Estevez-Abe et al. 2001; Hall and Soskice 2001; Iversen and Soskice 2001). As part of this endeavour it has been contended that the demand for social protection varies with different production regimes, or more specifically skill systems (see Estevez-Abe et al. 2001). It is claimed that not only the income position divides public opinion towards social

Self-interest and pocket-book attitudes

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protection but also the type of skill. In systems based on specific skills, such as Germany, workers are said to be more inclined to support a higher level of social protection than in systems with a prevalence of general skills, such as in Britain or the USA. This is explained by the fact that investment in skills that are particular to a specific firm or industry expose their owners to risks for which they seek protection. Portable skills, in contrast, do not demand such a level of protection. Since the ‘rational worker’ calculates the overall return of his educational investments and since people choose to invest in those skills that generate attractive returns, a system of unemployment compensation can be seen as protecting people against the loss of those investments in the case of unemployment. Since workers with specific skills face potentially longer spells of unemployment in the event of job loss, they have a stronger incentive to support extensive welfare protection. Furthermore, the model predicts particular alliances between employers and employees for a specific welfare protection regime that encourages the investment in skills by safeguarding the expected returns though unemployment protection. On this basis, cross-national variations in welfare state support are explained by an ‘asset theory of social policy preferences’ (Iversen and Soskice 2001) hypothesizing that policy preferences can be explained by national skill profiles that make one protection regime more beneficial than another.

Policy reforms: designing institutions for knaves The question of human motivation and social preferences has also become a central theme within the discussion about welfare state reform, since this demands an understanding of how welfare measures affect people’s behaviour. Under conditions of scarcity policy makers have reevaluated many social policy programmes, often by combining austerity measures with policy instruments which put a greater emphasis on individual responsibilities and market elements. On the level of policy design it was stressed that human action has a strategic dimension and that individuals ‘react to situational changes using the scope of choices available to them’ (Bénéton 1998: 188). Since it was suspected by many policy makers that the welfare state had become ‘a strategic environment in which people operate as calculating entrepreneurs’ (De Swaan 1988: 229), generous and unconditional welfare benefits were viewed as dysfunctional. Hence, it was put forward that the welfare state should not de-commodify welfare provision, rather it should place an emphasis on responsible behaviour and the strengthening of the self-help capacities of the citizen. One central aim, therefore, was the ‘productivist re-ordering of social policy’ (Jessop 1994: 24) which leaves less space for social fraud and the over-utilization of services and benefits.4 One popular argument, especially in the Anglo-Saxon debate, claimed

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that far-reaching state responsibility discourages individuals from taking responsibility for their own actions.5 In this context, the public discourse was dealing with the distinction between ‘passive welfare’ and ‘active welfare’, alleging that there are certain programmes which set the right incentives while there are others which set the wrong ones. At the same time, policy makers expressed their distrust in the structural reliability of amorphous concepts such as solidarity or altruism, and hence were reluctant to give them a central place in their reform concepts. Only when they could be harmonized with efficiency considerations were they kept as concessions to the public. Their substantive power, which was an integral part of traditional concepts of welfare, was in many cases dismissed and replaced by the idea of the ‘welfare calculator’. The solution then offered was to accept the fundamental role self-interest plays in human motivation. ‘The job of a welfare reconstruction is to plan a series of benefit reforms which allow self-interest to operate in a way that simultaneously promotes the public good’ (Field 1995: 20). In many areas of social policy implicit contractual and achievement-oriented principles have been enforced. This is because it is thought that a welfare state grounded on such principles possesses more institutional robustness and corresponds better to the motivational structure of individuals. These solutions represent a policy approach which Goodin (1996: 41) labelled as ‘designing institutions for knaves’, i.e. an institutional design on the basis of a calculus account of human behaviour. LeGrand (1997) has examined this shift within social policy. He reaches the conclusion that the old welfare state was largely based on assumptions that, in welfare-related situations, people would either behave like knights (public-spirited altruists) or like pawns (passive recipients of state benefits), whereas the political shifts are built on assumptions that people behave in one way or another as knaves (selfinterested individuals). A similar observation was made by Peter TaylorGooby: The shift from altruism to self-interest as the assumed primary motivation is associated with a shift from cultural to an instrumentally rational account of behaviour. In the former model, professional and public service ethics and a citizenship that included a willingness to finance services for the more needy members of the community were seen as guaranteeing the service of the common interest. The new public policy is based on the assumption that the rational pursuit of self-interest is the major motivating force. (1998a: 216) It seems to be an important trend within social policy design to modernize the welfare state in a specific way, by reducing benevolent and unconditioned welfare measures and replacing them with measures that

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place recipients in a position where obligations, individual responsibility and norm adherence are enforced. Thus, the collective production of welfare should be less concerned with redistribution, but more with a ‘reprivatization’ of public goods which ought to be more closely attached to individual contributions and achievements.

3

The admixture of motives Broadening the perspective

In the previous chapter a number of theoretical contributions regarding the interaction between the output of welfare institutions and the question of legitimacy were presented. Although in many cases it remains implicit, the view taken by most of these contributions suggests that the micro-behaviour and attitudes of citizens are determined by the distributive outcomes of welfare institutions. In short, individuals prefer institutions that enhance their welfare to losses in aggregate welfare. Hence, it has been assumed that the distributive preferences of the people are aligned with the output structure of the welfare arrangement. However, despite the influence the material incentive-based interpretations of the welfare state have gained, the explanatory power of the self-interest account is not unlimited. There is ample evidence that the welfare state is widely accepted, notwithstanding the fact that substantial income redistribution takes place and that not everybody benefits from this. That people, even in well-to-do constituencies, regularly endorse redistributive policies is a major indication of the existence of modes of acceptance which cannot be captured within an approach that considers only the gains and losses in material terms. Theories which rely on the explanatory power of self-interest alone overlook the substantive role of other components which shape people’s orientations. Without other motivational sources of the normative kind, many of the welfare state assets which realize huge resource transfers between social groups would not be sustainable and would evoke strong resistance. The question of interest is what other factors are relevant to the way people view and value the welfare state and whether these factors can be integrated into the modelling of the welfare state–individual relationship. The subsequent chapter, therefore, attempts to lay out an analytical framework that overcomes the behavioural assumption of the self-interest model and takes the normative underpinnings of welfare transfers into account. In order to improve ideas on the role of different motivational components which govern attitudes and behaviour, on the one hand, and the role of the institutional architecture, on the other hand, this chapter will put forward a concept of the moral economy of

The admixture of motives

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welfare state institutions that provides us with a more specific and concrete understanding of the matters of resource sharing and its normative aspects.

Preference formation beyond self-interest Survey studies have shown throughout that the core principles of the western welfare states have found the lasting support of the population. The stances taken within public opinion in the western countries have shown a strong commitment to the welfare state, its services and programmes. Although the many problems and changes the welfare state is facing are clear to most, an overall tendency towards an erosion of mass support for the welfare state is not apparent. Amongst others, Coughlin (1980: 153, 154) argued that welfare state institutions are deeply entrenched in popular attitudes, and that they are likely to survive. This observation was confirmed some years later by a comprehensive scientific enterprise, the Beliefs in Government study (Kaase and Newton 1995). The study found little evidence for a crumbling support of public services; on the contrary, attitudes seem to have remained firmly in support of them. Moreover, patterns of public attitudes have shown a very moderate and consonant reaction to a rearrangement of the welfare state and even a sense of the limits and problems which it entails. The major criticisms tend to appear at the level of a perceived inefficiency and the side-effects of the welfare state, rather than at the level of fundamental principles. Indeed, even socio-economic equality policies, which are the most vulnerable from a calculus perspective, enjoy a strong support from European citizens (Roller 1995: 194). In addition, little evidence was found that voters want something for nothing and it could be shown that people are still willing to contribute to the common good (Confalonieri and Newton 1995). Kaase and Newton conclude: ‘There is little sign of a welfare backlash, tax revolt, legitimacy crisis, or general disillusionment with public services. That is not to say there has been no change, but change is not necessarily decline’ (1995: 96). Not even the massive cut-back policies in Great Britain during the Thatcher era (see Taylor-Gooby 1991) or in Sweden at the beginning of the 1990s (see Svallfors 1997) have evoked a breakdown of the welfare consensus or a general disapproval of the welfare state. As Pierson (1994: 176) writes about the Neo-Conservative era in the United States and Great Britain: ‘The public has become, if anything, more supportive of social services.’ Indeed, the observations underline that the welfare state is extremely popular and that retrenchment might even have triggered a higher level of public support. Within the UK, it is reported by the British Social Attitudes that a comfortable majority ‘supports increases in spending on at least one or more of the core areas of health, education and universal welfare benefits. There is no evidence either that rich people are less

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The admixture of motives

in sympathy than poorer ones with increases in public spending, even if they are asked to pay a higher share of the tax burden to finance them’ (Brook et al. 1996: 200). Due to the manifold evidence, authors came to reject the assumption that individualism and self-interest gain ground at the cost of a collective commitment to state welfare (see Rentoul 1990). Inglehart (1990: 257), for example, strongly opposes the idea of the rise of a citizen motivated solely by self-interest, on the contrary, ‘the electorates of advanced industrial societies do not seem to be voting with their pocketbooks, but instead seem primarily motivated by “sociotropic” concern’. Within experimental economic research it has also been demonstrated that people may be willing to accept losses rather than to accept a distribution they perceive as unfair (Kahneman et al. 1986). In addition, there is empirical evidence that people have a deep aversion to allowing others to fall below the poverty line (Alves and Rossi 1978). Sears and Funk’s (1990) cross-examination of a number of heterogeneous studies shows that many of the findings of self-interest were, in fact, item-order artefacts rather than being based on genuine self-interest. ‘Pocket-book voting’ appears to have a lesser importance than is generally assumed; personal economic considerations have, at best, a modest influence on political choices. One finding of the extensive research programme into Economic Beliefs and Behaviour (Taylor-Gooby 1998a) was a strong indication for a range of motivational factors underlying individual actions and preferences. According to this view, the calculus approach was judged as being too narrow to provide an adequate account of human behaviour and social preferences. Concluding the plentiful research which has been carried out concerning the relationship between attitudes and public policy, Papadakis (1992: 37) recommends: ‘Explanations of opinion of welfare which focus mainly on self-interest need to be refined and to take account of both institutional and individual factors.’ A similar observation has been made by Bénéton (1998: 198) with regard to the way in which social policy frames human behaviour: ‘Social policies have ignored the moral dimension of human action. A purely economic analysis, in its limited perspective, . . . contributes to this misconception.’ Recent analyses (Lichbach 1994; Bicchieri 1993) have demonstrated that the individualistic and self-interested perspective fails to explain why people are willing to serve the commonwealth at all, since it is costly and risky to act collectively.1 With regard to collective welfare arrangements people are found to have several simultaneous reasons for being willing to pay for welfare wherein moral obligations play an important part (Van Oorschot 2000). In a nutshell, the self-interest model cannot account for a satisfactory explanation of political behaviour, nor can it make sense of all the publicregarding views of citizens. There is no doubt about the major importance

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of the self-interest factor, but predictions made solely on the basis of this determinant prove to be insufficient. One can assume that self-interest explains most human interaction in some contexts, and that it plays some role in almost every context (Mansbridge 1990a: ix). However, other factors, the unexplained ‘rest’, are not a redundant category, but rather the decisive element which makes the welfare state work. After all, the welfare state needs to be regarded as a societal arrangement for the exchange and redistribution of resources that is insufficiently captured by the effects of extrinsic material motivations. It is not the taking, calculating and capitalizing individual who provides the key to understanding the political economy of the welfare state, but rather a citizen who is – to a large degree – freely consenting that resources are moved through state channels to the benefit of people in distress. In his ground-breaking book Stone Age Economics, Marshall Sahlins (1974: 183) argued that ‘every exchange, as it embodies some coefficient of sociability, cannot be understood in its material terms apart from its social terms’. An explication of the motives involved in the support for the welfare system, therefore, also has to give a place to motives that are related to the aims and objectives of welfare transfers. Leading social scientists like Albert Hirschman (1985), Amartya Sen (1990) and John Elster (1990) made it clear that ‘self-interest cannot be the whole story’ (Elster 1990: 51), and that other forms of motivation such as altruism, codes of honour and long-term orientations have to enter into the explanation of preferences. Elster (1989) has emphasized the importance of norm-guided behaviour, which he defines negatively as the opposite of action according to self-interest. Social norms play a role in human motivation and it is not satisfactory ‘to leave them as an untheorized residual’ (Levi 1991: 139). In response, many contributions have softened the stress on self-interest, and some have even challenged the primacy of individual self-interest in public issue involvement. The focus shifted towards universal moral systems which were considered as distinct guides to human behaviour. Normative orientations, controlled by culture and socialization, were conceptionalized as alternative patterns of social conduct. Amitai Etzioni pronounced a sociological concern when he insisted that individuals are ‘ “normative-affective” beings whose deliberations and decisions are deeply affected by . . . values and emotions’ (1988: ix) rather than by self-interested calculations. For him, human behaviour on the grounds of moral commitment differs systematically and significantly from behaviour in the pursuit of self-interest. This ‘irreducibility of moral behaviour’ (1988: 67) calls for a paradigm development that keeps its distance from the idea of one overarching utility, and treats the moral commitment as a separate explanatory factor. In contrast to the ‘empirically implausible theory of selfish human behaviour’ (Bowles et al. 2001: 1) one needs to regard the admixture of motives that form the basis of individual behaviour or social attitudes.

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The admixture of motives

Papadakis (1992: 37) has observed that ‘symbolic values and ethical concerns may be as salient as or even more significant than a preoccupation with the maximization of income in shaping opinion about the welfare state’. Although the terminology varies quite widely, the dichotomy of motivations based on self-interest (often in terms of maximizing one’s own income), on the one hand, and moral concerns, on the other hand, has found repercussions in a wide range of literature.2 Elster (1990) speaks of ‘selfishness’ versus ‘altruism’, Mansbridge (1990b) of ‘self-interest’ versus ‘love and duty’, Kangas (1997) of the ‘homo economicus’ and the ‘homo sociologicus’, and Taylor-Gooby (1999a) of ‘instrumental rationality’ versus ‘normative behaviour’. Others suggest ‘dual utilities’ of normative and instrumental motivations (Levi 1991; Margolis 1982), or they have rejected egoism as a description of motivation and emphasized more expansive sets of concerns such as ‘sympathy and commitment’ (Sen 1990) or ‘concerns and respect for others’ (Schmidtz 1996). Jencks (1990) views the fundamental distinction between selfishness and unselfishness as the opposite ends of one spectrum, depending on the relative weight of one’s own interests and the interests of others. According to him, a single label encourages the illusion that it is a single trait that underlies different forms of behaviour. Unselfish, or altruistic, behaviour is behaviour promoting another’s welfare for a reason independent of its effects on one’s own welfare, whereas selfish behaviour is the promotion of one’s own welfare that does not include the welfare of others (Jencks 1990: 53). Bauman (1990: 131) defines both motives of human conduct as follows: ‘If in a gain-motivated action my needs (however I may define them) are the sole consideration, in a morally motivated action the needs of others become the basic criterion of choice. In principle, self-interest and moral duty point in opposite directions.’ It must be noted that there is not a clear-cut difference between selfinterest and moral impulses, as the moral component can quite often be interpreted in terms of cooperative behaviour.3 One also has to be aware that parties may internalize each other’s welfare, making it difficult to distinguish between self-regard and regard for others. Furthermore, many acts possess both elements and the fact that an act benefits oneself does not necessarily mean that a moral commitment is not present (Mansbridge 1990b: 137). Purely self-regarding people, in other words, people who care about no one else’s welfare than their own, are a rather rare social phenomena, as are people who purely have a regard for others.4 The interesting question for theoretical and empirical analysis is how norms and economic incentives interact (see Kreps 1997). For matters of clarification it has been suggested that one should start with the assumption that people have dual utilities. ‘A large proportion appears to have dual utilities. They wish to contribute to the social good, as long as they believe a social good is being produced. They also want to ensure that their individualistic interests are

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being satisfied as far as possible’ (Levi 1991: 133). The outcome, i.e. the individual action or preference, blends the two utility functions. The pursuit of self-interest, for example, may violate social norms, but if it does, the individual tries to minimize the negative effects. The same applies vice versa: the individual may emphasize his moral commitments, but if he does, he seeks not to do so against his self-interest given the range of choices available to him. Margolis (1982) has also distinguished between individual utility and group utility for advancing a dual model. He uses the fictitious person Smith in order to demonstrate the tension and modes of reconciliation between these two dimensions. If we imagine that inside Smith there are two individuals – an S-Smith who values only his self-interest, and a G-Smith who values only his perception of group-interest – is it possible to specify an allocation rule, or a Social Welfare Function for this two-person ‘society’ with the property that, given the rule, Smith behaves the way we empirically observe real people behave? (1982: 2) As an answer he argues that ‘inside Smith’ the claims of self-interest versus group-interest are balanced against each other, leading to an observable ‘outside’ preference order. When people judge social welfare situations, such as allocation rules and outcomes, they do so simultaneously with regard to their beneficial (or non-beneficial) involvement as to their normative scripts. In normative terms, they approve situations and courses of action which they regard as morally correct and plausible, in self-interest terms, situations which enhance their individual pecuniary well-being. The different sources of valuation form a common outcome, either on the basis of a conjuncture of self-interest and a moral commitment or in a conflicting way. In the case of conjuncture the aggregate outcome is easy to predict. Evidently, in a clear positive-outcome situation and under the condition of moral consent, there is no reason to disagree. If the self-interest is in line with one’s moral values, a strong feeling of commitment and affirmation emerges. If the modes of validation oppose each other, because the moral approval is contested by personal losses, or if gains are offset by the costs of immoral behaviour, the outcome is more difficult to predict. Studies have been undertaken to gain an insight into the interaction of both factors, especially in cases where there is a disjunction between the self-interest and the moral convictions. In general, there is a pay-off between both, e.g. people are less likely to heed a moral commitment if the costs are high, and vice versa. In other words, a social commitment can be easily maintained if the costs are marginal or negligible. A moral commitment, as Etzioni (1988: 42) writes, ‘drives up the costs of immoral behaviour’. If the pursuit of self-interest

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violates the personal codes of moral behaviour the gains of this action are belittled. However, there are also cases when moral commitment overrides self-interest. From an institutional perspective the question arises how institutions condition and determine the interaction between the two utilities. Consequently, Mansbridge (1990b: 21) has called for an analytical paradigm that shows sensitivity to these issues: We need institutions based primarily on self-interest as well as those primarily on altruism, recognising that each may well require some admixture of the other set of motives. We need particularly to understand better the internal dynamics of various mixtures of motives in specific institutions in which different forms of self-interest either undermine or sustain specific forms of concern with others. It can be assumed that there are conditions under which moral commitment thrives while it fades away in the face of others. Richard Titmuss’ (1970) investigation into blood donation practices is an apt example of the way material incentives can endanger moral stances. He found that commercial blood programmes drive out voluntary ones and that people donate less once giving blood is rewarded financially. This is exactly what Goodin (1980: 140) had in mind when suggesting that ‘material incentives destroy rather than supplement moral incentives’. In this instance, people’s motivation to donate blood without being financially rewarded was undermined by the introduction of financial gratification. But although self-interest and moral motives may become prevalent depending on circumstances over which people have only limited control, it also has to be emphasized that ‘the power of circumstances is never absolute, and the choice between the two contradictory motives remains open even under the most extreme conditions’ (Bauman 1990: 140–1). Margaret Levi (1991, 1997) reports in her study on volunteering for military service and conscientious objection during wartime that there were people coming from an anti-war movement background that were ready to pay a high price for their beliefs. Conscientious objection represents a case where even obstacles and penalties fail to affect those with a strong and fundamental position. In some instances people may only have a single utility. Moral motives may be promoted by certain supportive conditions such as community values, peer culture and moral education which help to entrench these commitments. Where moral commitments are perceived of as worth pursuing in the light of public recognition and mutual reassurance, people are inclined to act accordingly. In such environments they give higher value to morally acceptable behaviour. Although morals cannot be fabricated and administered by central policies, ‘once attention is paid to normative factors, policies can be fashioned to enhance, or at

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least to not undermine these factors’ (Etzioni 1988: 242). Mansbridge (1990c: 133) makes a strong point when stating that unselfish motivations must coincide sufficiently with self-interest to prevent the extinction of the altruist. Moral motivations are more sustainable within an environment – an ‘ecological niche’ – that provides enough self-interest return to make them less costly. ‘Arrangements that make unselfishness less costly in narrowly self-interested terms increase the degree to which individuals feel they can afford to indulge their feelings of empathy and their moral commitments’ (Mansbridge 1990c: 137).

Institutions: material incentives and social norms There is a widespread consensus within the literature that every institutional structure sends signals, and provides incentives, that influence the individual’s course of action. However, economists have mainly dealt with the role of economic incentives, while sociologists have tried to understand how social norms are institutionally fostered and mediated. Recent research has attempted to overcome this conceptional divide by accepting that both economic incentives and social norms influence an individual’s behaviour. The concept of ‘contingent consent’, as developed by Margaret Levi (1991, 1993, 1997), assumes that the way people balance norms against their self-interest is conditioned by the institutional set-up, which can strengthen norms and encourage compliance. In many institutional contexts people are willing to hold back their outcome-oriented interests in order to promote the collective good. Contingent consent is possible ‘when institutional arrangements exist which create either of two situations: the dominance of normative over instrumental motivations; or a complementarity of instrumental and normative motivations’ (Levi 1991: 135). Though there is much knowledge concerning the issue of why people respond to economic incentives, we know comparably little about the issue of why people adhere to social norms. The answers given by economists to this question suggest that adherence to a social norm follows the assessment of sanctions or benefits associated with norm-driven action. It is said that people adhere to a norm if, relative to norm violation, it is costless. For example, if the risk of being caught for committing tax evasion is too high then people may be more willing to pay their taxes. Adherence to social norms can also be advantageous because it allows coordination and cooperation with others, as the theorems of repeated games suggest (see Kreps 1997). Obviously, these points are of relevance if one regards the institutional structure not just as an incentive structure, but also as an environment of social interaction. When vast groups of people have no direct contact with one another the coordination between them is facilitated through institutional arrangements. Institutions are, in their most innocuous sense, points of reference for individual actions and

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expectations and thereby address problems of order and cooperation. The term institution denotes that social actions are ‘institutionalized’ in the sense that their regularity is attributable to the constraint of normative expectations. Since the binding power of institutions underwrites that the co-actors are disposed to engage in cooperation and that norm violators are punished, individuals are less prone to abstain from norm adherence. From the individual’s point of view, the behaviour of the respective coactors is less dependent on their intention or motivations, but rather on the capability of regulations to enforce and to encourage cooperative behaviour. A variety of writings, which can be summed up under the label of ‘new institutionalism’, has contributed to a more far-reaching conceptualization of the individual–institution link.5 Most institutionalists agree with the proposition that individual agents and groups pursue projects in a collectively constrained context which takes the form of institutions. Institutions are understood as ‘organized patterns of socially constructed norms and roles, and socially prescribed behaviors expected of occupants of these roles, which are created and re-created over time’ (Goodin 1996: 19f.). Bo Rothstein’s book Just Institutions Matter (1998) highlights the determinative and formative role of institutions in shaping social and political motivations. He stresses the two-way connections between social norms and interests, on the one hand, and institutions, on the other: Opinions, interests, values, ideology, preferences, etc., all influence institutions and policies. But policies and institutions also influence opinions, etc. . . . In simplified form, the mental figure looks like this: institutions give rise to certain interests and norms, which in turn either reinforce or undermine the original institutions. (1998: 135) In Rediscovering Institutions, March and Olsen (1989) argue that the behaviour of individuals is shaped, determined and conducted by institutions, but, rather than simply providing extrinsic incentives, institutions establish cultural and social norms with their own codes and dicta. The ‘new institutionalists’ perceive the preferences of individuals as being formed within an institutional context or, even beyond this, as products of a large framework of references including, for instance, culture, identity or customs (see Granovetter 1992). If institutions incorporate the entrenched norms of the wider social environment they tend to be more legitimate and justifiable. Thus, institutions are not just efficient aggregates of preferences, rather they mediate and cultivate common cultures, collective identities, belonging, bonds, mutual affection, shared visions, symbols, mutual trust and solidarity (March and Olsen 1989).

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Once established, institutions have a norm-setting function which determines the individual’s motives. The moral and cultural resources which institutions encapsulate allow them a permanent normative selffoundation by giving reason to comply and being morally compelling. The inherent meanings of institutions provide motivations for individual’s actions and foster a commitment to the norms and values represented by the institution. Rothstein (1998: 138) remarks: ‘The idea is that institutions not only influence what political actors find to be a rational course of action, seen from the standpoint of their self-interest, but also what we consider to be a morally defensible behaviour.’ Indeed, successful institutions are those which are arranged to bring about in its members a ‘corresponding sense of justice (and) an effective desire to act in accordance with its rules’ (Rawls 1971: 261; author’s comment added). Hence, the institutional perspective suggests that the focus on material incentives needs to be more fruitfully related to the institutionally ingrained social norms that affect people’s public attitudes, choices and actions. Only if we understand how value judgements enter people’s preferences and how these judgements relate to those values pronounced by the institutional architecture will we advance our knowledge of the political economy of the welfare state. However, the logic of normative support for a specific institutional set is difficult to spell out in precise terms. The normative component possesses a good degree of social obstinacy and is difficult to predict. Norms take their grip on people’s minds in an ‘active process of interpretation, selection, adhesion and rejection in specific contexts’ (Lukes 1991: 147). It is most commonly suggested that institutions convey a sense of the ‘appropriate’ and the ‘adequate’ rather than stimulate income maximizing behaviour. March and Olsen (1989), for example, refer to the ‘logic of appropriateness’ in order to establish the link between the macro- and the micro-level of policy. An institutional context is associated with ‘identities more than with interests; and with the selection of rules more than with individual rational expectations’ (1989: 11). Within most institutional contexts people do not act according to economic man categories but search for an appropriate response to a situation given their position and responsibilities. For the question of what shapes and guides human behaviour a ‘calculus of political costs and benefits is less important; a calculus of identity and appropriateness is more important’ (March and Olsen 1989: 38). Part of the notion of appropriateness is ultimately anchored in the normative notion of institutions. Institutions act as filters, emphasizers, accommodators and cognitive determinants of the moral point of view taken by the individual. Institutional built-in biases of justice, fairness and adequacy have the propensity to prepare individual moral judgements. Mary Douglas (1987: 124) has told us that the ‘most profound decisions about justice are not made by individuals as such, but by

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individuals thinking within and on behalf of institutions’. Hence, the ‘design given to political institutions governs the notion of morality and justice prevailing in society’ (Rothstein 1998: 217). It can be shown that what most people find fair, just, equitable or legitimate with regard to resource distribution shows some consistency and convergence with the actual distributional practice (Philips 1983: 318). One also has to emphasize the importance of social conventions, habits and routines as determinants of action which derive from constraining environments. Processes of internalization turn constraints and rules into preferences. Once individuals establish a routine and internalize norms they tend ‘to stay with the tried and true’ (Koeble 1995: 235). Institutional practices have the tendency to accommodate individuals into a given system and to phase out alternative arrangements. Hinrichs’ (1997: 30) interesting work on German health insurance, for example, shows that there is some kind of ‘institutional fatalism’ that facilitates continuing support in which ‘the basic (formal) rules and their redistributive implications develop a hegemonic, almost natural normative status and thus assure habitual loyalties and uncontested support’. However, not every institution will be successful in motivating corresponding normative orientations. Institutions are most successful in winning support if they possess a moral plausibility that makes them not only comprehensible, but also defensible against objections that they lack fairness or adequacy and other competing claims (Offe 1999). Plausibility also underpins the assumption made by individuals that others share their perception, an assumption that enhances the normative agreeability and accountability of institutions. Institutions, if appropriately designed, enable us to trust our fellow citizens. Trusting institutions means ‘knowing and recognising as valid the values and form of life incorporated in an institution and deriving from this recognition the assumption that this idea makes sufficient sense to a sufficient number of people to motivate their ongoing active support for the institution and the compliance with its rules’ (Offe 1999: 70). Institutions can be seen as generalizers and mediators of trust relationships. This lateral reproduction of meaning, one could argue, stabilizes the relationship between institutions and individuals by simply validating institutional norms at a social level. The willingness of the individual to contribute to the common good, for example, depends on the belief that other citizens also pay their duly allotted share. Ultimately, institutional support rests on the perception of a form of ‘just distribution of burdens’ (Rothstein 1998: 142) and also that others will not have unjustified and illegal advantages from the system (e.g. social fraud). Levi (1993) has suggested that there are three forms of contingencies which facilitate consent: first, that the collective political solutions must appeal to social norms, such as notions of justice and fairness; second, that the institutional solutions must generate trust that fellow citizens will likewise contribute to the common good;

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and finally that the implementation of policy measures must be based on unbiased and fair procedures.

The moral economy of welfare state institutions Equipped with the insights of the ‘new institutionalism’ one can tackle the issue of public support for the collective provision of welfare in a different way. A cost–benefit analysis alone cannot sufficiently explain how prowelfare attitudes develop, rather we also need to understand how the institutional arrangements of the welfare state incorporate norms and values. This requires accepting that they are not just instrumental arrangements, but, moreover, ‘expressions of definite moral conceptions’ (Rothstein 1998: 2). Talking about a moral economy6 implies that social transactions are grounded upon a socially constituted and subjectively validated set of social norms and shared moral assumptions. Social transfers have meanings. An institutional stock, or system of transactions, can be socially desirable because it represents the society’s prevailing normative selfunderstanding, for example, how the vulnerable and weak should be treated, and thereby gives reason to its members to agree upon the transfer of wealth and income. Through social transfers, social ties are institutionalized and social relationships between members and groups of the society are recognized, maintained and balanced. Therefore, as EspingAndersen (1990: 18) has pointed out, it is necessary to think of the welfare state ‘in terms of social relations, not just social categories’, or, as Lessenich (1998) puts it, ‘relations matter’. Indeed, welfare transfers between social groups, mutual aid and risk sharing depend, on the whole, on ongoing assertions of social relatedness. The provision of social support is the major mechanism that remedies the imbalances in the relative distribution of life chances in cases where they have exceeded tolerable limits (Cheal 1996: 91). The restoration of balanced relationships between the members of a collective may imply costs for parts of the society, but these costs are morally and socially countervalued by accomplishing a ‘better society’. The moral economy of welfare state institutions can be defined as the ongoing logic of social support for, and acceptance of, the redistributive nature of welfare provision whereby a commitment to the fate of the lesswell off, the disadvantaged, and people at risk is recognized. The normative resonance of welfare policies is one of the main prerequisites for the support of the public, especially for those groups that are expected to contribute resources. It is certainly true that the ‘institution works as such when it acquires . . . support from the harnessed moral energy of its members’ (Douglas 1987: 63). Where ‘good reasons’ for a certain set of social provisions are given, people are more likely to comply and to sustain the institutional asset. It is the public affirmation and recognition of welfare policies that provides the ‘normative fundament’ on which the

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institutional architecture rests. Offe (1994: 90–1) has emphasized that any welfare state must operate upon the basis of a socially and politically validated conception of ‘how much is enough under given circumstances’ . . . The practice of the welfare state is embedded in a widely shared set of background assumptions concerning some operationally appropriate notion of social justice which specifies the (social and substantive) limits up to which, but not beyond which, social security enhancing policy arrangements are called for, and who is to carry the burden of such provision. . . . Only those policies are likely to become effective which ‘make sense’ (i.e. those which are widely accepted as ‘plausible’, ‘tolerable’ or sufficiently ‘meaningful’) in the context and by the criteria established by these considerations, which thus would delimit the ‘possible space’ of social policies. Since every redistribution of social resources involves winners and losers and establishes social relationships, an account of welfare policies must develop an understanding of the kind of social exchange which has been put into operation. To comprehend the moral economy of welfare institutions it may be suggested that reciprocity norms are quite crucial since they entail ideas of giving aid, exchange and mutuality which have an impact on an individual’s motivations and the way they relate themselves to others.7 That is to say that public transfers must be conceived of as bilateral relationships between the giver and the recipient on the basis of the norm of reciprocity. Reciprocity refers to exchanges with others that are contingent on rewarding reactions from others, but which are not reducible to extrinsic benefits. In other words, although reciprocity encompasses some elements of self-interest, it cannot be reduced to it, since reciprocal interactions can entail very different reciprocations for social benefactions. It is the set of moral assumptions people hold that constitutes a system of reciprocal relations (Kohli 1987: 127). The interest in rewards, therefore, is not to be equated with a specific (balanced) distributional outcome and allows for redistributions across social groups. Indeed, reciprocity exchanges can be very unequal exchanges entailing a reapportion of resources. It is important to note that the relation between the benefits and the reciprocation involves moral interpretations about what is regarded as a fair social exchange.8 The merit of the reciprocity principle is that it puts a premium on mutual beneficiality of welfare schemes where different parties can advance and satisfy their interests without necessarily taking the position of an income maximizer. It departs from the notion of egoism and asks for different reasons to give (or not to give) in relationships involving intermediaries. It is not the asymmetry between the taxpayer and the welfare client that is the dominant understanding of welfare transfers, but

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the continuum of ‘giving-receiving-reciprocating’ within which both sides play their part. That is to say that reciprocity norms define certain actions and obligations as ‘repayments’ for benefits received (on reciprocity see Gouldner 1973: 226ff.). Reciprocity also implies that those who are involved in reciprocity exchanges can expect to receive benefits in the case of their own need. The norm carries a notion of precaution by saying that if you want to be helped by others you must also help them. As Walzer (1983: 81) points out: ‘All provision is reciprocal; the members take turns providing and being provided for, much as Aristotle’s citizens take turns ruling and being ruled.’ Thus, the reciprocity norm has to be understood in terms of appropriateness and mutuality, rather than in terms of commensurability. Rothstein (1998: 199) describes the related attitudinal stance as follows: ‘(C)itizen X demands that the public services be supplied in a manner appropriate to his own situation and need, but is prepared at the same time to support citizen Y’s demand to obtain services matching his own altogether different situation.’ Social redistribution presupposes a closed world and a constituency which regulates the exchange and sharing of social goods. Without an idea of membership within a political or social community, the redistribution of welfare would lack normative support and justification. If one thinks about the welfare state as a ‘mutual benefit club’, one can clearly grasp that it is an underlying ‘contractualist notion’ that facilitates welfare provision. Otherwise, if this were not the case, the reciprocity norm would be hollowed out. Walzer (1983: 82–3) provides an account of the social contract: (I)t is an agreement to redistribute the resources of the members in accordance to some shared understanding of their needs, subject to ongoing political determination in detail. The contract is a moral bond. It connects the strong and the weak, the lucky and the unlucky, the rich and the poor, creating a union that transcends all differences of interests, drawing its strength from history, culture, religion, language, and so on. Arguments about communal provision are, at the deepest level, interpretations of that union. The main purpose of welfare state institutions is to achieve a balance in the quality of life between members and groups of a given society by means of organized and institutionalized reciprocity (Mau 2002). Social insurance, for example, can hardly be understood to be an actuarial arrangement, moreover it is an expression of a ‘collective sense of fate’ (De Swaan 1988: 154), generalizing interdependencies and social mutuality. One can view social insurance as an institution through which the ‘societal solidarity contract’ is realized and which constitutes the relationship of the members of the society with each other (Ewald 1986). Social insurance embodies a solidarity ideal, and it gives society the means to allocate ‘goods’ and ‘bads’. Societies can thus feel like the ‘master of

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justice’ mediating people’s demands, needs and entitlements. The institutional character helps to standardize and stabilize social relationships, and to resolve the problems of accountability and trust which are an inherent feature of mass societies. On these grounds, social relations can be viewed as correlates and constituents of social transfers, and vice versa. When social transfers take an institutionalized form, for which the welfare state is a prime example, the social relations involve actors as strangers and intermediaries, but they also become more coordinated and stabilized. Although institutions are an answer to coordination problems in modern societies, they are also problematic. They have certain drawbacks such as their anonymity and the absence of face-to-face relations between the beneficiary and the benefactor. State-regulated transactions tend to be independent of personal relations and characteristics, whereby rights and duties derive from abstract legislation rather than specific ties. Some of the moral sentiments which underlie acts of solidarity simply cannot be translated into the institutional architecture. The motivation to help, for example, is likely to be more effectively activated where help is solicited in direct confrontation with the concrete needs of other people, as well as contexts where others are visibly helping, as opposed to a situation where the relations between the helper and the needy is mediated by legal, bureaucratic, or professional procedures. (Offe 1992: 84) Obviously, the welfare state cannot rely on the ego gratification and social rewards which were a part of many charitable projects in Victorian times. However, within the welfare state the public attempt to institutionalize and standardize ‘compassion’ and ‘social help’ has raised the opportunity ‘for those of higher incomes (middle class and above, perhaps) to gain social status by associating themselves with advocacy for “programs”, without making the sacrifice of charitable giving and without having interpersonal contact with those who are actually struggling’ (Husock 1997: 89). The altruism people can enjoy does not need further engagement and does not force us to ‘probe deeper into our motivations’ (ibid.). Paying for social insurance and contributing taxes – in other words rendering resources for collective provision – are the major means of a citizen’s involvement in redistributive arrangements. That does not mean that moral concerns are absent, but they are related to the institutional asset rather than to the individual beneficiaries themselves. Also institutions can develop the moral capacities of the citizen. Hinrichs (1997: 6) has highlighted that welfare institutions, such as social insurance, depend and rest upon a ‘moral infrastructure’ which ‘is the result of formative side-effects on the part of the insured due to the lasting existence of those schemes because . . . they perform a “socializing

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function” in that they generate and cultivate congruent moral and cognitive standards’. The welfare state provides a setting which deters people from individual utility maximization and encourages them to participate in a ‘vision’ of social justice and social duties. Titmuss believed that the welfare state can, and should, provide an environment that facilitates a moral commitment and regard for others. According to him, social institutions can foster a sense of community and thereby ‘help to actualize the social and moral potentialities of all citizens’ (1970: 238). How ‘effective’ the institutional and contextual conditions for fostering motivations towards justice and solidarity are, however, is the subject of an ongoing scholarly debate and, of course, empirical investigation.

The homo reciprocus Emphasizing reciprocity as a vital principle in organizing and legitimizing welfare exchanges makes it clear that the reasons why people endorse transfer policies have to be located within the social logic of these exchanges themselves. When looking for the effective motivations at work which underpin these exchanges we need to somehow depart from a narrowly defined model of the homo economicus, and to refer to the model of the homo reciprocus9 in order to help us understand why people endorse some kind of transfers while disapproving of others. The homo reciprocus ‘cares about the well-being of others and about the processes of determining outcomes – whether they are fair, for example, or violate a social norm’ (Bowles and Gintis 2000: 37).10 The inducement to interact and to accept discomfort and burdens is based on general conceptions of fairness, social entitlements and notions of deserving. Claims and counterclaims on resources need to be normatively validated and the question of repayments is closely tied to the cognitive, behavioural and motivational stances of the interactants. The engagement of the homo reciprocus in a costly collective endeavour is more likely in groups and societies that have an effective norm adherence and share moral assumptions. A shared understanding and appreciation, on the side of the giver and the recipients, of what such exchanges entail and demand is one of the essential triggers of welfare state support. One of the preconditions of reciprocity is the mutual recognition of citizens. In general, therefore, to the degree that A and the members of B share a reciprocal moral relationship . . . , then they must be seen as equals. This equality has nothing to do with the relative quantities of their material possessions. Rather it reflects the premise that equal levels of need-satisfaction lead to equal potential for assuming shared moral duties – for achieving equal dignity in the pursuit of individual goals. (Doyal and Gough 1991: 95)

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The moral code of accepting the positive responsibility of helping other persons is bound by reciprocal duties, and, at the deepest level, by mutual recognition. Citizens as ethical actors are those who contribute to the common good by understanding that they join with others, and that they are part of a system of reciprocal rights and duties. It requires understanding that everyone benefits from living in a society where mutual respect is honoured. For when society attempts to safeguard such viable conceptions of justice, public provision should accord equal treatment and concern. However, it should be noted that the principle of equal concern and respect does not say anything about the appropriate level of state ambition in regard to economic distribution and security. This principle can be combined either with a highly comprehensive welfare policy or with a minimal one . . . it is, one might say, a matter of regarding all citizens as possessed of equal worth in relation to the state, and treating them as responsible for their actions. (Rothstein 1998: 33) Reciprocity exchanges are not uniform and one-sided, but rather a ‘whole class of exchanges, a continuum of forms’ (Sahlins 1974: 191). If one seeks to distinguish different types of reciprocity one needs to look at the relationship of the actors involved, the type of expected returns and the social concomitants of reciprocal exchanges. The first type is the balanced – often associated with insurance schemes – where payments are made with the expectation of equivalent returns, while one-way flows are not tolerated (Sahlins 1974: 195). This states that the paycheque to a collective trust fund stipulates returns of commensurate worth or utility, and thereby comforts the participants’ interest. ‘Those “contributions” serve – politically, morally, and psychologically, as well as legally – to vest the persons subsequent entitlements to benefits’ (Goodin 1990: 536). In many instances the balanced reciprocity norm is ensured by earningsrelated contributions and benefits. The justification of such a practice is the equity rationale which states that those who have paid more into a collective fund should get more out of it. Most of these arrangements operate as over-life-span redistribution schemes, basically underwriting that the payments made during the time of a market-income flow will be used for the compensation for a loss of income. Income maintenance schemes ensure not only that everyone participating is benefiting, but also that those who have contributed more will benefit more. A second notion of reciprocity is the dispositional reciprocity (Arneson 1997: 340) or risk reciprocity (Ullrich 1999: 14ff.). In instrumental terms, risk reciprocity suggests that participants in a collective scheme, most notably insurance schemes, are protected from life vicissitudes due to the very contributions made. The ‘security promise’ insurance membership

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confers precludes the narrow calculation of returns. It stands to reason to assume that since diswelfares are associated with negative consequences, people are prepared to accept a degree of resource redistribution. Social insurances do not rely on risk rating, in other words, they do not relate the true actuarial risk to the insurance premium, and thereby they bring people with very different risk profiles into the same pool. Strictly speaking, risk reciprocity is not about equivalent returns, but rather about collective risk sharing. In a common-sense interpretation beyond the insurance rationale, risk reciprocity stands for an attitude saying that if I was helped in a situation of misfortune I would help those who are hit by a similar misfortune. The reciprocation is socially contingent depending on the incident of similar circumstances. Generalized reciprocity is a pattern of interpretation where people understand themselves as partaking in a collective arrangement of mutuality (Ullrich 1999). The specific relations between benefits and material, or immaterial, ‘repayments’ are usually unregarded or indeterminate because people conceive of themselves as cooperators in a societal solidarity contract. Sahlins (1974: 193) calls generalized reciprocity the solidarity extreme, with transactions that are putatively altruistic with some vagueness of the obligation to reciprocate. This variant of the reciprocity norm underpins generous exchanges and abstains, to a large extent, from relating the original benefit and the reciprocation. However, although there might be reasons to invoke the norm of generalized reciprocity for justifying the alleviation of hardship, people cannot be considered as unconditional altruists. People often have the propensity to combine their generosity with the expectation that beneficiaries requite a benefit by accepting certain obligations (Bowles and Gintis 2000). The public issue of who should be eligible for social welfare benefits, and under which condition they can count on public aid, highlights that receiving benefits is often associated with status duties. The obligating reciprocity dictates that it is not the initial cost of the benefit which defines an appropriate reciprocation, but rather the capability and resources of the benefit recipient to reciprocate. Such welfare state transfers carry the notion that those who benefit should make ‘good-faith efforts’ (Arneson 1997: 339) to provide something in return. This ‘something’ can take the guise of a completely different ‘currency’ such as norm-adherent behaviour or the compliance with duties of a different kind. The benefits and the reciprocation are largely incommensurable. Morally approved reciprocity exchanges are those where the granting of benefits leads to behaviour that can be interpreted, by the benefactor, as the recognition of an unwritten ‘debt agreement’ on the side of the beneficiary.

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Policy designs and the repertoire of motives In order to advance our knowledge of the moral economy of welfare states one needs to relate the different reciprocity interpretations to different institutional settings. Subsequently, an attempt has been made to provide a motivational taxonomy in relation to different types of welfare arrangements. The attempt outlines four different motivational complexes that might determine the subjective formation and articulation of welfare state support in correspondence to different types of welfare arrangements (see Figure 3.1). It specifies the hypothetical reasons for sharing incomes with other members of society as well as the normative objections such a demand can face. The taxonomy represents ideal types, whereas the empirical world consists of arrangements which draw on different normative justifications simultaneously. However, the taxonomy makes clear that certain arrangements and services are prone to some reciprocity interpretations while others rest on different kinds of moral assumptions and ideas of adequacy. The model will help us in the subsequent empirical chapters to derive some hypothesis about the logic of social support (or withdrawal of support) for different welfare state schemes. The main distinction between the quadrants at the top and the quadrants at the bottom is the emphasis on conditionality. Those reciprocity norms at the top exert only

Weak conditionality

Generalized reciprocity Solidarity motivation Collective responsibility Universal benefits

Redistributive policy model: Equality of outcome

Risk reciprocity or dispositional reciprocity Liberal egalitarian ethos Flat-rate benefits

Subsidiary egalitarian policy model: Equality of opportunity

Policy model Contributory insurance model: Status maintenance

Balanced reciprocity Insurance attitudes Return expectations Graduated benefits

Figure 3.1 A moral taxonomy

Selective and residual policy model: Deterrent poverty policy

Strong conditionality

Obligating reciprocity Self-help priority Last resort aid Means-tested benefits

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weak conditionality and require indefinite reciprocation, whereas those at the bottom are built on strong assumptions of ‘repayments’ either in the form of beneficial returns (money, entitlements) or the good-faith efforts of the beneficiaries (behaviour). At the top left we have classified the redistributive model as it is represented by the universal welfare arrangements. Universalist welfare provision means that ‘benefits and services are intended to cover the entire population throughout different stages of life, and on the basis of uniform rules’ (Rothstein 1998: 19). In the ideal universalist welfare regime the promotion of equality is an end in itself. The overarching goal of such forms of provision – the objective of providing de-commodified welfare for all citizens – is derived from the understanding of the responsibilities of the larger collectivity. A fully drafted version of a universal scheme renders the common ‘rights of citizenship’ and thereby contributes to the creation of a ‘single-status moral community’ (Goodin and LeGrand 1987: 12). The ‘moral collectivism’ prescribes the ‘collectivization of ultimate responsibility of people’s material well-being’ (Goodin 1998: 155). Human agency, as is conceptualized in universalist programmes, is predominantly public-spirited, enabling social transactions across class boundaries and deploying norms of generalized reciprocity. By stressing the collective character of provision the institutional patterns are said to enhance the moral capacity of citizens. Such a design, therefore, can serve as an example for arrangements that put a ‘premium on refined and reflective preferences’ (Offe and Preuss 1991: 170). At the top right we find the liberal egalitarian ethos of the Beveridge tradition which gives preference to a minimum of social and economic security rather than redistribution. Whereas the redistributive model aims at reducing income differences, ‘liberal collectivists’ (Ginsburg 1992: 139) are committed to a guaranteed minimum. A Beveridge type benefit scheme ‘offers a basic, equal benefit to all, irrespective of prior earnings, contributions or performance’ (Esping-Andersen 1990: 23). According to this vision a decent society should provide a national minimum which is ‘adequate in amount, that is to say enough for subsistence without other resources, and adequate in time, that is to say as long as the need lasts’ (Beveridge 1942: 13). This would break the market-nexus at the bottom end of the inequality structure and establish a safety net below which no one would be allowed to fall. In reciprocity terms this policy concept relies on dispositional or risk reciprocity whereby people can feel protected against life contingencies due to the very contributions (as tax payers or insurance contributors) they made. It is a typical normative reference for the organization of health provision and some types of poverty or unemployment relief. Redistribution takes place between citizens on the basis of risk incidents: some may be less prone to social risks and not need public provision, others face risks and can enjoy the safety net

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provided. Such an arrangement of risk reciprocity allows an efficient reapportionment of misfortune. The third section represents a residual type of welfare provision that is rooted in the Poor Law tradition and has little ambition to establish a comprehensive safety net. The doctrine assigns the primary responsibility to the individuals themselves, whereas the state only plays a passive role, providing basic necessities. The elimination of poverty is ‘the legitimate focus of social policy’ (Furniss and Tilton 1977: 111) and takes precedence over all else. However, the interpretation and the treatment of poverty is deeply individualized, in other words, social problems are explained in terms of individual failure, and solutions promote a focus, in the first instance, on self-help and the self-improvement of those concerned (see Williams 1989: 24ff.). The state assumes responsibility only after all other individual and familial sources are exhausted. The policy is intended to encourage responsible and self-reliant behaviour on the part of the welfare client. The division between those who should, and should not, be helped is based on the criteria of ‘demonstrable need’ and ‘social deservingness’. For this reason welfare provision tends to be tightly targeted, means-tested and often deterrent. The ‘moral auditing of poverty’ (Culpitt 1999: 68), i.e. controlling and monitoring the behaviour of the poor constitutes a part of this policy. The ‘actively seeking work test’ imposed on the unemployed is a typical policy instrument for ensuring that the ‘right people’ benefit from public assistance. The argument for social welfare is based ‘merely upon ordinary human sympathy’ (Goodin et al. 1999: 45) and is less concerned with the establishment of social rights. The axiomatic understanding of reciprocity is that beneficiaries should make efforts to be self-supporting (Arneson 1997: 339), while unconditional welfare state transfers with little incentive to exercise this kind of ‘repayment’ are widely disapproved. The bottom left policy model resembles what has frequently been called the Bismarckian social policy model, based on social insurance with an earnings-related benefit system (Bonoli 1997). The design of such social insurance welfarism is assigned to preserve the relative income status someone has achieved throughout his life and to conserve the ‘existing pecking order of society’ (Goodin et al. 1999: 33). Hence, it has been argued that ‘earnings-related benefits are more pro-rich than pro-poor’ (Goodin et al. 1999: 33). Social insurance regimes confine the collectivization of risk to those who are actually members of the insurance schemes, i.e. the composition of the beneficiaries ought not to differ significantly from the composition of those who pay for welfare. Welfare redistribution takes place merely as a by-product of collective risk sharing and ‘within’ an insurance constituency. The relationship between risks, insurance arrangements and welfare entitlements is organized in such a way as to channel ‘the participants’ motives towards conformity and acceptance’ (Offe 1996: 185) because, as, for example, in the case of pension

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entitlements, it instils a sense of individually earned contractual rights. In social insurance regimes there is little demand for morally motivated generosity as it is felt that the benefits are a restitution of foregone contributions. The reciprocity argument underlying social insurance stimulates compliance on the basis of return expectations, suggesting that contributions made lead to due returns. These exchanges are ‘more economic’ from this vantage point and less tolerant of one-way flows (Sahlins 1974: 195).

Summary This chapter has set out a conceptional framework that attempts to overcome the limits of the writings about the welfare state’s political economy that rest on the assumption of the self-interested voter. For this reason it was argued that people endorse welfare state arrangements not only because the welfare schemes maximize their income, but also because they approve of the moral purpose of the welfare state. The crucial legitimization of the welfare state does not only reside in the welfare income flows from which social groups might benefit, moreover it has to be understood how material incentives and social norms affect human motivation. Under the premise that both normative concerns as well as material self-interests have a stake in shaping attitudes towards welfare provision, it was argued that their codetermination is affiliated to the institutional architecture. By referring to the insights provided by the institutional school it was stressed that besides the beneficial output structure, institutions embody moral conceptions. Their very existence can prepare the moral opinions of those participating by means of filtering and emphasizing certain norms. People have the tendency to accommodate themselves within a given institutional structure and to develop habitual loyalties. Beyond this, the moral plausibility of institutions can engender a supportive stance, since it underpins the perception that others participate as well, and that wrongful advantages are prevented. A just institution that reflects people’s ideas of how a society should comport itself is, therefore, likely to find public approval. Building on this perspective, the concept of the moral economy was introduced in order to sharpen the analytical focus. The moral economy perspective highlights the fact that welfare transfers are not simply resource transactions, but rather exchanges that have normative attendants and establish social relationships between the beneficiary and the benefactor. The provision of social support aims at balancing the relative distribution of life chances within society and rests on a normative fundament. Taking this perspective a step further, it was argued that the welfare state is embedded in a set of background assumptions that govern the notion of justified and plausible welfare entitlements. Of primary importance for the organization of welfare exchanges is the reciprocity norm

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and its various interpretations. The social logic of reciprocity is based on the prerequisite that people recognize each other and accept mutual social duties. Since the welfare state can be conceived of as an arrangement of institutionalized reciprocity, people may invoke norms of reciprocal fairness when evaluating welfare policies rather than pursue narrowly defined income interests.

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An analytical framework

Welfare institutions and public attitudes Within the contemporary welfare literature, there is some awareness that the much praised scientific specialization and the methodological advances of the recent years have some drawbacks with regard to the integration of the knowledge yielded. At times, scholars of a certain subsection of welfare state research have given up exchanging ideas with scholars of bordering themes and perspectives. Most public opinion studies, for example, have been rather superficial in their treatment of the historical, institutional and ideological pattern underlying the formation of attitudes (Svallfors 1997: 284). This problem was addressed by Bo Rothstein (1998: 3): A high degree of specialisation entails the risk, however, of so narrowing the scope of analysis as to make it impossible to say anything of interest about the urgent questions facing society. One scholar may know something about the moral–philosophical bases of solidarity and the welfare state, another might perform mathematically advanced cost–benefit analyses of different welfare programs, a third is perhaps an expert on statistical analyses of public attitudes towards various welfare questions, a fourth may study problems of bureaucracy in social policy, and a fifth, finally, might have some interesting things to say about the historical cause of welfare policy in different countries. . . . What above all is lost is the possibility of a more synthetic and overarching analysis of how the phenomena falling under various analytical domains affect each other. Without being able to satisfy this type of criticism fully, this study makes an attempt to tie different arguments and perspectives together which are often kept apart, namely the historical trajectory of different welfare systems, their institutional design and the public attitudes towards different welfare schemes. The central objective is to provide an empirical account of the moral economy of welfare exchanges within the British and the German welfare systems.

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Since the moral economy deals with the ongoing logic of social support for, and acceptance of, collective provision, empirical research is in need of a framework that encompasses the specific relation between institutions and attitudinal stances. The moral economy needs to be grasped by giving attention to the patterns of individual attitudes, orientations and interpretations that are associated with certain collective arrangements. The guiding questions are those highlighted by Offe (1993b: 235–7): What kind of arguments and defences are empirically deployed and turn out to be successful in motivating individual actors and social groups to grant such rights and agree to share the burdens that are involved in granting such rights? . . . The question, as suggested by the sociology of moral, is this: ‘What is the repertoire from which a society can draw in order to alleviate these obligations so as to make them widely acceptable?’ The foremost issue at stake is how the attitudinal stances are structured and how these expressions of support (or disapproval) can be interpreted with regard to the institutional asset. Of major interest is the degree of consensus about welfare arrangements, the motivational components that form the basis of acceptance and support, the institutional prerequisites that enhance agreeability and channel people’s motives towards conformity, and the special stake moral arguments have therein. Rather than looking for a master determinant, research on the welfare state should, instead, capture the ‘ongoing logic of the relation between its type of policies and its political and moral support’ (Rothstein 1998: 29).1 As soon as one starts to acknowledge the ‘motivational complexity’ (Goodin 1996: 41) of preferences, orientations and actions, the question of the moral economy of welfare states becomes more difficult. It moves away from uni-dimensional and self-interest-based explanations of the institution–individual interplay towards a more elaborated concept, stressing normative factors which determine actions and preferences. The position taken here is that neither the homo economicus nor the unconditional altruist can sufficiently explain why people endorse redistributive policies and why, in many instances, they refrain from doing so. In order to advance a research design one has to start from the assumption that people approve of the redistributive welfare state because they benefit (or expect to benefit) from it, and/or because it conforms to deeply entrenched norms.2 In other words, norms incorporated within and strengthened by institutions, on the one hand, and the beneficial outcome, on the other, may help to explain the motivations that underpin support for collective welfare arrangements. Therefore, it is necessary to investigate two aspects of institutions, their programmatic structures

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whereby income interests are served, and their normative references that give reasons to citizens to accept the burdens of collective schemes. Such an approach tries to overcome the weaknesses of many normativist writings about the welfare state that ‘fail to explain the conditions under which compliance is likely to occur’ (Hechter 1987: 39), on the one hand, and the narrow gain-oriented actor model, on the other hand. Along this line, and quite exemplary, Karl et al. (1998) talk about criteria of ‘system-induced acceptability’ distinguishing between those factors which determine people’s income interests and those which are of a normative kind. Acceptability in self-interest terms is related to the programmatic structure and can entail an actual ‘beneficial involvement’ or an assurance of future returns. This distinction draws a line between the status as actual beneficiary (‘transfer classes’), on the one hand, and contributions which establish entitlements (and eventually returns), on the other hand. People can be motivated by the latter to accept huge transfer schemes from which they do not gain immediate benefits. Rather, the institutional structure assumes the role of a stabilizer of return expectations by suggesting that those who pay now will benefit later. In this way, massive transfers within insurance communities can become agreeable. These criteria are manifested by the programmatic structures of the institutions, for instance, methods of financing, the mode of entitlement and the allocation principles. The material criteria of acceptability are backed up and supplemented by acceptability of a normative kind. The proposition is that people are willing to share their income with others, if they regard the moral assumptions that underlie transfer policies as valid and appropriate. Thus, the willingness to give depends on the moral persuasiveness of welfare institutions. According to the argument made, the role of reciprocity norms is paramount. Invoking the norm of reciprocity and its various interpretations is the major mechanism for justifying social transfers. In the case of obligating reciprocity, for example, people expect certain behaviour from the beneficiaries as ‘repayment’ for resources granted. Where institutions do not assure that the public schemes encourage norm-conforming behaviour rather than undermining it, the motivational base for prowelfare attitudes is likely to be destroyed. Thus the resistance to help is less attributable to the selfishness of the electorate, but rather to the ‘failure of many programs to tap powerful commitments to fairness and generosity and the fact that some programs appear to violate deeply held reciprocity norms’ (Bowles and Gintis 1998: 20). ‘Good institutions’ are characterized by a moral persuasiveness, in other words, they must appeal to people’s sense of justice and be based on shared moral assumptions. Within the empirical part of this book, assumptions about how the beneficial output structure and the normative underpinnings of different

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welfare schemes might affect the attitudinal stances will be put forward. These assumptions will then be subjected to an empirical investigation of survey data using statistical methods in order to test the relevant hypotheses. However, since not all purported effects can be tested by statistical modelling, the investigation also relies on non-quantitative reasoning to establish the link between institutions and attitudinal stances. In addition, it needs to be said that the survey questions are not suitable for testing the hypotheses at stake in all cases. Another difficulty lies in the specific combination of institutional analysis, normative arguments and the entrenchment of interests that sometimes makes a straightforward verification, or falsification, of hypotheses problematic. As already mentioned, the distinction between interests and norms is a heuristic one and sociologists know that the real world often makes them indistinguishable. In order to avoid a loss of complexity that often accompanies the statistical analysis of attitude data, the empirical section will place emphasis on a synthetic interpretation of institutional accounts and survey data. The ultimate aim is to present an empirically based interpretation of the welfare state and its social acceptance that pays regard to the instrumental and normative reasons why people might favour collective schemes. However, the moral economy also has cognitive aspects to which one should pay tribute. Svallfors (1993: 24), who has done much in the field of comparative attitude research, highlights the importance of the arena of public discourse for the shaping of attitudes towards the welfare state. Since welfare regulations are quite complicated matters, people hold – to a certain extent – ‘rationally uninformed’ perceptions3 of various groups of welfare clients, and the actual distribution of burdens and benefits. The arena of the vivid and controversial public debate about welfare issues generates and communicates ‘images of welfare’ (Golding and Middleton 1982) which influence collective attitudinal stances. Hence, the normative and structural conditions are subjected to ‘politics of interpretation’ (Offe 1991: 143) by which themes are promulgated and issues framed. On the level of attitudes, cognitive and normative aspects are closely interwoven. Should social assistance require the individual to make an effort to find a job? Which duties should be imposed on them? The answers depend very much on whether it is assumed that people receiving social assistance are using their abilities to find their way out of state welfare or not. This analytical dimension sheds light on the role of the media and information. The images of welfare that are communicated in public transmit certain representations (e.g. waste of resources, social fraud, social stereotypes, the distinction between the recipients and the payers), which is then confronted with personal experiences, pre-existing opinions, etc. One of the well-established findings of mass communication research is that issues taken up in the mass media create the agenda for

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what citizens actually discuss. We know that the public conflicts surrounding welfare are not only about feasible policies, but also about defining relevant issues, and that the way in which issues are presented and discussed has an impact on how the issue is dealt with (Rein and Schön 1993). Therefore, the agenda-setting function of the media is relevant for the formation of opinion to the extent that it determines what occupies people’s minds and suggests certain interpretations of reality (see Rogers and Dearing 1988; Iyengar and Kinder 1987). Consequently, what the public thinks and perceives and what is seen as an appropriate role for the welfare state emerges not only from interest structures or normative resonance, but also from how the public discourse frames and interprets the social reality, and how convincing and persuasive these presentations are. The institutional structure itself has a selective effect by giving priority to certain public issues while ruling out others. Institutions matter, ‘because their organizational configurations, along with their overall patterns of activity, affect political culture, encourage some kinds of group formations and collective political action (but not others), and make possible the raising of certain political issues (but not others)’ (Skocpol 1985: 21). Although the institutional set-up and the social policy culture make certain debates more likely and more ‘successful’ than others, public debates still possess a degree of autonomy and their own momentum. Hence, when interpreting public attitudes towards the welfare state one needs to keep in mind that the media has an important stake in generating images of welfare and that cross-national variations are not only attributable to the objective institutional structures, but also to the types and contents of public debates. Although this study does not scrutinize the agenda-setting function of the media systematically, it seeks to show some sensitivity for these issues by giving reference to the policy context and some of the related public debates.

Survey data and methods The examination of the relation between collectivist arrangements and the moral economy requires a detailed account of the attitudinal pattern. What people think about the welfare programmes, whether they value their objectives and whether they take a supportive stance needs to be examined by suitable research instruments. Within this study, survey data will be used in order to describe the attitude pattern as well as to investigate the mechanisms, and forces, of attitude formation. Public opinion, as understood and used within this context, is ‘an aggregate of the individual views, attitudes, and beliefs about a particular topic, expressed by a significant proportion of the community’ (New Encyclopaedia Britannica 1986: 352). This sentence offers a very pragmatic and empirical definition

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of public opinion, eluding some of the intricacies related to it. Public opinion is taken as attitudes held and expressed by the citizen, and, in this respect, seen as attainable from the individual via survey methods. Most psychologists take a cognitive or information-processing approach to attitude formation, saying that attitudes develop from beliefs people have about the attitude object (Fishbein and Ajzen 1975). However, the attitude-related measurement of social norms is confronted with serious objections. Hechter, for example, doubts whether it is possible to measure the salience of a norm apart from the observation of a person’s behaviour. He provides us with a very telling argument for this position: This statement (the impossibility of measuring norms) holds notwithstanding the heroic attempts of survey researchers to do just this. Since a norm is (by definition) something we all are obliged to honour, survey respondents often have an incentive to affirm their support of it whatever their true attitude about the norm might be. Is their response to the questionnaire item due to this (positive) sanction, or is it due to their acceptance of the norm? No survey instrument is capable of revealing whether a respondent would actually honour a given norm in the absence of potential sanctions. One may reasonably suspect that respondents themselves may not be able to know if they would actually abide by a given norm that they believe to be internalized. How can I ever know if, as a passenger on a rapidly sinking ship, I would allow women and children to precede me into the lifeboat, as the norm bids me to do? (1987: 4; author’s comments added) This comment on survey research expresses some of the persistent misunderstandings public opinion researchers are confronted with. Measuring attitudes and observing individual behaviour are quite simply two different things, and it would be presumptuous of public opinion researchers to infer, or even to predict, individual behaviour from questionnaire responses.4 Conversely, to refer to the individual’s state of mind when it is simply deduced from an observed course of action is one of the serious failings of structural explanations of individual behaviour. To put it crudely: What do we really know about the arousal of self-interest and the binding power of social norms if we observe that many people are trying to find their place in the lifeboat? And what if we see that some are not? Although normative orientations can be quite different from actual behaviour there is no denying that actions and norms are closely intertwined. What the institutionalist account suggests is that normatively entrenched institutions are more likely to be supported and maintained. How can we understand the fact that the normative persuasiveness of a

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regulation has some relevance to the readiness of the people to comply and to adjust their action? It is, perhaps, possible that the example provided by Hechter can enhance our understanding more than was initially intended. Taking the case that there are less lifeboats than passengers, the ship’s crew would try to enforce a preferential treatment for the women and children, who would be allowed to enter the lifeboat first, to that for the men, who would have to wait. In many instances this distinction has been (successfully) made against the will of the male passengers and under the use of arms. In thinking about a different principle of giving access to the lifeboat, one could come up with the idea of giving preferential treatment to all persons with birthdays on even dates. Without doubt, this principle would have caused some opposition and probably even strong rejection. Nevertheless, there is a slight chance that people might interpret this rule as a lottery where everybody has an equal chance. If one speculates further, one could ask what would happen if the crew were advised to let men proceed whereas women and children had to wait? One does not need to be a clairvoyant to see that this selection rule would violate the moral common sense of the people, and that people – not only women, but also men – would object to it. It is also likely that this principle would be overthrown because it is such a drastic deviation from a well-entrenched norm. This suggests that although everybody is striving for their own survival – in other words, the most vital interest one has – norms still have their stake when it comes to compliance and adherence to institutional rules. One can conclude that normative resonance makes institutions and procedures more robust and people more likely to comply. This is the level of investigation in which attitude research has its strength. If people were asked in a questionnaire to give preference to one of our three examples there is no doubt which one would have met their normative understanding. But to re-emphasize again, this instrument is not suitable for predicting individual behaviour, and one certainly needs additional sources in order to gain respective insights. The second objection raised questions the trustworthiness of the respondents. It is true that surveys often give an incentive to affirm what is socially accepted.5 The difference between the ‘true’ person and the ‘false’ person which is implied by such an argument is somehow ubiquitous, and applied in a strict sense it would invalidate most social science research. The ‘true’ person is simply not accessible. But nonetheless, as in most of our social communications and interactions we have some indications of finding people credible and their opinions valid and responsible. In addition, the concept of the moral economy and the notion of moral assumptions do not necessarily rely on accessing the true inner mental state of the individual. What is attained from the surveys should, rather, be treated as ‘public stories’, blending beliefs, preferences and

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An analytical framework

worldviews which are part of wider societal communication. What we are interested in when investigating the moral economy of welfare transfers is less the profundity of opinions, but rather the attitudes towards the collective welfare arrangements. The respondents are thereby taken as participants within the process of social communication, holding opinions about issues concerning their vital interests. Survey methods are advantageous because they ‘provide an account of the general structure of political ideas that is difficult to obtain from any other source. Provided the evidence is interpreted with care it may help in assessing issues about the contribution of changes in public ideas to public policy’ (Taylor-Gooby 1985: 23). However, one needs to contend that opinion survey analysis faces measurement error problems as well as problems that arise from the randomness of people’s opinions. That multivariate statistics, such as regression models that seek to assess the relationship between one dependent variable and a number of independent variables, often explain only a small share of variance indicates that people’s responses are not strongly structured. Nonetheless, public opinions are neither chaotic swirls of thought nor fully determined stances, but there is surely some degree of vagueness attached to them. For the undertaking of this study it should also to be pointed out that the links between opinion patterns and institutional settings are difficult to reconstruct (see Papadakis 1992). However, as Ringen (1987: 52) remarks, ‘if we want to know what people think about the institutions of their society or the policies of their governments, the best way to find out is still to ask the people’. Whether the transfer of resources is seen as justified, adequate and socially appropriate is in the eye of the beholder. Another problem worth mentioning is the difficulty for interviewees to respond properly due to a lack of information. Repeatedly, the issue of the difference between opinion/non-opinion was raised. Many surveys are based upon the expectation that respondents have an opinion, and many questions are formulated in such a way that respondents cannot avoid answering them. Converse (1964) has shown that the information dimension or, more concretely, the allocation of information throughout the population is characterized by strong asymmetries, and that only the better informed sections of the population rely on a general ideological framework when answering policy-related questions, whereas other parts respond in an idiosyncratic and random manner. Non-respondents tend to be less knowledgeable about the questions asked and less certain about their knowledge. The Converse findings have been criticized because they rely on perfect response consistency. It has been proposed that (unobservable) attitudes and (observable) responses be distinguished between and the survey response process be viewed as intrinsically probabilistic (Duncan and Stenbeck 1988). Complementing this, one needs to take into account that there is some degree of selectivity with regard to citi-

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zens’ attention to the workings of politics. Therefore, Brooks (1994: 453) talks about the ‘selectively political citizen’, implying that there is ‘an important degree of variability in the existence, scope and content of mass attitudes’. These problems have to be taken seriously, but there are also reasons to assume that people can have opinions and preferences without being fully knowledgeable or by making judgemental shortcuts (see Sniderman et al. 1991). Within this study different sorts of data will be used for a secondary analysis. These are all representative survey data issued from established research institutions in Germany and the United Kingdom. Three of them, the International Social Survey Programme, the Eurobarometer and the International Social Justice Project are comparative studies well recognized within the field of cross-national research. The other two data sources, the British Social Attitude survey and the German General Social Survey are national studies. The use of different data sets was necessary since none of them offers a comprehensive coverage of the theme of interest. No single instrument was available for investigating the different policy fields in question (poverty, old age, unemployment, health and redistribution). In addition, since most of the surveys pursue rather different research objectives to those of this study, the data do not always fully match with the perspective taken. However, since the author’s aims were to portray the attitudinal stances towards the welfare state and to search for determinants and conditions, the ‘data mix’ represents the best possible approximation to the issues at stake. International Social Survey Programme (ISSP): the ISSP is an annual programme of cross-national collaboration on surveys covering topics important for social science research. Since 1983 it has brought together pre-existing social science projects and coordinated research goals, thereby adding a cross-national perspective to national studies. The secretariat of the ISSP coordinates the official activities of the group. The ZA (Central Archive for Empirical Social Research, University of Cologne) carries out the data service for the ISSP. ZUMA (Centre for Survey Research and Methodology, Mannheim) is responsible for the German part, while the SCPR (Social and Community Planning Research, London) carries out the survey in Britain. The ISSP questionnaire runs as part of the British Social Attitudes Survey (BSA) and the German General Social Survey (ALLBUS). The major database for this study is the International Social Survey Programme 1996 (ISSP) with the module ‘Role of Government’. The 1996 sample size for Great Britain was 989 (response rate 56.7 per cent), for West Germany 2,361 (response rate 53.3 per cent) and for East Germany 1,109 (response rate 53.9 per cent). Other data used are the ISSP 1985 (Great Britain N ⫽ 1,530, response rate 62.4 per cent, Germany N ⫽ 1,048, response rate 41.7 per cent) and the ISSP 1990 (Great Britain N ⫽ 1,197, response rate 54.2 per cent, West Germany N ⫽ 2,812, response rate 54.2 per cent, East Germany N ⫽ 1,028, response

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An analytical framework

rate 68.3 per cent). For more information: www.social-science-gesis.de/ en/data_service/issp/index.htm. Eurobarometer: the Eurobarometer public opinion surveys are conducted on behalf of the European Commission in all member states of the European Union at least twice a year. Since the early seventies they have provided regular monitoring of social attitudes in the European countries. Eurobarometer data are made available for secondary analysis purposes by the Social Science Data Archives. Initially the samples were drawn from the national population, aged 15 and over. Starting with EB 41.1, the target population was the population of any nationality of an EU member country, aged 15 years and over, resident in any of the member states. The sample size in standard Eurobarometer surveys is 1,000 respondents per country: in 1992 there were 1,062 respondents in Great Britain, 1,008 in West Germany and 1,058 in East Germany. In 1996 the sample size was 1,051 for Britain, 1,028 for West Germany and 1,046 for East Germany. The fieldwork is carried out by national institutes associated with INRA (International Research Associates). The two data sets used for this study are the Eurobarometer 37.2 (1992) and the Eurobarometer 44.3 (1996, comprising 44.3OVR with an oversample of the unemployed and housewives, Britain N ⫽327, West Germany N ⫽428, East Germany N ⫽337). The response rates are not specified in the codebook. Due to the sample size the accuracy of the survey results in terms of representing the universe is not very great. Depending on the observed percentage the real percentages might vary by up to 3 per cent. For more information: www.gesis.org/en/data_service/eurobarometer. International Social Justice Project (ISJP): the ISJP is a collaborative project that works on perceptions and evaluations of social, economic and political justice. In 1991 opinion surveys were fielded in twelve countries, amongst them Germany (West and East) and Great Britain. Follow-up studies were conducted in 1996 and 2000 using a smaller number of countries. The project participants and principal investigators were Bernd Wegener and Stefan Liebig in Germany and Gordon Marshall and Adam Swift in Great Britain. The methodological standards are ensured by a common questionnaire and a national probability sample with a minimum of 1,000 respondents. A standard questionnaire in English was translated into the respective languages, aiming at culturally equivalent formulations. Most countries conducted face-to-face interviews with respondents aged 18 and over. The survey was carried out in Germany by the survey organization ZUMA/INFAS and in Britain by RSGB. The sample size varied from 1,837 in West Germany (response rate 70.5 per cent, completion rate 63.0 per cent), 1,319 in Great Britain (response rate 71.1 per cent, completion rate 66.1 per cent) to 1,019 in East Germany (response rate 70.7 per cent, completion rate 62.5 per cent). Weights are used to adjust for differences in household size in Britain and for region, household size, age, sex and city size in Germany. The 1991 international

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dataset was deposited with the Interuniversity Consortium for Political and Social Research (ICPSR) at the University of Michigan (# 06705) and at the Central Archive in Cologne, Germany. For more information: www.butler.edu/isjp and www.isjp.de. British Social Attitudes: The National Centre’s British Social Attitudes (BSA) series focuses on the developments of social values and social attitudes. It is a representative sample of around 3,500 randomly-selected adults nationwide. The survey series is core-funded by the Gatsby Charitable Foundation of the Sainsbury Family Charitable Trusts, and is supported by numerous government bodies and other research foundations. In the 1996 survey, information was collected on a number of social issues including political attitudes, public spending, taxation, welfare and healthcare. The method of data collection was divided into a face-to-face interview (conducted by computer-assisted personal interviewing – CAPI) and a self-completion section. The supplement was collected by the interviewer or posted. Some modules with core questions were put to all respondents, while specific modules were asked only of a random third, or two-thirds, of the sample. The standard sample size for the main file is 3,622. The representative sample was drawn from the Postcode Address File of adults (18 and over) living in private households in Great Britain. The principle investigator for the 1996 British Social Attitudes Survey was the Social and Community Planning Research (SCPR). The main results of the studies are published by the annual British Social Attitudes Reports. The weights applied reflect the relative selection probabilities of the individual at the main stages of selection, the address, the household and the individual. Of the in-scope sample of 5,375, 3,662 interviews were achieved (response rate of 68.1 per cent). For most of the questions asked all sample members have a confidence interval of around plus or minus two per cent of the survey proportion. Naturally, the confidence interval for questions asked of only half the sample tends to be greater. The data have been provided by the Data Archive, University of Essex. For more information see www.data-archive.ac.uk/findingData/ bsaAbstract.asp. German General Social Survey (ALLBUS): The ALLBUS produces data on attitudes, behaviour and social structure in Germany. As a standard, the representative cross-section surveys have been conducted biennially since 1980. Many of the items included are replications from previous surveys, while others are specifically varied according to particular topics. The ALLBUS is conducted and administered as a joint project of the Central Archive in Cologne (ZA) and the Centre for Survey Research and Methodology in Mannheim (ZUMA) within GESIS (Association of Infrastructural Institutions of the Social Sciences). Since 1992 the representative sample has consisted of around 2,400 face-to-face interviews conducted in the western states and 1,100 in the eastern states. In 1994 the Allbus realized 2,342 interviews in the West

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(response rate 53.2 per cent) and 1,108 interviews in the East (response rate 55.2 per cent). The ALLBUS 1994 comprised of the module ‘Social Inequality and the Welfare State’ that replicated a number of variables from the ALLBUS 1984. For more information see: www.social-sciencegesis.de/Dauerbeobachtung/ALLBUS.

5

The state of welfare

A comparative framework For the purpose of tracing the moral logic of the German and the British welfare model, a framework for comparison needs to be developed. This chapter will begin with a short overview of the programmatic structures of the welfare regimes. The second part of this chapter looks at the policy legacies in more detail, emphasizing the ideological patterns underlying the formation of the welfare state, the role of different political actors, and the way in which norms have entered the process of institution building. The historical perspective highlights the fact that today’s welfare state constitution is deeply determined by the historical trajectory taken. The third section will put forward some ideas and hypotheses as to how different welfare regimes are likely to be associated with different moral economies. When choosing cases for comparative research, researchers are confronted with the need to justify their choices. The attraction of comparing the moral economies of the German and the British welfare model is threefold. First, both welfare regimes are said to rest on different concepts of legitimacy in terms of beneficial involvement (Esping-Andersen 1990). The German welfare state represents a comprehensive system with high middle-class legitimacy, whereas the British system targets its resources to the lower sections of the population. Its legitimacy is derived mainly from measures that provide a social minimum rather than from providing high income replacements. Second, both systems are characterized by a distinctive set of welfare policies not only in terms of the programmatic structure, but also in terms of the normative underpinnings of the welfare institutions. What is represented by different entitlement modes, scopes of coverage, and levels of benefit rests on different normative notions of why and to whom welfare should be delivered.1 Third, both systems have taken different historical trajectories with different ideological concepts taking part in shaping the welfare state. At the same time, both welfare states can be considered as pioneers of welfare developments that have evolved as interlocked competitors carefully observing each other (Hennock 1981).

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Also, the development over the last twenty years rather distinguishes the two systems; with a Neo-Conservative agenda and the concept of the activating welfare state in Britain, and a policy of relative containment in Germany. Both countries, similar to most western European countries, possess a mix of social insurance, social assistance, and universal schemes which interact with sources of private and voluntary provision.2 What differs is the composition and the relative importance of these elements, the entitlement principles, and the distributive outcome of the welfare state activities. Within the comparative welfare state literature it has become fashionable to survey, and to cluster, international variations in welfare provision in terms of welfare state typologies. The identification of different types of welfare states is related to two propositions: negative to the postulation of the convergence of welfare states which predicts growing similarities between different welfare states (see Flora and Alber 1981), and positive to the theorem of path dependency which emphasizes the persistence of distinct institutional rationalities (North 1990). One of the first influential works introducing a substantive typology was provided by Titmuss’ (1958) three models of social policy. The ‘residual welfare model’ has the market and the family at its core, whereas the state assumes only a limited responsibility for social welfare. The ‘industrial achievement–performance model’ conceptualizes welfare state policy in close relationship with employment status and insurance contributions. Finally, the ‘institutional redistributive model’ offers universal entitlements relatively independently of market status by means of redistribution. More recent contributions emphasize the idea of different development paths embracing their own evolutionary logic. The present figurations of welfare models appear as history-dependent arrangements which owe their origin to different historical forces and follow different trajectories. Hence, the present institutional architecture inherits past decisions and compromises which condition future developments and restrain possible choices. One of the most powerful and profound concepts which argues along exactly this line of thought was put forward by Esping-Andersen (1990). In his book The Three Worlds of Welfare Capitalism he develops a general framework for clustering western welfare states into groups characterized by different organizational principles and modes of societal integration. By taking up, and fleshing out, the Marshallian (1964) proposition that social citizenship constitutes the core idea of the welfare state, Esping-Andersen looks at the way in which social rights and entitlements are granted. For this reason Esping-Andersen sets out to consider the relationship between paid work and welfare with a focus on the level of de-commodification3 within state welfare, i.e. how, independently of the market position of individuals, the social safety net provides social security. This specification

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allows him to use the degree of de-commodification as a differentiating variable for distinguishing different welfare regimes4 characterized by different institutional designs and social arrangements. As a result, EspingAndersen identifies three regime types: the social democratic welfare regime, the corporatist welfare regime, and the liberal welfare regime. Social democratic regimes are characterized by the principle of universalism and the pursuit of equality. Social rights are mainly based on citizenship or residential status and a great share of welfare is financed by general taxation. The social democratic welfare state, of which Sweden is the prime example, is universal, comprehensive and includes an active labour market policy pursuing the goal of full employment. Liberal welfare states such as the United States and the UK, in contrast, tend to give market-based welfare priority before the state supply of welfare. The regime assigns primary responsibility for welfare to the citizens themselves, while the state assumes a rather passive role. There is a strong emphasis on flat-rate entitlements and means-tested benefits. The level of the social payments is rather modest and the programmes are largely directed towards the poor and needy. The conservative regime, such as Germany’s for example, pronounces corporatist arrangements where motives of state policy and social paternalism come together. The welfare state institutions are not primarily designed to combat poverty, rather they are status-oriented schemes which maintain, and sometimes reinforce, status differentials. Social insurance and the principle of equivalence are the institutional features of such a system, whereas equalization and redistribution are less important social policy goals. A closer look at the countries in question reveals that the liberal ideology as part of the British system carries a strong notion of freedom in terms of market relations, choice and individual responsibility. Since the first steps taken by liberal reformers in response to the failure of the market during the process of industrialization, liberal ideology was guided by the conviction that the market provides the best allocation principle; superior to others with respect to the overall well-being of the population. Paradigmatically, a productive market allows the creation of social wealth which is supposed to ‘trickle down’ from the richer to the poorer sections of the society. Nonetheless, the growing pressure of social problems called for a more realistic approach, and the traditional, locally organized, and pre-industrial systems of social protection were substituted by a social policy framework which was assigned to complement the market and to interfere in market allocation as little as possible. A minimalist social policy is intended to reward productive behaviour, stimulate selfreliance and individual responsibility and to provide a last resort safety net only for those who cannot meet their needs on the market. Hence, liberal welfare regimes can be characterized by residualist social policies which accept the supremacy of market logic5 (Esping-Andersen 1990: 43). Liberals value a type of ‘productive social welfare’ safeguarding market

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performance and giving priority to high disposable incomes and low taxation rates. The conservative welfare model is distinguished by group politics, communitarian economics and mutualist social policies (Goodin et al. 1999: 51). It rests on hierarchy, familialism and traditional status relations which can be traced back to feudal times. Born out of authoritarian and paternalist strategies of modernization, the German welfare state is organized around the unifying theme of social cohesion and social integration. However, the conservative concept of social order and cohesion favours status-preserving policies rather than redistribution. The role of the state as guarantor of social order is complemented by a corporatist component. The organizational forms of the medieval social and economic life such as estates, guilds and monopolies, i.e. social collectivities based on the principle of social closure and regulated mobility, supplied the corporate ideologies of associationalism and mutualism (Esping-Andersen 1990: 60). Since its inauguration at the end of the nineteenth century, the welfare state is firmly based on contributory and compulsory social insurance schemes. The corporatist German model intervenes more markedly in the economic sphere than the liberal model. The welfare state does not limit its activities to anti-poverty measures, rather it is conceptualized as a broader frame of societal policy in which the policy, the market and societal level are closely intertwined. Associated with this is the concept of the ‘Social Market Economy’ with corporatist economic management and industrial relations. However, the social bias of the conservative model can be found in the privileged treatment of families and its organization around a bread-winner ideal (Sainsbury 1994). Due to its ideological tradition the corporatist model is deeply committed to traditional family forms and discourages women’s labour market participation (see Ostner 1995). Numerous criticisms of the Esping-Andersen typology have been launched and have questioned some of its premises. It was asked whether the regimes have to be considered as ideal types rather than as empirical types (e.g. Offe 1993a; Kohl 1993). It has been argued that the construction of regime types as carried out by Esping-Andersen stands on weak epistemological ground (Rieger 1998; Lessenich and Ostner 1998). There is some circularity within the argument of Esping-Andersen when he uses his regime types to explain different trajectories in employment and stratification. The problem is that the construction of the regime types already incorporates labour market and stratification characteristics so the typology cannot be taken as an independent explanatory tool. Hence, the regime typology is not an empirical reality on its own. Rather, it is a heuristic model that can help to highlight the differences between institutional realities (Rieger 1998). Another critical point is to take decommodification as the criterion of welfare state activity that necessarily rules out other possible policy objectives and effects. De-commodification tends to be an idealized concept that rests on the opposition of the state

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and the market and neglects the variety of welfare-relevant actors and the different means and purposes of welfare state activities. At the same time, there has been criticism that the regime typology is ahistorical and does not account for social change (Borchert 1998). Thus, the regime typology tends to overlook the fact that some of the differences have already been washed out in the course of time. It is also sometimes misleading to treat the welfare state as one single object and not to differentiate between distinct policy sectors. Looking at particular policy areas and their variations seems to be more promising for the understanding of the policies and politics of welfare. Other authors have made proposals for a revision or an extension of the typology, for example, by adding new types such as the Latin Rim containing Mediterranean countries like Greece, Spain and Italy (e.g. Leibfried 1990). Castles and Mitchell (1993) have divorced the United States from the other liberal countries by deploying historical arguments saying that a strong workers’ movement did not exist there and that the welfare state programmes are less redistributive than in the other liberal countries. A confuting point was made by authors analysing policy outcomes empirically. The picture they provided was somewhat different, confirming the statement made by Heidenheimer et al. (1990: 11) that: ‘Similar outcomes may be achieved through a range of policy instruments, while ostensibly similar policies may well be associated with quite different outcomes.’ In this respect, an exemplary study of policy outcomes carried out by Mitchell (1991) found that, in terms of the poverty gap and the level of income inequality, the outcomes of the UK system are closer to the corporatist group of countries than to the liberal cluster. Much writing has placed more emphasis on the way in which welfare is delivered, instead of the ‘replacement ratio’ or the de-commodification of social benefits. Ferrara (1993), for example, has focused on the coverage of social protection schemes, namely whether the whole population is covered by a universal scheme, or whether different schemes exist for different sections of the population. According to this distinction, the Scandinavian welfare states represent the pure universalist type, but the UK is marked by some universalist traits as well. In contrast, most of the continental countries possess fragmented and occupationally divided social security arrangements which make them appear less encompassing and less unified. Another interesting suggestion is the distinction between ‘Bismarck’ and ‘Beveridge’ styles of welfare state (Leibfried 1993; Hills et al. 1994). The Bismarckian tradition relates each wage-earner’s rights proportionally to the contribution that he has made, whereas a Beveridgean welfare state stresses the importance of a minimum income floor for the whole population (Chassard and Quentin 1992: 94; Bonoli 1997). This distinction captures not only the different objectives of social policy, such as status maintenance or the prevention of poverty, it also asks how welfare is delivered. The first model is based on social insurance and

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provides earnings-related benefits, whereas the second model is characterized by universal flat-rate provision which is tax-financed and based on residence and need. The feminist critique of Esping-Andersen’s ‘worlds of welfare’ is powerful because it has drawn attention to the underexposed dimensions of analysis, namely the role of gender relations, the family, social services and caring (see Lewis 1997). Since the welfare models rely on different family models, the effects of de-commodification are gender biased, affecting female employment rates, family structures and the composition of the welfare clientele. Not only are the state and the market providers of welfare, rather the family also acts as such. If welfare state arrangements depend largely on family and gender patterns, the analytical focus has to be extended by these constituent dimensions. Suggestions were also made for a refinement of the welfare regime approach with regard to other areas such as the labour market (Lessenich 1994) or social services (Anttonen and Sipila 1996).

The welfare legacy in Britain Laissez-faire and New Liberalism One powerful force in British social history was the laissez-faire ideology with its emphasis on individualism and hostility towards state intervention (see Taylor 1972). Therein, the state was conceptualized as a ‘night watchman state’ whose role it was to guarantee the conditions for a free market and free individuals. Pure laissez-faire ideology argued for a kind of negative state – the absence of coercion. The pursuit of individual interest and the rights of the individual to enjoy their own profits were seen as the driving forces of a prosperous society. More moderate positions maintain these assumptions as to societal functioning on the basis of self-interested individuals, but they are also aware of the destructive tendencies such a social order can have. The concepts of authors such as John Locke, Adam Smith and David Ricardo were not entirely in line with ‘those of egoistic, possessive individualism’ (Bellamy 1990: 2). They attempted to tie competitive to cooperative aims and to emphasize the preconditions of societal integration. The state was to guarantee the conditions within which individuals could pursue their interests without undermining the basis of society. The beginning of British social policy, dated around 1830, is related to the phenomena of the industrial revolution, such as massive population growth, the development of manufactory systems and the process of urbanization. These phenomena generated social problems such as unemployment and urban epidemics that were previously unknown. The administration was forced to introduce measures in order to combat destitution and to improve living conditions. However, these measures

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were not designed to comfort welfare recipients. The Poor Law, for example, entailed harsh measures and the ‘less eligibility’ principle which made life in the workhouse less comfortable than life on a low wage. This was intended to give people an incentive to earn their own economic means and to rely on the state only when self-help capacities were exhausted. Many of these policy tasks were matters for the local authorities and institutions and, to a lesser degree, the central state (Steward 1999: 22). Besides, we also find a long tradition of philanthropy and voluntarism. On the one hand, there were initiatives made by the better-off aimed at improving the life circumstances of the poor, and also their norms and behaviour. Charity work, which was a very common engagement for middle-class women, was not only material help, it was also an attempt made by the ‘respectable middle classes’ to transmit the Victorian values of hard work, religiosity and family to the wider society. This kind of paternalism and imposition of norms resulted in an embourgoisement of parts of the working class (see Fraser 1984: 107). On the other hand, the working class created its own organizations of mutual insurance and support such as the Friendly Societies. These were self-help arrangements by which individual contingencies (e.g. illness and family hardship) and collective risks (e.g. the closure of manufacturing sites) could be shared and provided for. However, because many of these initiatives were based on contributions, they were only available to workers in relatively secure and continuous employment. The strong individualist notion of the liberal ideology was challenged by the rise of a new ‘collectivist’ concern about the disruptive nature of industrialist expansion. It was argued that industrial development was wasting human resources. According to a more ‘organic’ view of society, greater state responsibility was demanded in order to ensure the longterm prosperity of capitalist society. The factory question, public health and education were problems which cut right across party lines. The great changes in social conditions in the era of industrialization made it apparent that the prime cause of distress and destitution could not be found amongst the people and their individual efforts but, rather, within the organization of an industrial society. The introduction of universal suffrage contributed to a growing governmental responsibility as the public demand for welfare was translated into votes and electoral success. The Liberal government at the beginning of the last century introduced pension, sickness and unemployment schemes which set a compromise between the traditions of individualism and collectivism. The first old-age pension was a small, but universal, payment, which was later converted into an insurance system. Unemployment and sickness insurance were initially limited to workers in certain branches and based on payments made by the Exchequer, the employer and the employee. For the first time, a national insurance principle was imposed, but in contrast to the German

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system which was segmented and income related, the British system consisted of flat-rate benefits (see Hennock 1981). The Public Assistance scheme replaced the Poor Law and the claimants were subjected to what was called a ‘household means test’ under which no benefits would be paid if another adult member of the household was employed or received benefits. Despite some fundamental premises the Liberals had no ready-made social policy programme. The guiding principles of most of the schemes were the notions of responsibility and market conformity, but they were enriched with the governmental task of social provision. The reforms were intended to protect the most vulnerable parts of society, namely children, the elderly, the sick and the unemployed. These measures were supposed to represent the middle way between a devastating individualism, on the one hand, and the threat of socialism, on the other hand. Churchill (1906), a leading member of the Liberal Party at the time, stated: ‘Something more is needed if we are to get forward . . . Liberalism at once supplies the higher impulse and the predictable path; it appeals to persons by sentiments of generosity and humanity; it proceeds by course of moderation.’ The Fabian socialists played an important role in the history of the British welfare state in initiating reform and pressing for their legislation, especially via their links to the Labour Party (George and Wilding 1987: 69). The key idea of their early leading figures, such as Sidney and Beatrice Webb, was a gradual departure from capitalism through parliamentary reform and a commitment to the values of equality, social justice and fellowship. Because of their pragmatic orientation the Fabians became relevant in terms of day-to-day political practice. Under the premise that there is a collective responsibility for social welfare and that the state has to correct the injustices of the free market, they rejected minimalist solutions. Furthermore, they believed the government should introduce measures which are aimed at a modification of the market outcome in terms of redistribution of wealth and life chances. Equality of opportunity, redistribution and universal social services were conceptualized as measures which would transform society into a kind of ‘welfare socialism’. The active role the state plays therein is based ‘on the idea of a positively functional, or at any rate neutral, relationship between the welfare state and the market economy’ (Mishra 1984: 17). Moving towards a Beveridgean social service state In the course of the last century the influence of the Liberal Party declined, but the social and political legacy of the New Liberalism remained. Two pre-eminent figures, namely Keynes and Beveridge, stand out here. The ideas of both had an extraordinary impact on the institutionalization of the British welfare state, not just because they supplied

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proposals for reforms but also because they set up the ideological framework on which the institutions were built. Their political goal was, to put it crudely, an integrated and efficient society with market-generated wealth and consumer choice (Eccleshall 1986: 46). Keynes’ General Theory of Employment, Interest and Money, published in 1936, provided a coherent theoretical rationale for state intervention in a mixed economy of welfare. His contributions to the understanding of the relation between unemployment and investment, and the role governmental activities play therein, became a major challenge to the assumption that unregulated markets are efficient in generating wealth. Keynes, along with Beveridge as the founding father of the British welfare state, accepted greater state regulation in order to counter economic waste, social distress and threats to political stability. Where the market appears to be incapable of solving social problems, the state has to intervene. But this intervention has to be limited and be directed towards a better market performance. The acceptance of the market as the general allocator of resources complemented by an intervening, correcting and moderating state became the key feature of this type of social engineering. New Liberalism sought to ameliorate the social problem, so ‘making British capitalism more efficient in an increasingly hostile and competitive world, as well as acting as an antidote to the “rise of socialism” ’ (Steward 1999: 23). Hence, the design of welfare state institutions should be in accord with the demands of the market and not stifle incentive and opportunity. The requirements of a competitive economy, especially the differences of reward, justify inequalities in market outcomes. Egalitarianism of the socialist type was seen as a threat not only to individual freedom but also to the functioning of the economy. The Beveridge social policy blueprint was based on a comprehensive scheme which put together different elements of state security with the aim of providing basic income security. Beveridge identified the different situations of distress (e.g. disability, old age) which should be covered by a national insurance, postulated a flat-rate benefit in each category and deployed a formula for flat-rate contributions which had to be paid by the employee, the employer and the state. This scheme was complemented by a means-tested safety net of social assistance. Alongside this a national system of health and public housing should be established. Beveridge insisted that risks should be pooled across the whole of society and that everybody should pay in and receive the same benefits. The model outlined in his Report is best described as a horizontally layered, mixed economy of welfare, in which the state guaranteed a basic level of provision. However, Beveridge also left ‘ample scope for the development of the voluntary and private sectors’ (Pinker 1992: 276). It has often been said that the implementation of the Beveridge plan would not have been possible without the experiences of the war which strengthened the sense of community (Addison 1975). Titmuss’ (1958:

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508) account of the war influence on the extension of state responsibilities points in the same direction when he writes: ‘The mood of the people changed, and in sympathetic response, values changed as well. If dangers were to be shared, then resources should also be shared.’ The Beveridge Report, published in 1942, became a widely read document and the government was forced to give attention to the problems of the reconstruction of society. Both major parties, the Conservatives and Labour, committed themselves to comprehensive social insurance and a national health service. The welfare legislation of the 1940s (National Insurance Act, National Health Service Act, Education Act) institutionalized the major parts of today’s welfare system. The major task of implementing such policies fell to a Labour government, which took office in 1945, and this was carried out without significant social conflicts. The National Health Service stands out because it established itself as the most popular institution of the welfare state by realizing most consequently the principle of universalism. It was the first health system in the western world that offered free medical care for the entire population. Because it gives equal rights of access to care independent of a contributory record some have argued that the new service even satisfied a number of socialist maxims (Francis 1997: 102). In an account of British social policy Howard Glennerster (1995: 43) writes: ‘The post-war security scheme began with a Utopian plan, widespread public support and a relatively smooth political passage.’

A welfare consensus, social rights and symptoms of crisis The period between 1951 and 1979 is often described as the consensus from Attlee to Thatcher which is characterized by a continuing all-party commitment to the maintenance of full employment, the mixed economy of welfare and a minimum standard of social security (Kavanagh and Morris 1989). The post-war development of welfare policy profited from a lasting period of economic growth and consistently high levels of employment, even if economic constraints and random shocks occurred (see Lowe 1999: 68ff.). The economic climate was favourable for an increase in expenditure and a maturing of the welfare state. Some have even argued that the full employment in this period did more for the relief of poverty than the welfare state policy (Townsend 1979). Despite their harsh attacks on excessive welfare services, the Conservatives can claim some credit for their contribution to the post-war settlement of the British welfare state. Their position has always been ambivalent, because of ‘an inherent tension within the party between a fundamental belief in the virtues of the market and an awareness of its past failings’ (Lowe 1999: 82). The moderate positions within the party have never fundamentally questioned the welfare state, neither the state-administered social insurance, nor the

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National Health Service. Although prominent figures of this camp like Butler, whose name stood for the ‘new conservatism’ and the early postwar consensus, and Harold Macmillan, who was Prime Minister from 1957 until 1963 and who engaged himself in economic planning, always believed in the superiority of the capitalist production mode, no longer conceiving of the laissez-faire ideology as a realistic option. From a leftist position, authors like Crosland (1956) and Marshall (1964) spelled out more assertive approaches to welfare. Crosland, who made an attempt to redefine socialism by taking into account the transformations which had taken place and led to a ‘civilized’ capitalism, believed that the main political objective was greater equality. Interestingly, his argument dealt not only with redistribution, but also with economic growth. Writing in a time of full employment and a prosperous economy he believed that sustainable growth could promote greater equality. An increase in disposable income on a general level, ran his argument, would have an equalizing effect. Through mass consumption and a wider access to valuable goods the cleavages between the rich and the poor parts of society would become less visible and class barriers would vanish. The state should stimulate growth side by side with measures which aim at equality of opportunity. Marshall’s (1964) theoretical contributions described the welfare state as the final achievement of citizens’ rights. His famous triad of civil rights, political rights and social rights provided a model for understanding the stages that British society had moved through by granting particular rights to its citizens in each. It can be read as a documentation of the self-esteem and optimism which were part of the welfare state settlement. Social rights in Marshall’s understanding entail access to universal social services on the basis of citizen status: ‘Thereby all citizens, despite their unequal money income, enjoyed equal status and an equal social worth’ (Lowe 1999: 19). In this context, the question of universality versus selectivity attracted the attention of Titmuss6 (1958, 1968) and others, who were largely in accord with Marshall’s position. Titmuss rejected selectivity because its stigmatizing character runs counter to a sense of fairness and unity, and hence demoralizes the poor. He was convinced that if ‘men are treated as a burden to others then, in time they will behave as burdens’ (Titmuss 1968: 26). What seems to save money in the short run has, by running the risk of having a divided society and undermining citizens’ values, high political and social costs. Instead, universal services ‘can perform functions which foster and promote attitudes directed towards the values of social solidarity, altruism, toleration and accountability’ (Abel-Smith and Titmuss 1987: 263). Social policy, in Titmuss’ terms, was not only social engineering, but also a normative endeavour. Hence, the purpose of the welfare state is to promote social justice and a sense of community, and to compensate for the social costs of economic change. In pioneering research carried out by Abel-Smith and Townsend (1965), the two LSE

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researchers found that the post-war welfare state was unable to abolish poverty and to protect all people out of work. National Insurance was often not sufficient to meet needs and many people who were entitled to receive social assistance did not claim it because of the social stigma attached to it. In the course of time, some significant alterations to the original Beveridge proposal were introduced. For example, earnings-related supplements for short-term benefits such as for sickness and unemployment became a part of the British model. They amounted to a third of the claimant’s previous wages and were paid for half a year. Later, in 1975, earnings-related benefits (and contributions) were also introduced for pensions (SERPS scheme). With respect to the pension system Lowe (1999: 148) writes: ‘It was electorally popular; and by providing eventually an earnings-related supplement to the flat-rate pension, it could lift many claimants off supplementary benefit and offer, in an “opportunity state”, some reward to hard work.’ In addition, new attempts were made to rationalize the whole social security and tax system. In the 1970s, unemployment became a permanent and serious problem which was threatening to flood the social security system with a huge number of claimants. The virtuous circle between employment and welfare in which Beveridge had believed was replaced by a vicious circle which turned the employment crisis into a public spending crisis. In 1976 unemployment reached a peak of 1.5 million which caused a rising demand for welfare. The government was forced to borrow heavily. Serious cuts in public expenditure had to be made and governments fought against the rise of inflation. The flawed strategies to manage the growing pressures on state finance and the unfortunate income strategies of the governments subsequently led to massive public sector strikes in the legendary ‘winter of discontent’ (1977–8). The Neo-Conservative era The disillusionment with the problem-solving capacity of the welfare state and the economic turmoil of the 1970s laid the ground for a forceful conservative attack against the principles of the welfare state. Margaret Thatcher argued that ‘a new vital debate is beginning, or perhaps an old debate is being renewed, about the proper role of government, the welfare state and the attitudes on which it rests’ (quoted in Wicks 1987: 22). The Thatcher years, from 1979 onwards, brought the welfare state under threat and questioned its legitimacy. Central to this attack was a rigorous break with the ‘welfare consensus’ as well as with some of the elements of ‘corporatism’ (represented by the National Enterprise Board and the trade unions) which had been established. Backed by Neo-Liberal economic theory, the New Right refashioned arguments which were already part of the classic doctrines of the market and individualism.

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Monetarist and libertarian paradigms became the centre of political concern, as a Conservative Party manifesto states: The Conservative approach entails living within our means, paying our way in the world, mastering inflation, reviving the wealth-creating part of the economy and encouraging all those on whom it depends. This approach means less bureaucracy and less legislation, lower taxes and borrowing, higher profits leading to more investment and more employment, and rewards for enterprise and hard work. (Conservative Central Office 1976: 23) The emphasis on individual freedom and public enterprise in a ‘popular capitalism’ (M. Thatcher), or what Riddell (1989) called an ‘enterprise society’, was combined with an opposition to state intervention. According to this ideology, inequality is both necessary and inevitable in a dynamic economy and the task of the policy is to allow individual initiative to be rewarded. By means of an unequal distribution of resources individuals can be encouraged to take responsibility for themselves and their families. State intervention, in contrast, was seen as misconducting social behaviour and creating dependency. The New Right is often described as a populist phenomenon which also appeals to grassroots sentiments of the social, moral and religious kind (e.g. Bosanquet 1983; Gottfried and Fleming 1988). The radical Right deployed a moral concept with a strong belief in self-reliance, family, the church and the community. The welfare state was reproached for weakening the private nets of social support and undermining social virtues. The New Right were deeply convinced that the welfare state eroded individual initiative which flourished under market conditions. The implicit account of human behaviour is that people react, above all, to incentive structures. ‘Human nature is presumed to be pretty much unchanging so that individuals will always adjust their behaviour to better themselves. In the welfare state they will do so at other people’s expense’ (Barry 1999: 63). An overly generous welfare state causes moral hazard, and large groups of beneficiaries feel no need to make personal efforts to act in a responsible manner. From this perspective, as Stoesz and Modgley (1991: 31) observe, ‘welfare state programs induce dependency and the proliferation of a culture of poverty’. The amplification of ‘scrounger’ cases helped to proliferate the image of the welfare state as the domain of social free-riders and fraud. The poor were seen as an ‘expensive “burden” on society, for whom the “average taxpayer” supposedly has little sympathy, especially when depicted as welfare “scroungers”, homeless, criminals and drug addicts’ (Jones and Novak 1999: 5). Cook (1991) argues that the implicit aim of the Conservative campaigns was to increasingly target the benefits at certain groups whilst discouraging the claims of the less deserving. This policy was

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promoted by means of the lowering of benefits, disentitlement to services and the privatization of the supply of services. Lady Thatcher’s words illustrate this new approach: The underclass life created by misconceived state welfare poses a grave threat to freedom and civility throughout Britain – and not least to those who are most disadvantaged . . . The majority of the population should be encouraged to provide for themselves, through market and mutual agencies, for the whole range of their welfare needs. The majority who are temporarily unable to fend for themselves and their families should be helped back to self-reliance by subtler and more realistic measures than the Welfare State has ever managed to provide. (Thatcher 1996: ix) The New Right stands for an absolute, rather than relative, concept of poverty because there is no ‘legitimate agenda for collective choice beyond the issue of absolute poverty’ (Bosanquet 1983: 113). Accordingly, means-testing is an essential feature of such policies. If applied, then welfare policies must be selective, i.e. not be concerned with the bulk of the population, but only with a restricted section of the population on the bottom of society. Strict qualification criteria should guarantee little interference with the market, deter moral hazards and prevent people from becoming caught in the ‘poverty trap’. In the first years of Conservative governance, economic crises dictated many of their political decisions, guided by the belief that it was not deficit spending, but rather a tightening of the state finances and austerity measures which would lead to necessary adjustments in wages, prices and employment. The state budget was reorganized, switching from direct to indirect taxes. Income tax was sharply reduced – the base rate from 33 to 30 per cent and the top rate from 83 to 60 per cent – with the intention of pumping more money into the economy by encouraging entrepreneurship and investment. As compensation, value added tax on consumers and national insurance contributions increased. Likewise the government promoted the ‘right to buy’ for council houses, which promised the current tenants the right to buy the houses at a discount price, far below comparable market prices. This kind of policy was a ‘vote winner’ (Pierson 1994: 79) since it provided sizeable benefits for the sitting tenants. By restricting welfare provision the government managed to hold down increases in spending despite a peaking mass unemployment, an ageing population and underfinanced social services and healthcare. The role of National Insurance was significantly weakened by a number of reforms (Steward 1999). In 1988, the Treasury ended contributions to the National Insurance Fund. Another step taken was the abolition of the

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wage-related sickness and unemployment benefits, although the earningsrelated contributions were retained. When the Labour government introduced these in the mid-1960s it was argued that earnings-related benefits had a positive effect on labour mobility, but the debate shifted and the New Right was more concerned about the disincentive to work which might be a side effect of ‘generous’ benefits (see Glennerster 1995: 180). The Social Security Act of 1986 restructured the means-tested benefits and introduced pension reductions. The targeting of benefits became the major social policy objective. In order to make the unemployment status less comfortable and to widen the (income) gap between the unemployed and employed, benefits were made taxable and many entitlement rules were tightened. The annual upgrading of benefits in line with inflation was regularly frozen or delayed, and later related to prices rather than earnings. A similar shift was observable within the pensions scheme, in which various means eroded the redistributive nature of the State Earnings Related Pension (SERPS) and made it less generous. Private and individually tailored pensions were given favourable tax treatment. As a corollary of these changes, the means-tested system was re-emphasized and became a central feature of the British social policy. The impact of the succeeding Conservative legislation was less visible. Although John Major remained committed to the Thatcher legacy to a large degree, he adopted a more moderate attitude towards social welfare (Glennerster 1995: 213). Some of the political changes such as privatization had gained momentum by the time Thatcher left office and have since been carried further. The unemployment benefit scheme was substituted by the Job Seekers’ Allowance in 1996. As a consequence, many unemployed people exhausted their insurance benefits or could not even claim to be eligible. Overall, it has been said that the government took a more responsive position towards the ordinary citizen by raising the standard of state service and putting agencies and public servants on the spot (Reitan 1997: 154). However, there is much discussion over how successful the Neo-Conservative administrations have been in implementing their ideology. Paul Pierson (1994) has found that the accomplishments of the Conservative governments fell far short of their announcements and aspirations. Although the British welfare state was institutionally robust the political ideology of the New Right has certainly had an impact on the political agenda (see Powell and Hewitt 1998).7 Overall, it can be suggested that the Neo-Conservative regimes were successful in popularizing a new set of ideas, but they were less successful in implementing them (Mishra 1990: 116).

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The activating welfare state For a long period the lines of conflict within the public debate were defined by the challenging of certain assumptions about the welfare state made by the Conservatives, and by the defending arguments on the part of those who remained committed to the Beveridge legacy. The Left was partly paralysed by the radical attack of the New Right and did not substantially change its position and arguments. ‘For more than a decade Labour simply stopped thinking constructively about the welfare state. It was, after all, their welfare state . . . they were damn well going to defend it’ (Timmins 1996: 368). This situation changed when – with the beginning of the Blair leadership in 1994 – Labour started to re-define its policies and propagate the modernization of the welfare state. The party leadership tried to escape their image as a ‘tax and spend’ party and ceased calling for higher income taxes and increased public spending. Instead, the new approach towards state welfare was characterized by the promotion of opportunity rather than equality, an emphasis on the empowerment of the welfare clients and a new balance between welfare rights and obligations. Already in July 1994, when campaigning for the party leadership, Blair had addressed the question of welfare for the readers of the Financial Times (15 July 1994): ‘I quite understand the resentment of every taxpayer who has to pay £20 per week in taxes to keep three million unemployed . . . welfare and work go together . . . welfare must enhance duties and responsibilities and not be a substitute of them.’ It has been claimed that a policy convergence between the two big parties has taken place, mainly due to the Thatcher era’s impact on the welfare state which has forced the Labour Party to redefine its own policies and to accept many of the Conservative premises (George and Miller 1994: 215ff.). Jones and Novak (1999: 176) state critically: The ideological veneer which surrounds these politics may have changed: instead of stressing the virtues of self-help and individualism, New Labour appeals to notions of community, to social responsibility, social inclusion and the need to overcome divisions. But in terms of policy and practice the trajectory largely remains the same. New Labour outmoded the commitment to classical social democratic positions and argued that a modern welfare state ‘must adapt to contemporary economic conditions rather than seek to cosset its citizens from the wind of change’ (Page 1999: 305). The new ideology claimed to track a Third Way ‘beyond left and right’ (Giddens 1994) which accepts the pace and the scale of the global economy and promotes a new relationship between the state and its citizens. Instead of following false spending ideology, New Labour seeks to activate society, respond to consumer wants, offer choice and stimulate innovation (Mandelson and

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Liddle 1996). Priority was given to so-called ‘welfare to work’ measures that would promote employment and avoid an ‘inactive life on benefit’ (Blair 1997). The Labour Party presented a vision which overcame the old controversies and promised a ‘better’ welfare state without insisting on redistributive measures. The traditional welfare state was criticized because of its structural inefficiencies and its failures to give people the means for self-improvement and self-support. As Gordon Brown, New Labour’s first Chancellor, has put it: ‘We reject equality of outcome not because it is too radical, but because it is neither desirable nor feasible’ (Brown 1997). In terms of citizenship, New Labour emphasized a nonegalitarian approach to welfare based on opportunity and social inclusion rather than redistribution (Powell 1995). Overall, there was little concerted public opposition to this paradigm and it was even suggested that alternative welfare strategies have now been supplanted because the new policy framework developed a prospective strategy out of the lessons learnt from the past (Giddens 1998b).

The welfare legacy in Germany Conservative authoritarianism The legacy of the German welfare state is deeply rooted in the Prussian tradition of state authority and social responsibility and associated with the religious tradition of Luther’s pietism (see Tampke 1982). It seems that the organized paternalism of the church had a formative impact on the way the Prussian state conceptualized its relation to the citizen. Rather than providing space for a liberal society with a self-reliant and autonomous citizen, the state was assigned the supervision of social life and the regulation of social relations (Kaufmann 2001b: 946). The practices of state intervention were legitimized – at least since the Enlightenment – by their capability to advance the moral and the economic good. Thus, the difference between the public sphere and the private sphere was less marked than in liberal regimes. The first steps were taken during the 1880s when the Bismarck administration introduced social policy measures as part of a broader class policy. The pressure for state intervention came from the expansion of the labour market, a rapid industrialization and the emergence of a new class, the working class, which was not as yet integrated into the social system. The working class was perceived by the political elite as a socially alienated group at risk of becoming infected with radical ideas. The growth of an organized labour movement shackled the political landscape of that time and the ‘social question’ threatened to turn into a ‘red danger’. Not only was the established social order endangered by the industrial system, but also the mental and physical health of the working force, which was the basis of the success of the capitalist accumulation process, suffered.

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The establishment of the German welfare state can be interpreted as the result of the pre-industrial political elite’s political power strategy, rather than a project aimed at social improvement (Zapf 1986). Scholars of history have argued that Germany failed to establish a stable parliamentary system of government and a democratic political culture which could integrate new political forces (see Wehler 1973). During the process of industrialization, the old aristocratic and authoritarian Prussian elite refused to give way to the emerging bourgeoisie, which, in turn, was being increasingly put under pressure by the emergence of a socialist and radical working class. Because of this inhibition, they renounced their emancipatory goals and allied themselves with the conservative and reactionary forces of society. Bismarck pursued a double strategy of repression and paternalism in order to control working-class political tendencies (see Hentschel 1983: 9ff.). The first aspect of this policy was the harsh, deterrent ‘Socialist Law’ which prohibited the political organization of the rising Socialist Workers’ Party (SAP). The second element of the defensive power strategy was designed to strengthen the link between the working class and the state. The state-sponsored social insurance scheme complemented the policy of repression by ‘buying’ the attachment of workers to the Wilhelmine state (Tampke 1982; Stolleis 2001). Bismarck’s explicit aim was to ‘reduce the attractiveness of revolutionary programmes by providing benefits from above that would place workers in a relationship of direct dependency on the state and consolidate their allegiance to it’ (Rosenhaft 1994: 29). The fusion of policies in defence of the ruling interests with welfare policies contributed to a ‘state authoritarian social policy’ (Lampert 1980: 130) which was not, in the first instance, concerned with paupers and the needy, but rather with the stronger parts of the working classes in industry that constituted potential trade union supporters. With the introduction of health insurance, old-age insurance as well as invalidity and accident insurance the state assumed responsibility for the satisfaction of individual interests and needs (Tennstedt 1997: 89). By making insurance compulsory, fixing benefit and contribution levels, giving a state subsidy and providing the legal framework for the insurance funds, the state was to guarantee social welfare (Stolleis 2001). The legal entitlement was designed to counter the hazards of industrial society; it derived the benefits directly from the productive status of the claimant and rewarded status achievements at the labour market. By this, it transferred the dominant evaluative concept of the market which rested on individual achievements, work performance and productivity into the sphere of social policy. Needs were acknowledged and addressed in interplay with the market position of the individual; transfer payments were compensation for a loss of earnings. For the initial reform steps, the division between policies directed towards the workers and policies directed towards the poor was quite crucial (see Leibfried and Tennstedt 1985). Social insurance was targeted at the stronger parts of the labour force,

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whilst the precarious and pauperized section of workers were still dependent on the deterrent poor relief system. Since the policy was preoccupied with the social insurance system, social assistance remained of secondary importance until its final establishment as a social right after the Second World War. Although its normative standing has been reinforced over time, social assistance is still a post-positive scheme that functions as a stopgap for the other types of welfare provision (Brück 1976: 283). The prevailing concept of community, which had its clearest expression within the strong guild tradition, generated a welfare ideology in which aspects of social welfare are linked to the fact of belonging to a social entity. Thus membership status and the idea of mutuality became important features. Steinmetz (1993: 124) has argued that the German insurance system possesses a specific logic of social group construction by which the core of workers and employees are typically eligible for insurance benefits, whereas people with tenuous relations to the labour market are neglected. Universalist traits and general solidarity motives were relatively absent from such an approach; security was offered as a substitute for social equalization (Hentschel 1983: 10). Although the system has been modified in numerous legislative acts, the basic feature of status differentiation, group specificity and organizational fragmentation is still recognizable (Alber 1986). The conservative inventors of the German social insurance model, as Esping-Andersen (1990: 24) makes clear, followed two political objectives: The first was to consolidate divisions among wage-earners by legislating distinct programmes for different class and status groups, each with its own conspicuously unique set of rights and privileges which was designed to accentuate the individual’s appropriate station in life. The second objective was to tie the loyalties of the individual directly to the monarchy or the central state hierarchy. The experience of the Weimar Republic revealed some of the fundamental defects of the German state and the fragility of the political consensus between the social classes. The concessions made by the political elite in order to fortify the political system were not far-reaching enough for the stabilization of a robust and durable political order. It became apparent that the Weimar Republic relied heavily on the integrative capacity of the welfare state and that more and more parts of the society were becoming dependent on the welfare system (Stolleis 2001: 277). With growing mass unemployment during the ‘great depression’ the welfare state also came under mounting pressure. The more state protection was demanded in this time of crisis, the fewer resources were available. Hence the newly established unemployment insurance (1927) did not live up to the expectations. It is very telling that the end of the Weimar Republic was triggered by a conflict over the financing of mass

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unemployment and the level of insurance benefits. According to Rosenhaft (1994: 34; see also Weisbrod 1981) this conflict documents the problems of the modern welfare state ‘caught between the promises it could not materially afford to fulfil and the hostility of those who saw both Sozialpolitik and Wohlfahrt as an unacceptable burden to profitability’. The period of National Socialism was marked by significant changes in social policy, especially in the status of the social partners and elements of self-administration, but also by astonishing continuities (see Sachße and Tennstedt 1992). The basic institutional architecture of social insurance remained largely intact. Nonetheless, the ideological change in social policy advanced by the regime was of a substantial nature because the individual was, even more than previously, conceived of as a part of the larger social organism. The strength of the nation was the ultimate concern of the Fascist policy makers, as their approach towards health, population policy and generative reproduction demonstrates. Within Nazi ideology the glorification of work gained a prominent status and benefits were strongly tied to duties. Rather than providing benefits for the unemployed the system tended to support workfare measures. Social policy was instrumentalized for the military ambitions of the Third Reich which needed a powerful industry and a healthy population. It goes without saying that welfare policies also entailed a previously unpractised discrimination policy excluding other ethnic groups, punishing deviant behaviour and treating mentally and physically handicapped people as inferior. The Social Market Economy The development of the welfare state in West Germany after 1945 has strengthened the stress on the welfare state as a legal concept. Social entitlements, therefore, were increasingly viewed as social rights. Although there is no explicit catalogue of social rights within the written constitution, the concept of the state embodies a general commitment to foster social security (Frerich 1987: 22ff.). At the same time, the term ‘welfare state’ was used less often and substituted by the more neutral label of ‘social state’. With the popularization of the term ‘social state’ the welfare activities of the state have lost their pejorative notions which were reminiscent of the absolutist tradition. Rather, the ‘social state’ stands for the range of state services and provisions which protect the people against life risks (Ritter 1991: 161f.). Freeman and Clasen (1994: 10) have argued that the term ‘social state’ embodies a ‘normative commitment to social justice and to reducing inequality and guarantees the legally codified claims of individuals versus the state’. In addition, the concept of the Social Market Economy became a crucial and determining concept within the German system. The idea of the Social Market Economy can be traced back to the Freiburg school of

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economic thought which provided an understanding of the relationship between the polity and the economy markedly distinct from the laissezfaire ideology, on the one hand, and central economy concepts, on the other hand. The authors of the Freiburg School were quite critical of the self-regulating and self-optimizing capacities of the free market and were in favour of state intervention which should mediate the destructive tendencies of the capitalist system (see Röpke 1994). The competitive market order, although indispensable for an efficient organization of the production process, needs a strong corrective in order to reduce its deficiencies. According to Walter Eucken (1990), a healthy market economy needs active and methodical intervention that ensures the reproduction of the productive forces in the long run. The development of a policy that guarantees a functioning of the market on the basis of freedom and choice, but prevents the malfunctioning of the market, is of prime importance. Thus, state interventions are accepted if they ‘improve resource allocation, economic efficiency and individual incentives’ (Ginsburg 1992: 69). Eucken developed a concept of ‘order policy’ in which social policy is not merely a supplement to economic policy, but rather a constitutive part. Within this approach, state intervention abates market risks and inequality and assumes a compensatory function, but it also focuses on the way economic policy affects individuals’ life changes and living conditions. Hence market conditions and their regulative mode are not considered to be an independent mechanism of resource allocation, moreover, economic policies should already be organized in such a way that societal needs and economic necessities become more compatible. When the concept of Social Market Economy8 was propagated by Ludwig Erhard, the Minister of Economic Affairs between 1949 and 1963 and subsequent Chancellor, it was a direct response to the socialist conception of social policy and provided a profound justification of the capitalist mode of production. In a reaction against the nationalization of the means of production and against central planning, as carried out in the eastern part of Germany, the ideology of a socially tamed market formed an appealing counterpoint to which the diverse social forces of that time could comply. The two major components of the Social Market Economy concept – the acceptance of the leading role of the market and the regulatory and compensatory role of the state – have been established as the baseline components of the German model. Christian Democrats as well as Social Democrats could place their political programmes under this umbrella. The Social Democrats adapted their political aspirations when they settled the Godesberger programme (1959) which contained a general acceptance of the social order and the capitalist production mode. Since then, a moderate social reformism with a stress on social justice and solidarity within the existing basic institutional set-up has become the main feature of Germany’s Social Democrats. While the conservative notion of the Social Market Economy has emphasized the

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self-help potential of small social units and highlighted the principle of subsidiarity, the Social Democrats have promoted a more comprehensive approach to welfare including wage and labour market policies. Since the successful recovery of the German economy, the so-called ‘economic miracle’, many reforms were set in motion, of which the pension reform (1957) and the Social Welfare Act (Bundessozialhilfegesetz 1961) are the most far-reaching innovations. With the pension reform, the pension was treated as a proper substitute for earnings, i.e. linked to the general prosperity and to the employment biography of those insured. The reform underlined the right to pension entitlement deriving directly from the individual’s former involvement in the production process. The social assistance legislation, in contrast, manifested the right of each citizen to public assistance at a level at which not only their physical needs could be satisfied, but also their participation in social and political life could be guaranteed. The system also enshrined the principle of subsidiarity by providing assistance benefits only on the condition that other sources of income, including the income of family members, are exhausted. The realization of a stable system of social partnership, the institutionalization of workers’ councils and the co-determination in industries constituted a milestone in the development of the welfare state and made a cooperative constitution of industrial relations possible (see Hentschel 1983: 230ff.). The other element of conflict arbitration within the German system is the industry-wide bargaining process between the trade unions and employer associations over working conditions and wages which is regulated by the trade agreement law. All in all, the corporatist character of the system, its collective bargaining and the complex institutional framework of industrial relations have contributed to a rather tight coupling of the domains of the labour market and the welfare state (Kaufmann 2001b: 961). Party responses to institutional drawbacks In historical retrospective, the German social security model has been a ‘remarkable consensual one, without any intensive conflict between labour-force participants, on the one hand, and welfare clients, on the other’ (Clasen 1994: 75). It has been argued that the features of the insurance system, its orientation towards compensation, its contributory mode of financing and its corporatist organization have fostered a compromise between the social partners and the major political parties. For this reason, the social security system has been characterized by a ‘depoliticized rigidity’ (Offe 1991) so that the welfare state can be regarded as a significant contributor to political legitimacy (Greiffenhagen 1997: 48ff.). The citizens value the welfare state on the grounds of its capability to provide security and protection, but they also appreciate the welfare state with regard to its normative standards.

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During the expansive period of the West German welfare state the conflicts between the major parties were rather negligible, and even the coalition government of the Conservatives9 and the Social Democrats at the end of the 1960s enacted important social policy reforms such as the Work Promotion Act. A wave of challenging criticisms was brought into the German public discourse in the wake of the first oil crises when NeoConservative positions gained in public influence. The state was reproached for over-regulating the life of its citizens and restricting individual freedom. This position was put forward by the entrepreneurial wing of the CDU/CSU as a joint force together with the market liberal camp of the free democrats (FDP). They were also united on fiscal and tax issues which were perceived as an unacceptable burden to the economy. The Conservative Christian Democrats 1976 election campaign was headed by the crude distinction between two political alternatives: ‘freedom or socialism’. The welfare state was associated with paternalistic and bureaucratic practices which cut off the self-help potential of individuals. It is quite telling that this debate did not only evolve within conservative or liberal circles, but also amongst the left and green-alternative critics. According to their view, the ‘nationalization of the social’ tends to discourage the emancipation of the citizens. However, the call for a different welfare state in Germany was much more moderate than in Britain; in the first instance there was criticism of the welfare state’s counterproductive effects and not of the welfare state as a whole. One reason for the less forceful attack in Germany was the strong influence of Catholic social thought on the conservative programme. According to their position, elements of solidarity are necessarily part of any social policy because they are realizations of collectivity. Oswald von Nell-Breuning (1957), one of the leading figures within this school of thought, has emphasized that the principle of solidarity is to be complemented by the notion of subsidiarity. The relationship between both defines the balance of ‘self-help’ and ‘outside-help’ as the relation between the smaller units of the society (individuals, families, community) and the larger units such as the state and the Länder. Subsidiarity, as well as solidarity, rests on a societal understanding that places importance not only on the individual and the state, but also on the numerous intermediate social units that realize integration. The influential ‘social policy wing’ of the CDU, which had a decisive say in welfare issues, stood for a clientelistic policy approach combining the fundamentals of the social market economy with elements of the Catholic social thought. The German Social Democrats also contributed to the process of policy formation. Since they made their peace with the social version of capitalism they participated – in government or in opposition – in many of the decisions within the field of social policy. Their affirmation of the basic institutional structure was inspired by the expectation that an institutionalized class compromise in the form of social insurance would

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enhance the amount of risk sharing and redistribution. It was assumed that an affluent society with a developed welfare system could generate security for the vast majority of the population and remedy social distress and deprivation. By and large, the German Social Democrats have favoured an extension of social insurance in order to achieve an inclusion of a greater number of social groups and have supported an enforcement of the redistributive elements within that system. Alber (1986: 104) argues that: the social policy efforts of the Social Democrats usually centre on the regulation of work conditions, on the promotion of full employment, and on social security, whereas the social policy of the bourgeois parties primarily seeks to strengthen the self-help potential of families and to promote a widespread capacity for property formation. In order to understand German social policy culture one must also consider the role of the trade unions and their political position. By means of their channels of influence, foremost within the Social Democratic Party, but also within the conservative coalition, they have become one of the major players whose consent the parties in power must try to obtain. On behalf of their clientele, the trade unions have taken a defensive position concerning welfare state achievements because of the perception of insurance benefits as ‘deferred’ wages to which workers have a right. As a consequence, ‘any reductions in benefit levels or restrictions of benefit rights for current wage-earners are seen by the unions as a direct attack on “earned” acquisitions’ (Clasen 1994: 77). The crossover from a period of expansion to a period of consolidation and containment had already begun in the 1970s but became more pronounced when the Christian–Liberal coalition government took office in 1982. Under the heading of a ‘mental and moral change’ traditional values of hard work and diligence were stressed in order to form a new normative core of welfare intervention. The conservative administration advocated a policy of change by focusing more on private provision and self-reliance without giving up statutory provision. The massive labour market problems and the fiscal load of the welfare state made the achievement of financial solidity the foremost objective of the conservative social policy actors. However, despite the new government’s rhetoric of change, which mixed some market liberal concepts with a populist morality stressing the virtues of self-help and familialism, the impact on the welfare system was relatively weak. Although some authors have talked about the conservative transformation of the welfare state (Borchert 1995), an ideological shift such as that introduced by the British Conservatives was not on the agenda. From a distance, the 80s appear to have been dominated by a moderate policy of consolidation with selective cost-saving measures, but not a turning point (see Schmidt 1998; Alber 2000). It was, not least,

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the image of the CDU as a ‘people’s party’ and their attempt to appeal to the wider electorate that prevented more radical measures. The impact of unification and new pressures on the welfare state A short glance at the social policy institutions in the former GDR indicates a strong rootedness in the German tradition.10 Hentschel (1983: 215) points out that East German social policy owed possibly as much to its German origin as to its socialist nature. Socialism – in the self-image of the East German political elite – was social policy per se because all political endeavours were directed towards the promotion of well-being and equality. With the beginning of the 1970s the official terminology started to address social policy issues more systematically as part of the socialist maxims. In many areas, such as housing, social care and family policy, comprehensive programmes were introduced which regulated large parts of social life. In line with the German tradition, statutory social insurance was financed by contributions made by the employer, the person insured and the state. Many other social areas (e.g. health, social care) were tax financed. Because of the officially propagated ‘right to work’ unemployment was not a social policy issue, rather, people were kept in employment even if it was economically inefficient. Overall, the GDR can be conceptualized as a welfare state with comprehensive and evenly distributed welfare provision. It offered universal, citizenship-type welfare rights at a modest level. Its cornerstones were the guarantee of work, subsidized prices for many products (food, clothing, energy, public transport), marginal housing costs and free access to health treatment. The relatively equal level of the majority of welfare services was partly offset by privileged schemes for economically or politically important groups. Social policy was a rather patronizing enterprise with a peculiar mixture of ‘welfare’ and ‘workfare’ (see Pirker et al. 1995) because many social policy measures entailed incentives in order to attach people closely to the state enterprises. By the same token, the achievements within the area of women’s policy and family policy were always inspired by the promotion of employed work. The unification marked an institutional break with the socialist type of social policy and transferred functions previously fulfilled by the paternalistic state back to the individual (Mangen 1994). The institutional asset was substituted by the western ‘ready made state’ (Richard Rose). On the one hand, there was a contraction of social policy functions, but on the other hand, the level of cash welfare benefits was substantially upgraded. The West German welfare state cushioned the impact of the social transformation and the liberalization of prices via compensation and ‘passive interventions’ (see Schmähl 1992). The political agents in power deliberately avoided a critical revision of the West German institutions and a preservation of some of the universal institutional elements of the East

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German system. Although the social cushioning of the transformation process via social policy instruments found general support within the major parties, the functional expansion of social policy, especially labour market policy, was viewed with suspicion by the liberal and market-oriented political forces. The extent to which social insurance and the labour market policy became part of flanking measures within the social transformation was seen as a problem. In the aftermath of the unification the social policy debate was largely absorbed by the issue of the costs of unification, but there was also a debate about some overall negative features of the system, particularly its immobilism (Mangen 1994: 55). With the extensive financial burdens the welfare state had to bear, allocation conflicts between the social partners intensified and the settled consensus became endangered. Despite mounting pressure, the Kohl government cautiously avoided a direct confrontation with the voters’ interests and tried instead to present itself as the guarantor of social continuity and stability. It is also apparent that the policy of unification had some impact on the normative standing of the German welfare state. First, without its polar opposite in the East, the West German social state has lost some of its stabilizing coordinates that were set up by the system competition and provided the system with self-esteem. Second, although the welfare state was able to attain a good record in combating social distress in East Germany, its image remained rather unfavourable (Schmidt 1998: 140). Of course, the enormous social costs of marketization could not be met fully by the social security system, but without the transfers for the unemployed, the retired and the people in job promotion programmes, the impact of the transformation would have been disastrous and unacceptable. Thus, far-reaching state engagement was accompanied by a rather resentful positioning of the welfare clientele. Third, the extension of the social security programmes to the East has caused a problem of legitimacy for the West German fund contributors. It was asked whether it is ‘legitimate to use funds raised by contributions of the members of a particular social insurance programme to address problems which are seen as problems of society as a whole’ (Gan␤mann 1993: 86). The consensus model was also challenged by the debate about the international competitiveness of the German model which has been popularized in line with the globalization paradigm. Despite some warning voices which have rejected the unicausal link between a globalized economy and welfare state performance (e.g. Cohen 1998; Butterwege 1999), the public has widely adopted the rationale of market competitiveness for judging the welfare state performance. At least since the late 1980s, the state and the market were increasingly viewed as opposing and conflicting forces because a ‘big government’ was said to put off economic prosperity. The access to markets, once welcomed as being profitable for the national economy and consequently for the national standard of social

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security, is now challenging the welfare state. At the legislative level some attempts were made to introduce more flexibility and to slow down the rise of social contributions. Also a number of retrenchment measures were adopted in order to ease the fiscal burden of the system, but this did not take place on a large scale. The pension reform in 1992 was an attempt to respond to the ageing society with a growing share of elderly pension receivers. The reform adjusted the calculation bases of the future pensions (change from gross to net earnings) and lifted the contribution rates (Schmähl 1993). However, the social care insurance, which was introduced in 1994, was a noteworthy government commitment to the principles of a ‘social capitalism’. At the present time there are many signs of more profound changes, especially in the area of pensions and health, comprising retrenchment measures, less benefit generosity and stronger private elements of provision. The unemployment system also faces some serious adjustments mainly by tightening the eligibility, strengthening the requirements to look for work and harmonizing the social assistance and the unemployment benefits schemes.

Welfare regimes and their moral economies: some preliminary thoughts At this point, one can advance some ideas as to how institutional arrangements, together with the dominant ideologies that have taken part in shaping the welfare state, may affect the moral economy of the respective welfare regimes. Under the assumption that people’s opinions are ultimately influenced by the institutional architecture and the normative references affiliated with a type of welfare scheme, one can suggest that rather distinct motivational underpinnings and interpretations play their part in generating a social stance towards the benefit system. Subsequently, the ground for the empirical chapter to follow will be provided. The major point that needs to be stressed is that welfare states are not only distinct with regard to quantitative measures (e.g. level of benefits), but also in qualitative terms such as the entitlement mode and the social relations involved. When we talk about a welfare regime we embrace not only the beneficiality of the welfare state for one group or another, but also the socially and politically valid conception of who should get what, for which reasons and under which conditions. These justifications are expressions of the normative content of collective welfare arrangements that affect whether people regard certain policies as necessary, desirable or morally plausible. Ultimately, the moral economy of welfare regimes resides in such kinds of institutionalized normative assumptions that colour and influence the citizen’s attitudes towards the welfare state. In the British system, as it was argued, social security takes the form of ‘limited substitution’ (Clarke and Langan 1993: 25) with as little interference in market mechanisms as possible. The state takes charge of welfare

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only if the market fails, while a self-help priority is assigned to the individual. The liberal-leaning welfare system in Britain gains its political appeal from a state role confined to protecting against fundamental life risks and to ensuring a national minimum. The idea of setting a national minimum by joint financing, as Glennerster (1995: 6) argues, is neither ‘particularly revolutionary nor egalitarian’, but it might appeal to a society that is impregnated with liberal values. One would expect the British constituency to have a preoccupation with poverty politics and modest security standards rather than with welfare measures that go far beyond this. The flat-rate principle, therefore, might be approved of and, when people pay for National Insurance, they count only on a decent protection for life’s vicissitudes rather than equivalent returns. Although the contributions are levied from income and put into the insurance fund, they are rather unspecific with regard to the single schemes and share some features with a social security tax. The National Health System is exemplary for a welfare scheme that is characterized by traits of universalism. It has had a unique position within the British welfare system since the welfare legislation of the 1940s and enjoys, despite criticisms about the quality of healthcare, widespread support. One can hypothesize that the universality of access and the conviction that health should not be treated as a commodity belong to the common sense assumptions that are shared by most Britons. The productivist orientation of social policy is discernible in various principles such as, for example, the less eligibility principle which is responsible for the distanced level of market earnings and social provision, the importance of private and occupational provision and the role of means-tested relief. A great proportion of benefits is targeted, in other words, they are reserved for those who satisfy rigidly defined conditions. In a liberal welfare regime, these benefits will typically be targeted in several respects. First they will be targeted to those genuinely in need of them. Income support and social services will be given only to those in demonstrable need of services. . . . Second, benefits will be targeted on those who cannot meet those needs through ordinary free exchange. . . . Third, benefits will be targeted on those lacking resources for legitimate reasons. (Goodin et al. 1999: 43) The underlying theme of ‘deserving’ and ‘undeserving’ that draws a distinction between those beneficiaries who principally can enter the market and those who cannot, such as the old, disabled and the ill is essential. Those who are not legitimately exempted from labour market participation receive only conditional and limited help, which should preserve their motivation to take up work. One would assume that people are willing to finance the aid to the poor only if they believe that those ‘on the

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dole’ also do their fair share, for example, by making continuous efforts to move off benefits. As with nearly all western welfare states, the British welfare state combines social assistance and social insurance schemes. Both schemes inhere organizational principles which are in line with a liberal approach: the social assistance scheme represents the last resort safety net below the market and social insurance incorporates liberal ideals such as the principle of individual contracts. While the first operates within the logic of the means test, the latter offers a relatively ‘low replacement of earnings, poor coverage of risks and relatively tough eligibility conditions in exchange for modest contributions from employers, employees and the state’ (Ginsburg 1992: 144). It is part of the British tradition to regard high replacement rates – defined as the ratio of income from social benefits to income when in work – as problematic because they are seen as discouraging people from joining the labour force and requiring higher taxation to pay for them. For this reason, one can expect neither unanimous nor unconditional support for unemployment provision, not least because of the repercussions welfare benefits may have on individual behaviour. Glennerster (1995: 221) has argued that the British system, in its minimalist flat-rate nature, never won the support of the middle classes. Evidently, the importance of poverty alleviation for liberal social engineering has left an institutional legacy that focuses prominently on the lower sections of society, rather than on comprehensive status maintenance which might attract higher status groups. The targeted elements rest on the principle of proved need and minimum supply, but social insurance with its flat-rate character also emphasizes a concept of basic security. The uniform and modest character of the insurance benefits, such as the basic pension, are at most trunk provisions on which to build private entitlements. Obviously, these private alternatives are not available to all and large groups from the lower income sections are merely reliant on state welfare. Thus, the stratificatory effect of the British system is twofold with ‘a blend of relative equality of poverty among state welfare recipients, market differentiated welfare among the majorities, and a class–political dualism between the two’ (Esping-Andersen 1990: 27). The division of welfare into minimum state security, on the one hand, and a significant private provision sector, on the other hand, also explains why, at an electoral level, privatization attempts, anti-dependency rhetoric and attacks on excessive and wasteful state welfare have attracted many members of the middle classes. Their view of the welfare schemes is likely to be impregnated with the position tax payers take rather than a property-like relationship that insurance entitlement holders tend to develop. Another possible effect is the fragmentation of the welfare state into two sectors: a heartland of services such as pensions and health, where people demand more state engagement, and a sector of minority

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benefits and means-tested benefits with strict entitlement rules, which is less popular and the object of moral judgementalism. In the latter welfare sectors the moral economy might produce a widespread ‘scepticism about value for money, and a preparedness to stigmatize recipients’ (Parry 1986: 235). The German model comes close to Titmuss’ (1974: 31) ‘industrial achievement model’ where ‘social needs should be met on the basis of merit, work performance and productivity’. Hence, social protection is primarily occupied with those groups that are the main pillars of industrial society, namely the workers and employees, and less with those on the bottom of society (see Goodin et al. 1999: 74). The legacy of corporatism finds its expression in the organization and principles of the social insurances, such as obligatory and exclusive membership, status differentiation and income maintenance. Either because of state recognition of particular status privileges, or because organized groups refused to be part of a more status-inclusive legislation, there emerged the tradition of constructing a myriad of status differentiated social-insurance schemes – each with its peculiar rules, finances, and benefit structures; each tailored to exhibit its clientele’s relative status position. (Esping-Andersen 1990: 60) The German system gives priority to the social policy aim of security rather than the aim of equality so that vertical redistribution is not a central feature. It promotes a concept of ‘individual equity’ on the basis of status maintenance and equivalence, supplemented by support programmes for particular groups and circumstances. However, as Zapf (1986) has emphasized, the maintenance principle is combined with other social policy paradigms such as: 1 2

3

solidarity, in the sense that associations should help their members and risks should be coped with collectively; subsidiarity, an idea which echoes the Catholic thought that there is an obligation to let smaller units of welfare production play their part, and; the obligation of self-help.

The German welfare state has been termed a ‘social insurance state’ (Alber 1987: 37) with social insurance being of primary importance. Social insurance entitlements are closely related to the labour market position of the claimant.11 Because of the premium type of insurance people have strong expectations towards their entitlements, i.e. they consider them as earned, and place a great value on them. Most of the transfers carry out an intertemporal reallocation of resources rather than

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redistributions between social groups. By linking benefits to prior earnings and attaining relatively high replacement rates, the organizational principles of social insurance safeguard the objective of income maintenance. In consequence, social insurance schemes in the German system can be considered as a highly effective means of income stabilization. The high replacement rates when people shift from market incomes to public transfers ensure that the system of income stratification is strongly reflected within the system of social provision (Goodin et al. 1999: 253). Due to this programmatic structure the German welfare state was not only able to generate consent (Roller 1992; Mau 1997a), it also achieved a kind of ‘differentiated integration’ (Leisering 1995). This ‘differentiated integration’ refrains from egalitarian principles and gives even the higher status groups attractive benefits packages on the basis of their contributory records. In contrast to the British system, the middle classes in Germany are said to form a principally supportive section of the population with respect to the insurance system, especially in the case of pensions. They have, as Clasen (1997: 80) writes, their ‘stake in the system’ and are less encouraged to take up private provision. Skilled workers, white-collar employees and civil servants have appeared as strong defenders of the core welfare institutions (see Alber 1986: 123ff.). It has been said that the social insurance system has an easy legitimatory stance, because it promises the participants what they have paid for. The German social security system, as Offe (1991: 129) has argued, is morally undemanding in its stated objective of security, because: no one needs to believe in lofty principles of solidarity, justice, or equality to become – and remain – a rational supporter of the system . . . Its modest goal is the guarantee of income – and of relative income status! – for employees and their dependants. As a consequence, rational self-interest on the part of the ‘internal constituency’ of the insured is sufficient as a base for consent. As long as redistribution remains horizontal, that is, within ‘insurance communities’ with a common exposure to a certain risk, rational opposition is unlikely to emerge. Cost-saving measures have echoed the insurance rationale by targeting the cuts towards the redistributive ‘insurance alien’ elements rather than towards the ‘genuine’ beneficiaries (see Clasen 1997: 78). However, the unemployment insurance architecture is not immune to conflicts between ‘insiders’ and ‘outsiders’ of the employment system. Due to the mode of financing, there is a tendency to view the latter as a burden to the former and those with relatively secure jobs might express some reluctance to share their income with those outside the labour market, especially if they are perceived to be making little effort to find work. Is also needs to be stressed that people have unequal access to the

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means of state security. Employment-centred insurance arrangements favour people within the labour market, especially those in full-time, stable and relatively secure employment relations, while neglecting those with less labour market attachment. People in precarious and nonstandardized labour market positions, or people who are not – in one way or another – part of the idealized ‘employee society’ are less well covered by social insurance provision. Sections of the unemployed, especially those with no unemployment compensation entitlements, might feel underprotected and demand more state engagement. These people often rely on the last resort net which is, in terms of generosity, quite distinct from the insurance level and which becomes a stopgap for those who are not covered by the higher-tier systems. Although this system cannot rely on the same kind of justification on which the insurance systems are based, one would expect that the fight against poverty as a policy objective is highly approved of. Thus, the right to social assistance should face little opposition with the exception of those measures by which assistance to the poor stops market incomes or incomes coming from social insurance schemes. In the areas of health and social care the German provision system is for the vast majority organized as statutory and compulsory social insurance. Health insurance membership is tied to current (or former) labour market participation, whereas people who are not part of the labour force derive their entitlements mainly through their relation to an income earner. Although there is a contributory differentiation, the entitlement system possesses a high degree of universalism. Healthcare is free at the point of delivery and relatively independent from the contributory record of those insured. As in the British case, one can suggest that these principles are widely acknowledged and morally unproblematic because health impairments are largely viewed as unforeseeable and beyond individual control. Risk aversion and the high value of health might lead people to adopt the perspective of risk reciprocity rather than to calculate returns (Hinrichs 1997). German unification has posed enormous problems for the integrative capacities of the German welfare state. Not only did the East Germans have to be integrated into the social policy schemes, but this also had to be done by means of heavy transfers from the West to the East. The welfare state was used as a vehicle to shoulder the high social costs caused be a rapid and fundamental social change. For this task, the old West German welfare state was neither designed nor sufficiently prepared, and it managed only by stretching itself to its limits. The unconditional absorption of the East German Länder has seriously threatened the viability of many well-entrenched welfare principles and, thereby, created a legitimacy problem for the western social security contributors who felt understandably aggrieved. This strategy created a two-tier welfare state in which East depends on West, with ‘most Easterners’ access to welfare also com-

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paring unfavourably with that of their western counterparts’ (Mangen 1994: 42). However, in some cases, as in the pension system, the East Germans gained a rather good stake in the benefit system due to their long employment history. In the face of serious budget deficits a Solidarity Pact was introduced in 1993 as an attempt to restore the accommodation between the main parties and the social partners ‘through seeking an agreement ostensibly espousing the principles of solidarity and social justice’ (Mangen 1994: 50). With this pact, the scale of the East German transformation and the long-term responsibility were finally acknowledged, even if not solved. Overall, one can hypothesize that the East German attitudinal stance differs quite substantially from that in the West due to the difference in historical past, but also due to the strong dependency on state protection. East Germans are likely to be more egalitarian but also to demand more state engagement when they feel poorly protected. In the face of serious economic and social problems there is a tendency to assign a good deal of responsibility to the state (Zapf 1994). With regard to principles of collective provision one can assume that the compelling rationale of the social insurance model also accommodates East German attitudes, notwithstanding the fact that they also might be strongly in favour of those policies that support income redistribution. It also stands to reason to assume that the East Germans are strongly committed to the idea that the state should be responsible for the well-being of its citizens and that all people should enjoy access to the means of security (Mau 1997b; Andreß et al. 2000).

6

The logic of popular support for welfare schemes and their objectives

The previous chapters have highlighted that the historical trajectories different welfare states have taken are closely associated with certain ideological traditions and political forces. It has been shown that the historical legacies of interventionist strategies differ quite substantially and that they have left an imprint on the state of welfare today. Social welfare policies bear the stamp of the past as do the concepts of social justice associated with them. The following section combines an institutional analysis with an analysis of attitudinal patterns. The task is to trace the specific logic of agreement with and acceptance of welfare measures, and to enumerate which factors and interpretations enhance (or endanger) people’s commitment to collective schemes. The empirical section, therefore, is concerned with the attitudinal patterns and their structural determinants, on the one hand, and the question of how normative and cognitive complexes influence the moral economy of the welfare state, on the other hand. In the following chapter the study will embrace five policy areas, namely redistribution, poverty, old age, unemployment and health policies. The organization of each single chapter follows more or less the same plot: first, it will characterize the different policy fields and their particular modes of operation with regard to interest satisfaction and the conception of social justice involved. A reading will be proposed that stresses the importance of implicit and often even explicit norms of reciprocity. It is important to tap into the reciprocity norms which underlie most of the welfare exchanges, because they help to explain why people exhibit a good deal of generosity in some cases and are rather resentful in others. A second step will describe the actual policy context in Britain and Germany. Following this, it will move on to the moral economy issues, looking for the patterns of support for the related policy objectives. Then it will be clarified as to what extent structural determinants account for attitudinal differences and which types of conflict are likely to arise. A final step will focus on the question of how interpretative and cognitive complexes enter the moral economy of welfare policies. It is, therefore, of special interest which factors undermine the normative

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commitment to welfare institutions and how the vocabulary of motives might change in the light of certain ‘politics of interpretations’. The main purpose is to discover upon which conditions the moral economy of welfare state institutions works, and which factors enhance or weaken a citizen’s compliance with the social security schemes.

Redistribution in our heads: givers and takers Interests and interpretations Redistributive policies can be defined as governmental policies aimed at modifying primary redistribution and to ‘repair damage or compensate dis-welfares which have arisen in the earlier stage of the process’ (Ringen 1987: 4). Redistribution is widely regarded as a mechanism whereby the distress of the poor and risk-prone sections of society can be provided with relief at the expense of the better-off. It ‘strives to produce a post-fisc distribution of certain goods and services that is preferable to the pre-fisc one’ (Goodin 1988: 7). By doing so, the welfare state establishes a system of secondary income distribution that differs from the allocative distribution of the market in terms of the principles and the objectives of distribution. But nonetheless, western welfare states emphasize the correction and the limitation of market-produced inequalities rather than an elimination of inequalities. In this sense, the redistributive policies of the welfare state represent a ‘very imperfect realisation’ (Goodin 1988: 51) of the equality ideal, restricting redistribution to certain domains and a limited set of resources. Leisering and Leibfried (1999: 198) argue that if material problems are to be solved, the material costs and burdens must be attributed to someone: ‘This is done when, so to speak, “the rich”, “those on the top” or “the better-off ” are asked to give more, such as paying higher taxes so that the social services can be expanded.’ Thus, redistribution does not occur without taking away from some social groups and giving to others. The public discourse, therefore, ‘tends to centre on distributional issues: “who gains, who loses?” ’ (Lindbeck 1994: 15).1 Within the literature on the subject there is a tendency to map the logic of political support for the welfare state as being derived directly from the distributive logic of the welfare institutions. It was assumed that netbeneficiaries of the system are pro-redistribution while the net-payers are likely to be against it. Baldwin (1990: 14) characterizes this view as follows: The poor and risk-prone are the obvious clients of such a system that promises to reapportion the effects of uncertainty. The affluent and safe, in turn, have good reasons to shun attempts to make them share the burdens with the ill starred. . . . In shorthand, disputes over redistribution and social policy are usually portrayed as a battle between working and middle class, poor and rich, lower and upper.

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However, such a simple dichotomy can be deceptive when it comes to understanding the empirical phenomenon of redistributive conflicts. First, the identification of redistributive winners and redistributive losers is neither easy to realize, nor does it inform an understanding of the political and moral conflicts within the contemporary welfare state. The ‘beneficial involvement’ of major groups of the population has fostered a general stake in the means of security that makes it more difficult to play some groups off against others. Consequently, the demarcation of diverging or conflicting interests is less clear-cut than a winner–loser dichotomy suggests. In fact, it is the strength of modern welfare arrangements that the inclusive course of the post-war period has overcome policy models that are confined only to the low income sections of the population, and that it has blurred the boundaries between those who pay taxes and those who draw benefits. Nowadays, the welfare state provides ‘something’ for everybody. But nonetheless, redistributive policies still threaten to translate into concrete political terms and conflicts. It is arguable that the political conflicts around redistributive policies reflect an identification with being a net-payer or a beneficiary rather than a straight-forward cost–benefit analysis. It stands to reason to assume that the map of redistributive winners and losers – if one may say so – can deviate from the map of subjective feelings of being a net-payer or a net-receiver. Regardless of how the real redistribution might look, what is more important for the allocative conflicts is what people think about the redistributive situation, in other words, the ‘redistribution in the heads’ (Prisching 1996: 282). Therefore, it is not only the redistributive impact itself, but also the ‘politics of interpretation’ which influence public perceptions of who gains and who loses. Rose and Peters (1978: 205) have suggested that income redistribution threatens to ‘divide society between those who identify with the haves, quite possibly a majority, against those who identify with the have-nots’. This distinction marks out a boundary between the alleged beneficiaries of the welfare state and those who see themselves as the netpayers for welfare. Public perception is interspersed with this distinction: on the one hand there are the groups supposedly depending on state transfers, the so-called transfer classes, and, on the other hand, those who feel negatively affected by the fiscal burden the welfare state imposes upon their income, foremost the upper and middle classes of tax payers and social contributors. In political terms it has been proposed that the ‘more the public programs are perceived by members of the wider society as benefiting only certain groups, the less support those programs receive’ (Wilson 1987: 118). However, the logic of redistributive conflicts is incomplete if one does not draw attention to the grounds on which people might be willing to accept the ‘burden of discomfort’ (Ringen 1987: 50) which is a necessary part of any redistributive policy. Since resources from the taxable groups

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of society are channelled through the institutions to the transfer recipients such measures have to generate their own support, for which selfinterest (e.g. risk aversion or return expectations) cannot be the basic fulcrum. Without some degree of a normative bent the policies of redistribution would fail to find sufficient social support. The apportionment of income and wealth through tax policies and social transfers demands social approval, or at least acquiescence, of those whose incomes are negatively affected. The question of interest is why should the well-off endorse redistributive policies? To address this question one has to refer to the prevailing societal norms of distributive justice. Ideas of justice regulate what is seen as fair allocation of resources and goods. Although people in western societies tend to accept inequalities, they are also attracted by a concept of egalitarianism entailing the belief that inequalities should not become too large. Viewing this at the political level, Lane (1986: 392) states that the ‘justices of need and equality seem to justify a process of redistribution’. To make this point clear: even if there is a potential tension of interest between the rich and the poor (or between those who believe that they are the benefactors and those who identify or are identified with the status of net-winners) in terms of redistributive policies those who ‘lose’ might be willing to endorse redistribution.2 Bonds of sympathy and solidarity, the feeling of mutuality and a collectivist orientation may be the underlying components that induce supportive attitudes to the redistribution of income (Hochschild 1981: 55). In terms of reciprocity norms, redistributive policies evoke the notion of generalized reciprocity in which people adhere to a collective understanding of resource sharing. They have to draw upon a repertoire of moral universalism which grants every member of the society a part in the social surplus and demands the correction of market inequalities by state intervention (Goodin 1985: 145). However, the objectives of egalitarian policies are contestable from the perspective of a more narrow reciprocity interpretation, especially when people believe that large and unspecified redistributive acts invite freeriding. Bowles and Gintis (1998) argue that opposition to egalitarian schemes often comes from the fact that some programmes appear to violate reciprocity norms, which entail that the ability to contribute should determine the actual share. Where people doubt that the burdens and benefits are in accord with a socially valid understanding of a ‘balancing out’, they may be resentful. Thus, the rejection of egalitarian programmes often has to be attributed to the failure of many programmes to accomplish people’s ideas of fairness rather than to the rise of selfishness (Bowles and Gintis 1998: 20).

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Assessing the redistributive impact Esping-Andersen (1990: 23) has made it clear that the welfare state is not just a system that intervenes in the structure of inequality but, moreover, a system of stratification in its own right. The welfare state has a strong impact on the societal resource allocation and determines the life course and life chances of individuals. By doing so it has a far-reaching impact on the formation of social inequalities and the ordering of social relations. Since each welfare state is characterized by a specific set of institutions, the redistributive consequences produced by them are quite different. The German type of status maintenance programme has been viewed as one with a low redistributive record where resource transfers characteristically remain within income strata. The British model, however, implies some kind of cross-subsidization from the better-off to the less well-off if it attempts to live up to its key objectives of guaranteeing a social minimum and lifting people out of poverty. The question is, however, who is profiting from the welfare state transfers? In the mid-1980s the bottom income quintile in Britain received 27 per cent of all transfers, in Germany this share was 22 per cent. The top quintile, in comparison, could benefit in Germany with 18 per cent of the total share, whereas in Britain this figure was only 12 per cent (Atkinson et al. 1995: 107). According to Goodin and LeGrand, it is mainly through the involvement of the non-poor within the welfare state that social policies have failed to reduce inequality more substantially. They have argued that the ‘more the non-poor benefit, the less redistributive (or hence, egalitarian) the impact of the welfare state will be’ (Goodin and LeGrand 1987: 215). Castles and Mitchell point to the same problem when they write that ‘earnings-related (or status-related) benefits will clearly have less equalising effects, all other things being equal, than flat-rate benefits’ (Castles and Mitchell 1992: 4). This point is well examined in Esping-Andersen’s welfare state classification, wherein he describes the conservative welfare regimes as granting rights according to social status and social class. The inherent principle of equivalence is status preserving, in other words, its putting of emphasis on ‘upholding status differences means that its redistributive impact is negligible’ (Esping-Andersen 1990: 27). Redistribution, as understood in the conservative paradigm, is ‘redistributive mainly in the horizontal sense, shifting incomes from the economically active to the inactive population’ (Alber 1986: 68), and less between different status groups. However, there are some well-grounded objections to the idea that targeted programmes are necessarily more redistributive than earningsrelated insurance benefits (Korpi and Palme 1998). The empirical world indicates that there might be a trade-off between income targeting and the size of redistributive budgets, i.e. comprehensive and encompassing welfare states tend to spend more on social welfare. Even if money that

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goes to the lower income groups might represent a smaller proportion of the social budget, the absolute size of redistributive budgets is more likely to be larger. This means that countries with fairly large transfer budgets should also have marked redistributive effects. Korpi and Palme (1998: 37) have called this the paradox of redistribution: ‘The more we target benefits at the poor only and the more concerned we are with creating equality via equal public transfers to all, the less likely we are to reduce poverty and inequality.’ Second, the redistributive effect of a policy cannot be assessed straightforwardly by only looking at the transfer system without considering how this affects the ‘income packaging’ of individuals and families. While flat-rate schemes might have an equalizing effect with regard to those with exclusive reliance on state schemes, a gulf between the state dependants, usually low income people, and those who can afford supplementary private provision also exists. This ‘division of welfare’ entails that much inequality is generated through different means of access to private provision. The redistributive efforts of the welfare state have to be distinguished in ‘churning’ effects, where cash and benefits are exchanges between the state and the household without substantial final effect on the household income, and net-redistribution where the income position of the household actually changes. With comparative data coming from the Luxembourg Income Study (LIS) the redistributive capacity of the British welfare state has been found to be lower than in Germany (Ervik 1998: Table 12). But when evaluating this fact, one must always bear in mind that most of the German transfers tend to remain within the insurance logic of benefits for contributions and that they are not specifically class abating. The scaling down of the income inequality appears to be caused mainly by horizontal redistribution between the economically active populations and those outside the labour market, and less by vertical transfers between social strata. In terms of redistributive pattern Britain has experienced substantial changes since 1979. Not only has the inequality of market incomes increased, the overall impact of state intervention has substantially declined since the mid 1980s. Significant cuts in spending were also introduced; in the area of fiscal policies ‘progressive taxes were reduced and regressive taxes increased’ (Mishra 1990: 30). Overall the British welfare state ‘has been mildly redistributive, although some elements of the system have much more of that character, for example the funding from general revenues of non-contributory benefits which to a substantial extent are targeted on the poor’ (Tomlinson 1999: 47). In Germany, in contrast, the picture is less clear cut. Some reports have shown that there was only a very moderate trend towards increasing inequality (Hauser and Becker 1994), while other data indicated a relative stability of the inequality (Ervik 1998). The importance of social transfers changed little, the impact of tax and social insurance contributions has been reinforced. According to income data, the average tax paid as a

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percentage of the gross income has increased, as has the level of progressivity (Ervik 1998: 31). In a cross-sectional view the redistributive effects of the German system are quite impressive and confirm that a comprehensive welfare state tends to be more redistributive than a residual model. The redistributive impact of the British welfare state – in other words the total Gini-reduction through state income intervention – at the beginning of the 1990s was only 25.4 per cent; in Germany at the end of the 1980s, nearly 44 per cent (Ervik 1998). A legitimate agenda for redistribution? Anyone who has observed the public debates over the last twenty years will come to realize that there has been a shift away from the policy aim of promoting equality towards a greater acceptance of inequalities. The pressures to adjust the welfare institutions in the face of less favourable economic conditions and substantial changes of the political economy have facilitated a deregulatory and market-orientated policy mode. This process embraced a move away from the policy makers’ preoccupation with enhancing the protective and redistributive capacity of the welfare state towards a marketization of the welfare state. Esping-Andersen (2000: 9) makes it quite clear that the politics of egalitarianism have changed and that new approaches to welfare are ‘now stressing the importance of cultural and social capital, and the unequal distribution of resources’. Pioneering this development were the assaults on the British (and the American) welfare state during the 1980s which were ‘readily heralded as proof of a new era in which the cherished institutionalisation of equality and justice . . . had come to an end and was rapidly giving way to the institutionalisation of inequality for the sake of economic growth and efficiency’ (Van Kersbergen 2000: 19–20). It is widely assumed that this new agenda of welfare politics is related to a similar shift in public attitudes, either caused by a general change of the political climate or by the tangible interests of the electorate. Inglehart3 (1990) accounts the very success of the redistributive welfare state as one possible reason for a lesser support for redistribution. As the income distribution becomes narrower, the number of people who would benefit from redistribution becomes smaller. In a relatively even distributive situation additional redistribution would be perceived as less beneficial than in societies with huge income differentials. It has also been pointed out that with increased income and wealth in a growing number of people, a greater weight to non-collectivist welfare provision is given. People would then emphasize choice and private provision and be less attached to the political concept of the redistributive welfare state (see Kuhnle and Alestalo 2000: 10ff.). Moreover, with regard to market incomes and the manner in which the government offsets wage differentials by regulatory policies, liberalization policies have given a free way to the forces of the

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market and promoted a closer productivity–wage link. These changes in pay norms and income inequality may be accompanied by ‘shifts in the attitudes of voters to redistributive policy, causing governments to become less willing to finance transfers and to levy progressive taxes’ (Atkinson 1999: 20–1). If we compare the attitudes towards redistribution in Britain and Germany at an aggregate level, the British public appears to be slightly more in favour of redistribution than the West German public (Table 6.1). However, over time the support for redistribution in Britain has diminished, from 75 per cent in 1985 to 67 per cent in 1996 (TaylorGooby 1998b).4 This result seems to be in line with the many accounts of a greater acceptance of market-produced inequalities during the last decade. However, it has also been shown that British people perceive greater income inequalities than the West Germans and a strong majority feels the income differences have grown too large (Mau 1997b: 59ff.). Since the overall level of inequality is higher in the UK and since the state administration did little over the last twenty years to promote equality, people are quite critical in judging the current level of inequality. In their view, the wedge between the rich and the poor is the most vigorous conflict in a time that has polarized society (ibid.: 68). The majority of West Germans believe that the government should be in charge of reducing income differences. As in Britain, this figure has slightly decreased since the mid 1980s. In contrast to their Western compatriots the East Germans demand quite unanimously that the government should even out income differences. This result can be explained by the post-communist heritage and socialization effects, but also as being caused by the ‘impositions’ of the present time, since the East Germans have faced rapid and deep social changes which brought about a much higher degree of inequality and Table 6.1 Attitudes towards redistribution Agreement (%)

Britain

West Germany

East Germany

All Highest income quartile Third income quartile Second income quartile Lowest income quartile

67.3 51.3 64.4 67.4 85.7

61.5 49.6 64.3 67.5 71.2

83.7 76.9 84.8 87.0 90.0

Source: ISSP 1996. Notes Question wording The government should reduce income differences; answer categories: (1) definitely not; (2) probably not; (3) probably; (4) definitely. (3) and (4) are represented in the table. Income quartiles based on household income per head measure. Germany: household net income per month after taxes and social insurance in DM (response rate: West Germany 74.7 per cent, East Germany 80.8 per cent). Britain: total gross income from all sources before income tax and national insurance in Pounds Sterling (response rate: 87.7 per cent).

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insecurity to which they were not yet habituated. In all three cases we find group differences, but these differences are rather gradual, with the low income groups as the strongest supporters of income reduction and the high income groups – in relative terms – less keen on redistribution. However, the attitudinal stances are by no means straight-forward expressions of income interests, and a substantial proportion of those at the top of the income distribution are willing to approve redistribution which works to their ‘disadvantage’. The multivariate regression model (Table 6.2) tests the impact of different status characteristics such as employment status, income, education, sex, age and public sector employment on attitudes towards redistribution. A first glance at the data suggests that Britain possesses a much more structured and less integrated attitudinal pattern than the other two cases. The explained variance and the number of significant independent variables are much greater in Britain than in East and West Germany. In their book Social Class in Modern Britain, Marshall et al. (1988; see also Hout et al. 1993) argue that there is a persistent class stratification within British society: ‘Our findings do not support the popular belief that we are witnessing a long term decline in class loyalties and attitudes . . . Britain is still . . . a class rather than a post-class society.’ It stands to reason to assume that the British stratification system accommodates, and furthers, social dissent on the issue of redistribution. The result suggests that the vertical dimensions such as education and income are, by far, more important than the status as welfare beneficiary or the relation to the means of employment. For Germany, it was said that the welfare system pits those groups who are in stable and secure employment relations against those who depend on state transfers since the former are obliged to finance the latter. On the basis of this polarization, authors have been concerned with the emergence of a marginalized and excluded ‘outsider’ society that is confronted with the protective attitudes of a sated majority (Esping-Andersen 1993, 2000). However, West Germany displays a rather consensual attitudinal pattern in this respect. Only the obvious candidates, income position and self-employment, have a significant impact on the attitudinal stances towards the state responsibility for the reduction of income differences. The traditional aim of the German welfare state to promote social cohesion and social integration appears to have been accomplished at least at the level of public attitudes. It can also be suggested that the type of welfare provision, namely the contributory insurance, possesses some normative robustness that makes redistribution less objectionable. In her comprehensive study of attitudes towards the welfare state, Roller (1992; see also Svallfors 1993; Mau 1997b) came up with a similar result highlighting the consensual pattern within the German welfare state. For East Germany the explained variance is slightly greater, mainly due to the effect of age. The effect of income, however, might indicate that the

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Table 6.2 Attitudes towards redistribution by structural determinants: linear regression analysis

Self-employed Unemployed Retired Others not in labour force Employed (reference category) Income quartiles Sex (women ⫽ 1) Age (in years) Public sector Education Constant R-Square

Britain

West Germany

East Germany

⫺0.070* (⫺1.996) 0.035 (1.004) ⫺0.043 (⫺0.898) ⫺0.043 (⫺1.110)

⫺0.068** (⫺2.683) 0.006 (0.256) ⫺0.021 (⫺0.574) ⫺0.020 (⫺0.680)

⫺0.092** (⫺2.649) 0.024 (0.636) ⫺0.006 (⫺0.117) ⫺0.008 (⫺0.213)

⫺0.264** (⫺6.585) 0.072* (1.944) 0.039 (0.837) 0.083* (2.402) ⫺0.099** (⫺2.613)

⫺0.200** (⫺7.770) 0.033 (1.238) 0.063 (1.871) 0.040 (1.503) ⫺0.026 (⫺1.006)

⫺0.171** (⫺4.634) 0.074* (1.965) 0.211** (4.038) ⫺0.024 (⫺0.662) ⫺0.067 (⫺0.868)

3.190** (16.616) 0.126

3.013** (25.556) 0.047

3.002** (20.562) 0.082

Source: ISSP 1996. Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficients ␤, t-values in parentheses. Dependent variable: the government should reduce income differences; answer categories: (1) definitely not; (2) probably not; (3) probably; (4) definitely. Income quartile based on household income per head measure (1 ⫽ lowest; 4 ⫽ highest). For measurement and response rates, see Table 6.1. Education: lower than secondary (1); secondary (2); higher/university (3). Public sector: employed by government or public owned firm.

‘winners’ in the transformation have adopted an emphatic ‘market ideology’ because of their successful entrance into the western model and that they show some resistance to state intervention (e.g. Liebig and Verwiebe 2000). A good predictor for the attitudes towards redistribution is in all three cases the status as self-employed. Due to their professional standing, the self-employed may have a more individualistic and entrepreneurial attitude and ‘do not want redistribution through the state, because they do not want to lose money for which they have personally struggled’ (Lippl 1998: 18). Despite the initial considerations, the status of being unemployed or in retirement does not turn out to have a significant effect

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on the support for redistribution. In general, a deep social rift between the welfare dependants (retired and unemployed), on the one hand, and those who are in employment, on the other hand, could not be established. Rather, the findings suggest that the conflicts connected with redistribution are structured along vertical lines, mainly the income dimension, and that they are less related to people’s stake specific in welfare provision.5 However, the model displays the importance of gender for the attitudinal patterns. In Britain and East Germany we have a positive betacoefficient. Women turn out to be more in favour of state responsibility for the redistribution of income than men. The more egalitarian stance of women has already been widely established by foregone research (e.g. Liebig and Wegener 1995). For this, cultural and structural arguments have been given. The cultural argument highlights different socialization experiences, making women place higher value on social commitment, devotion to others, ethics of care and need. This concern for others, which initially was closely attached to the private sphere, has been brought into the public sphere, and it has been argued that the redistributions in favour of the socially weak can be seen as a generalization of the moral economy of private care. The structural argument would assume that women, due to their different employment patterns, are more reliant on the welfare state ‘both as employees, as family members relieved of heavy and unrewarded care work, and as recipients of benefits from the state’ (Svallfors 1997: 290). It is often put forward that the younger generation is less committed to welfare, because the new generations have been brought up in the climate of retrenchment and have been taught not to expect too much from the welfare state. Van Kersbergen (2000: 29), for example, states: ‘This group is not part of the stable social and political coalition that once supported the growth of the welfare state and there is no guarantee that this generation will develop the same pattern of solidarity as those upon whom the welfare state was constructed.’ Looking at the data, this hypothesis finds little support: belonging to the younger generation does not seem to have a significant effect on attitudes towards redistribution. Only in East Germany does age take an effect indicating that the older generation that was socialized within the socialist system places more emphasis on redistribution. Within the literature the argument has been raised that public sector employees have a strong stake in the welfare state because it provides their incomes and jobs (e.g. Papadakis and Bean 1993; Pöntinen and Uusitalo 1986: 7). As producers of state welfare they are reliant on the welfare state’s prosperity for their own sake, but it has also been put forward that employment in the public sector ‘may create bonds of sympathy and solidarity with fellow public-sector employees and their clients, patients, and other “welfare dependants” ’ (Svallfors 1997: 290). Nonetheless, in the

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model presented the assumption of more pro-welfarism public employees could only be confirmed for the British case (see also Roller 1995; Svallfors 1993). According to the model presented, people in Germany do not position themselves as public/private employees to a significant extent. It has been stressed that there are two ways in which education may have an impact on attitudinal stances (Heien and Hofäcker 1999). First, education is one of the ways in which the dominant welfare ideology is transferred to individuals, and consequently we would expect a result that corresponds with the extent to which the different welfare models incorporate the policy goal of redistribution. But second, one could argue that the ‘longer a person remains successful in the educational system, the more she will be convinced that individual achievement is rewarding and should be rewarded’ (Heien and Hofäcker 1999: 8). This would mean that the emphasis on achievement and meritocracy contradicts the redistributive welfare norm and that people with a high educational attainment would show lower levels of welfare state support. As one can see from the results, this tendency can only be established with regard to the British case; a finding that substantiates the importance of social-strata related determinants in Britain, with the higher-educated being more resistant to supporting redistribution. That we do not find an education effect in Germany could indicate that the education system does not transmit such a status-related consciousness, or it may be due to the closer link between education and the labour market position in Germany. In the latter case, the effect of education would, in part, be expressed by the income and class characteristics. Paying taxes: value for money and the fairness issue Progressive taxation is one of the major fiscal instruments through which redistribution is realized. The rationale of progressive taxation is justified by the principles of egalitarianism, but also by the citizens’ differential economic abilities to contribute to the production of public goods. Those who should bear the burden are those who are able to – a kind of ‘deep pocket’ idea. It also reflects the fact that individuals with higher incomes need a smaller proportion of their earnings to satisfy their basic necessities such as food, housing and clothing. The principle of progressive taxation has long been a part of fiscal policy. Initially, tax was only imposed on the rich, those with taxable income and wealth, in order to finance public policies, but during the last century the tax base expanded and more and more income earners were subjected to taxation. Tax policy resembles other public policies by having effects on citizens’ lives, but since tax has direct effects on disposable income, people are quite sensitized to the tax burden. Tax policies, as Peters (1991: 4) states, ‘provoke stronger reactions from citizens than do many other policies, and may

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have to be adjusted to meet changing political and economic circumstances’. In liberal regimes the bottom income tax rate tends to be quite low, so that the ratio between the top tax rate and the bottom tax rate, i.e. the progression, is comparatively high (Aalberg 1998; Atkinson et al. 1995). Furthermore, in liberal regimes taxation is regarded as the more important redistributive policy in comparison to government expenditures on welfare benefits (Aalberg 1998: 8). However, the tax system in Britain has ambiguous effects since it serves to reduce inequality in the form of direct taxation, but reintroduces inequality in the form of indirect taxation and many tax deductions. Since the Second World War, the level of redistribution has gradually declined, because more wage-earners have become subject to tax at low income levels. The British tax system came under constant change after the Conservatives took office in 1979. The Tories presented themselves as the tax reduction party. In a Conservative manifesto from 1987 it was argued that there ‘is a strong moral case for reducing taxation. High taxes deprive people of their independence and make their choices for them’ (Conservative Party 1987: 27). The Conservatives introduced a forceful political rhetoric that put an emphasis on the costs of welfare rather than its benefits (Clarke et al. 1987). They made taxes more ‘invisible’ and weakened the progressivity of the tax system. Taxes on spending, which were increased throughout the 1980s, have a disproportional effect on low income households since they affect their living standards more substantially (Pond and Smail 1988: 126ff.). In the major budget reform of 1988 the top marginal income tax rates were cut from 60 to 40 per cent. These developments have redistributed the tax burden downwards (Steinmo 1993) and increased income inequality (Gardiner 1997). In Germany, direct and indirect taxation contributes in about equal proportions to the overall tax revenue. Over time, the income tax system was rather stable, although several tax reforms have slightly reduced the progressivity of the scheme. The highest marginal tax rate was above 50 per cent, but, for high income earners, especially the self-employed, there were many loopholes to avoid taxation. Since the German system also puts a comparatively high load of taxation on the lower income sections, its record of progressivity is relatively restrained. The German tax system also relies, more than the British system, on an idealized breadwinner concept and therefore, for example, allows an income splitting for married couples. During the last thirty years the contribution rates for social security increased continuously from 26 per cent in 1970 to more than 40 per cent in 2002. At the time being, households contribute nearly half of their gross market income in taxation and social security payments. According to the data, the principle of progressivity enjoys widespread support throughout the British and the German electorate, much more so than the policy principle of redistribution (Table 6.3). This finding is con-

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sistent with Confalonieri and Newton’s (1995) study in which they found a stable support for progressive taxation over time and across countries which led them to suggest that, when people are critical towards the taxation system they do not disapprove of the principle of progressive taxation per se, but rather how the tax burden is distributed in concrete terms and how their taxes are spent.6 Interestingly, the attitudinal differences between the income groups remain marginal despite the fact that they would be affected in different ways. Edlund (1999) has demonstrated that there are few signs that the principle of progressive taxation is a socially decisive issue, and testifies to the negligible influence of class- and education-related factors. In the second part of Table 6.3, the dimensional relationships between the principle of progressive taxation and redistribution has been examined for different income groups. Although progressive taxation faces fewer objections than redistribution, the attitudinal complexes are loosely connected. It is also interesting to note, that for both countries there are significant correlations for all income groups. The middle income quartiles in Britain and East Germany tend to show the strongest integrated attitudinal pattern, in West Germany this applies to the low income group. Turning to the citizens’ attitudes towards levels of taxation, two general observations must be made in advance. People tend to dislike taxes, Table 6.3 Attitudes towards tax progression and redistribution

Progressive taxation . . . support in per cent

Highest income quartile Middle income quartile Lowest income quartile

Spearman’s rank correlation coefficient Progressive taxation

Britain

West East Germany Germany

79.2 84.9 90.2

84.5 88.3 88.0

93.2 95.7 95.6

Redistribution Highest income quartile Middle income quartiles Lowest income quartile

0.224** 0.320** 0.291**

0.214** 0.294** 0.361**

0.250** 0.380** 0.311**

Source: ISSP 1990. Notes *p ⬍ 0.05, **p ⬍ 0.01. Question wordings Progressive income tax: Should people with high incomes pay a larger share in taxes? Answer categories: (1) much larger proportion; (2) larger proportion; (3) same proportion; (4) smaller proportion; (5) much smaller proportion. (1) and (2) are summarized in the upper part of the table. Redistribution: Should the government reduce income differences? Answer categories: (1) agree strongly; (2) agree; (3) neither nor; (4) disagree; (5) disagree strongly. Income quartile based on household income per head measure. For measurement and response rates, see Table 6.1.

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therefore it is not surprising that promises of tax cuts have been electorally appealing, as the British case demonstrates. On the other hand, people value the benefits they get from the welfare state and they have shown a strong reluctance to curtail the use of welfare.7 However, not only from a fiscal perspective is it impossible to separate the issues of governmental taxation and spending, people are also likely to perceive the specific relation between tax policies and welfare spending: people may relate the costs imposed by taxation with the value of benefits they receive.8 In people’s minds, the evaluation of taxes may be a function of what they believe they are ‘buying’ with their taxes (Peters 1991: 153). A fair, equitable and commensurable return in services for taxes paid seems to be a precondition for an endorsement of governmental tax policies. Within the literature there seems to be a common agreement on the point that ‘the overall level of taxation has reached its upper limits in many OECD countries’ (Clayton and Pontusson 1998: 95). Since most of the western welfare states have entered a stage of retrenchment and costcontainment it has been said that the high taxes and social security contributions, together with the slow growth of real incomes, have caused a general discontent with the welfare burden. Even at an early stage, Wilensky (1975) was predicting the retreat of the better-off from the welfare state as the result of the high welfare burden. By the same token, Rational Choice authors (e.g. Alt 1983) have argued that since the majority of people are subject to tax and the marginal tax rate is rather high, people tend to calculate what they get in return and to be critical about an unfavourable benefit bias. If people really calculate and compare, one can assume that the people in the highest income groups are likely to be the strongest opponents of taxation, since they are subjected to absolute and proportionally higher taxes and are less likely to be beneficiaries of welfare programmes. For the middle classes, such a conclusion is more difficult to draw since their participation in the welfare state depends very much on the character of the system and the type of entitlement. In Germany at least, the salaried middle classes have been viewed as important beneficiaries of the welfare state who have a strong stake in the system (e.g. in the areas of health and pensions) (Alber 1986: 123ff.). Where benefit packages are perceived as attractive and tax impositions are low, tax resentment will be weak and vice versa. Since the British model is characterized by a relatively low median tax and contribution rate and rather modest benefits for the middle income earners, and the German model imposes high costs on middle incomes and gives quite attractive benefit returns, both might be seen as a ‘good buy’.9 The lower classes, in contrast, may tend to be critical with regard to the level of taxation since their incomes are rather meagre and substantially curtailed by taxation. The benefits they derive from the welfare state may be perceived less through the lens of tax contribution, but rather as compensation for misfortune and deprivation.

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However, the calculation of returns is just one way to view people’s tax evaluation. Since we know that it is also accepted that people contribute according to their ability to pay, and that there is strong support for progressive taxation across nations and across different social groups, it seems that there are other evaluative concepts to be considered as well. Taking up this observation, it can be suggested that citizens may also be motivated to bear unequal costs of welfare if they believe that the objectives of the welfare programmes are worthwhile. Good spending – that is, spending for the right purposes – can be an incentive to comply, even if there are no direct benefits. The notion of a ‘just’ distribution of burden in terms of contributory capacity and the fact that fellow citizens are also subject to taxation can serve as additional incentives towards accepting taxation. Thus, if the tax system is to function, ‘the state must convince the citizen that all (or almost all) of the other citizens will also pay their duly allotted share’ (Rothstein 1998: 142). Table 6.4 displays the perception of tax burden by different income Table 6.4 Perceived tax burden and income groups: cross-tabulation and analysis of variance Taxes are too high (agreement in %)

Britain

West Germany

East Germany

Taxes for high incomes Highest income quartile Middle income quartiles Lowest income quartile Taxes for high incomes by income quartiles – F-values Taxes for middle incomes Highest income quartile Middle income quartiles Lowest income quartile Taxes for middle incomes by income quartiles – F-values Taxes for low incomes Highest income quartile Middle income quartiles Lowest income quartile Taxes for low incomes by income quartiles – F-values

18.5 23.3 13.8 21.5

17.7 22.6 13.9 13.7

9.5 10.6 8.4 9.4

1.623 31.9 33.1 28.9 35.7

8.716** 56.6 57.1 58.1 52.0

2.305 45.3 47.2 44.6 42.4

3.362* 74.7 68.2 72.9 86.4

0.635 83.4 80.5 85.0 87.1

1.824 86.9 83.8 88.1 90.8

19.359**

6.890**

2.769*

Source: ISSP 1996. Notes *p ⬍ 0.05, **p ⬍ 0.01. Question wording Taxes for those with low/middle/high taxes (including wage deductions, income tax, etc.) are: (1) much too high; (2) too high; (3) about right; (4) too low; (5) much too low. Categories (1) and (2) are summarized in the table. Income quartiles are based on the household income per head measure. For measurement and response rates, see Table 6.1.

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groups. Rather unexpectedly the attitudes towards the tax level appear to be fairly uniform regardless of whether or not the people actually belong to the respective income group. Many of the group differences, especially those regarding attitudes towards taxes imposed on middle income earners, are not significant. Only a minority claims that taxes for people with high incomes are too high, whereas the overwhelming majority considers the tax imposed on people at the lower end of the income distribution as too high. There are even large groups in all countries and all income quartiles that favour higher taxes on high incomes (understandably this is less the case for the highest income quartile). The response pattern for the taxes for middle incomes shows little variation for the different income groups, but there are significant between-country differences. The majority in Britain judges the level of the middle income tax to be about right, whereas the Germans tend to think it is too high. The result for Britain is likely to indicate that the tax relief for the middle income earners in the recent past has not passed unnoticed. In Germany, in contrast, the vision of over-taxation of the middle classes seems to inform the wider public. For the taxes on low incomes we can detect significant group differences albeit not of a substantive nature. The overall trend is rather clear in all three cases; the British people, as well as the Germans, think that the lower income groups pay too much in taxes. This finding is very much in line with the rationale of progressive taxation; moreover, on an attitudinal level, people want to see it reinforced (mainly by letting the poor pay less and the rich more). It seems that the idea of tax progression is deeply entrenched within popular attitudes and that the group-specific responses are less structured than with regard to the redistribution issue. In this context, one also needs to note that the majority of citizens does not possess sufficient information to evaluate the system of taxation fully and only a minority has realistic ideas about the level of taxation they themselves and others have to pay (Schmölders 1978: 96). Again, the tax domain, and whether people feel unduly tax burdened, is as much a result of the actual tax burden as it is dependent on prevailing normative and interpretative patterns10 (see Prisching 1996: 229ff.). Burdensome taxation and the disapproval of redistribution Taking the analysis a step further, it would be of interest to relate the observed attitudinal patterns towards taxation to the principle of income redistribution. The burden on the taxpayer, and the reluctance to make costly and painful contributions, has been identified as one major factor that has facilitated the political defection of large groups from the collectivist welfare arrangements and the principle of redistribution. For Wilensky (1975) the middle masses were of special interest since they form the electoral backbone of the welfare state. He has argued that, in an era of

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less stable social integration they become more reluctant to support the ‘lazy and undeserving’ poor. The tax burden, therefore, becomes the symbol of their grievances. Thus, the middle classes were viewed as being unwilling to share their income with the rest of the welfare state’s clientele. This argument was made explicitly by Offe (1993b: 235) when stating that the preparedness to contribute to collective welfare ‘can be hypothesized as being more precarious the more costly the granting of rights become to those who are not immediate beneficiaries relative to those rights, and the greater the social distance that lies between those who grant the rights and pay the costs, on the one hand, and the beneficiaries, on the other’. A number of other references are available to support an interpretation that takes tax resistance and the growing scepticism towards redistributive policies as conjoint indications of a single political syndrome. Voting for tax protest parties, for example, was found to be related to the general belief that the government had become too costly and that welfare state expansion had gone too far (see Peters 1991: 180). The ideological campaign of the New Right is said to have triggered a situation in which those groups that believe they are paying for welfare ‘resent having to pay taxes . . . and channel their anger against the poor’ (Caan et al. 1993: 125). With regard to the ideological upsurge of anti-collectivism, the literature generally assumes that there is a certain amount of self-interest that constructs a close relationship between attitudes towards taxes and the issue of redistribution. Indeed, they are considered as two sides of the same coin. In order to trace this hypothesis empirically, tax dissatisfaction for each respective income group and the income status have been included into a regression model with the attitudes towards redistribution as dependent variable. Model 1 in Table 6.5 reports the results from the regression. As expected, the beta-coefficients for the household income quartiles are negative, indicating that with rising incomes the support for redistribution diminishes. In Britain 10 per cent of the explained variance can be attributed to the income status; in West Germany the respective figure is smaller and in East Germany negligible. Quite surprisingly, the tax dissatisfaction variable, which is an aggregate index summarizing three (subjective) items with regard to the respective (objective) income group, makes hardly any substantial contribution to the overall model. With the exception of the weak effect in West Germany, where the perceived tax burden affects the commitment to redistribution negatively, the explanatory value of the tax issue is not significant. The correlation between the two items confirms this result. If we single out the different effects on redistribution of the perceived tax burdens for high, middle and low income groups the picture becomes more elaborate and the model gains strength (see model 2 in Table 6.5). The results suggest that a perceived tax burden for high income groups

2.968** (11.699) 0.216

3.310** (42.658) 0.041

–

–

2.766** (15.326) 0.155

⫺0.236** (⫺8.505) ⫺0.044* (⫺1.557) 0.200** (7.494)

⫺0.149** (⫺6.129) –

Model 2

2.583** (35.119) 0.015

–

–

⫺0.141** (⫺3.191) ⫺0.038 (⫺0.860) –

Model 1

East Germany

2.975** (13.072) 0.114

–0.212** (⫺5.092) ⫺0.005 (⫺0.123) 0.184** (4.656)

⫺0.100** (⫺2.802) –

Model 2

Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficients ␤, t-values in parentheses. Dependent variable: The government should reduce income differences. Answer categories: (1) definitely not; (2) probably not; (3) probably; (4) definitely. Independent variables: income quartile based on household income per head measure (1 ⫽ lowest; 4 ⫽ highest). For measurement and response rates, see Table 6.1. Tax burden: for those with low/middle/high taxes (including wage deductions, income tax, etc.) this is: (1) much too low; (2) too low; (3) about right; (4) too high; (5) much too high. The tax-dissatisfaction variable has been constructed out of the three variables for attitudes towards taxation. In order to relate the subjective tax burden with the respective income group the low income item was used for the lowest income quartile, the middle income item for the second and third income quartile and the high income item for the highest income quartile. This assignment is intended to pin down the subjective tax burden for the income group the respondent belongs to. However, this type of measurement carries some problems since we do not really know whether the income group construction that is an objective measure matches with the same classification that is part of the tax burden evaluation. For the purpose of validation other status measures have been used and produced similar results. The constructed variable is a dummy.

Source: ISSP 1996.

R-Square

3.640** (32.997) 0.104

–

Tax burden for low incomes

Constant

–

⫺0.270** (⫺7.907) –

⫺0.324** (⫺8.479) ⫺0.001 (⫺0.039) – ⫺0.216** (⫺5.623) ⫺0.025 (⫺0.626) 0.240** (6.700)

Model 1

Model 2

Model 1 ⫺0.219** (⫺8.117) ⫺0.051* (⫺2.245) –

West Germany

Britain

Tax burden for middle incomes

Tax burden for high incomes

Tax dissatisfaction (Dummy)

Income quartiles

Redistribution

Table 6.5 Attitudes towards redistribution by structural determinants and subjective tax burden: linear regression analysis

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has a negative impact on social support for redistributive policies, whereas people who think that the lower income groups are overburdened are more in favour of redistribution. The beta-coefficients of the partial effects of high income tax burden and low income tax burden point in different directions. Interestingly, the well-theorized middle-class burden does not seem to influence strongly the attitudes towards redistribution as has been widely assumed. Its independent contribution to the prediction of the support for redistribution is small, and in East Germany and Britain not even significant. However, by using the attitudes towards taxation as an independent variable the explanatory power of all models improve substantially. Nonetheless, since the model includes all respondents, and not just the respective income groups, we might detect foremost an ideological pattern by which critical attitudes towards high income taxation go hand in hand with the disapproval of redistribution, while a concern for the burdens of lower income households leads to a demand for more effective state intervention. It stands to reason to assume that since the issue of redistribution has a different meaning for the lower status groups, the middle classes and those who are well-off, we might detect rather group-specific links between the taxation issue and the redistribution issue (Table 6.6). For the high income groups the correlation analysis suggests that the discontent with the level of taxation is accompanied by a lower support for redistributive measures, either due to tangible interests or due to ideological positions where the dislike of taxes and the opposition to redistribution go together. For the low income groups we have the mirror image: a perceived high tax burden for people with low incomes occurs together with supportive attitudes towards redistribution. For the middle classes, in contrast, the articulation of heavy tax burdens appears to be relatively independent from the general acceptance of the welfare state objective of redistribution. For them, the perception of a high tax burden does not necessarily correlate with what they think about the principle of redistribution.11 To emphasize the result again: we find opposing effects for high and low income groups, and a broad band of middle income individuals for whom the attitudes to taxation and income redistribution are barely interlaced. The result is very instructive because it runs counter to many accounts of the political economy of welfare states. If it is not possible to generally assume that the de-emphasis on distributional justice and income equality is closely linked to tax dissatisfaction, as the middle income results suggest, then the common logic of these accounts needs to be revised. For publicly controversial tax issues this relation might exist, but there is little systematic evidence on the attitudinal level. Tax discontent may trigger redistributive conflicts on a political level and people may be inclined to emphasize pocket-book attitudes, but it does not simultaneously lead to a turning against collective welfare arrangements. The

Highest income quartile Third income quartile Second income quartile Lowest income quartiles

People with high incomes People with middle incomes People with middle incomes People with low incomes

West Germany ⫺0.320** ⫺0.069 ⫺0.089 0.306**

Britain ⫺0.399** ⫺0.130 0.043 0.152*

Redistribution

⫺0.355** 0.004 0.054 0.280**

East Germany

Notes Spearman’s Rank Correlation Coefficient, *p ⬍ 0.05, **p ⬍ 0.01. Redistribution: The government should reduce income differences. Answer categories: (1) definitely not; (2) probably not; (3) probably; (4) definitely. Tax burden: For those with low/middle/high taxes (including wage deductions, income tax, etc.) are: (1) much too low; (2) too low; (3) about right; (4) too high; (5) much too high. Income quartiles based on the household income per head measure. Measurement and response rates, see Table 6.1.

Source: ISSP 1996.

Income group

Taxes burden for:

Table 6.6 Subjective tax burden and redistribution: correlation

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results to hand challenge the received wisdom which associates the dissatisfaction with high taxation levels with a widespread mass defection from the redistributive welfare state. For high income and low income groups in society these issues are closely related, but their relations are different; leading in the first instance to a negative stance towards redistribution, and in the second instance to a stronger demand for stateadministered redistribution. For the large middle income group the finding also suggests that citizens are not motivated ‘only or even primarily by hard-headed economic interests’ (Newton 1998: 108) and that other considerations and factors interfere. For this group at least it can be granted that, as Edlund (1999: 327) suggested, ‘the forces and mechanisms behind the formation of attitudes are quite different when it comes to taxation compared to other forms of government redistribution’. Conclusion The chapter started with the argument that attitudes towards redistribution within the welfare state cannot be sufficiently explained by the economic calculus perspective. This perspective suggests that, since redistributions entail redistributive winners and losers, those who lose object to redistributive measures while those who win are strong supporters of such policies. Confronting this perspective, it was highlighted that the map of those who are in favour of redistribution and those who are against is not identical with the redistributive balances. The most ample evidence here is that even among high income groups one can find significant proportions in support of redistribution. Since the promotion of socio-economic equality is a moral objective, the attitude formation is likely to engage some degree of value orientation. Nonetheless, neither British nor German respondents seem unified on the redistribution issue and we find apparent differences in the attitudinal patterns. As far as redistribution is a socially contested issue it is mainly structured along vertical status differences, and less by new conflicts associated with the distinction between the financiers and the recipients of welfare benefits. In Britain, the dissent about redistribution is strongest, while the status-related differences are relatively contained within the German system. Due to the organizational arrangement of the welfare state, the middle classes also have a stake in the welfare state and the actual transfers are, to a large extent, justified by the contributory record of those who benefit. According to the majority of the literature, delivering the benefits of the welfare state is electorally popular, imposing costs is not. The taxation issue, therefore, has been identified as a contested one setting groups up against one another. The principle of progressive taxation, however, is widely approved within the electorate. Also, with regard to the subjective tax burden, different income groups are in agreement with each other rather than attitudinally distant. By relating the tax and the redistribution

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issue it can be shown that the perception of over-taxation and the objection to redistributive measures are not symptoms of one phenomenon, but rather they are different for each different social section. On the top, and on the bottom, we find effects where high income groups who feel overtaxed are critical with regard to redistribution, while low income groups with a subjectively high tax load are rather in favour of redistribution. For the middle income classes, which are crucial for the welfare state’s legitimacy, it is not, in the first instance, a complaint about the high tax burden on middle income earners that drives them to defect from redistribution. These findings are rather consistent for all of the three cases which have been scrutinized. One of the greatest virtues of the post-war welfare state was that it could satisfy different societal interests with growing overall revenues. Since the expansionary course of the welfare state has been distracted by economic stagnation and the growth in the number of the jobless, people have become more aware of the redistributive nature of the welfare state and its actual costs. Therefore, the issue of redistribution and the ‘fair’ share every citizen has to contribute to finance the welfare state, have become highly politicized issues. In this context, it is often argued that people are not ready to pay the bill of redistributive welfare schemes (Field 1996). In the wake of such critical stances, recent policy developments have deemphasized the policies of egalitarianism by shifting away from an encroachment upon income and resources to life chance equalization and the politics of inclusion. However, large parts of the population are by no means ready to abandon the redistributive ideal. It is also true that it is not, in the first instance, the tax burden that causes a retreat from the collectivist nature of the welfare state. The change in public mind is less informed by economic considerations than one might expect and the attitudinal stances may foremost be impregnated with beliefs about the appropriateness of redistributive policies. However, since it has been widely recognized that welfare states face ‘multiple egalitarian tensions’ (Esping-Andersen 2000: 10) in how to balance equality, equity and efficiency people may be motivated to rewrite the egalitarian agenda without becoming homo calculans in the name of their egoistic selfinterest.

The two moralities of giving assistance to the poor Social assistance: justifications and objections Poverty does not exist in itself, moreover it is inseparable from its relation to society. Therefore, the approaches to poverty are not only concerned with the poor, moreover they regard the society as a whole (Foucault 1977). In the course of time the discourse about poverty has changed: from poverty as a quasi-natural phenomenon to the idea that the poor are

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shaped by improper circumstances. One can explain this new attitude as part of the ‘generalization of interdependence’ in society leading people to understand the social and economic causation of poverty, and, in the end, enhancing the willingness of societal members to provide remedies for the elimination of poverty (De Swaan 1988: 252). Nonetheless, despite the increasing awareness of the structural conditions of poverty, a rather moralistic interpretation of poverty has also become part of the welfare exchanges with the poor. Pauperism in its new sense within industrial society was understood not only as a material, but also as a moral destitution related to certain habits and a distant culture. To the extent to which poverty was viewed as the fault of the poor themselves, it was possible to ‘moralize society as a whole by means of the techniques inspired by the treatment of the poor’ (Procacci 1994: 212). The impetus behind this was not entirely economic, nor can it solely be understood in terms of social integration, rather it was driven by the interests of the moral community feeling challenged by the social question of poverty. When considering the moral economy of poverty it is important to note that poverty is a socially constructed phenomenon. The welfare state has its own stake in the construction of poverty since any action taken requires the identification of a social problem and a particular treatment of the poor population. Poverty, as Dean and Melrose (1999: 26) argue, ‘is inseparable from the logic of relieving and preventing it’. It can also be argued that the social arrangements established to meet their needs have institutionalized the social exchanges with the poor and thereby emphasized a ‘moral contract’ between the successful and those drawing on social assistance. The urge for collective responsibility arises from the deprived and inferior life circumstances of members of society that are widely perceived as unacceptable and dysfunctional. In functional terms, the occurrence of poverty has been viewed as a threat to the wider society, undermining cherished values and being danger-laden in terms of radicalism and criminality. In normative terms, assistance to the poor is understood as society’s duty, in other words, a ‘national debt’ (Procacci 1994: 210). When there is a great deal of affluence within society, poverty becomes an ‘unacceptable face of inequality’ (Alcock 1993: 255). Accordingly, poverty can be viewed as the result of unjust distributions and as the failure of political actors to correct market allocation. The ethical concern which motivates people to share their resources can be called ‘basic needs generosity’ (Bowles and Gintis 2000: 37), implying that people are willing to endorse redistributive policies that meet the needs of the poor. A decent standard of living that enables the members of the society to live in dignity and decency can be seen as part of the ‘moral collectivism’ (Goodin 1998). The most outstanding moral case for providing welfare for the poor is the injunction to protect the vulnerable.12 According to Goodin (1985), there is a strong moral demand to protect the vulnerable in cases where they depend on you and when they have nowhere else to turn. On the

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societal level, this is exactly the type of justification on which public assistance for the poor rests. Social assistance programs of the welfare state are seen as devices to protect vulnerable and dependent beneficiaries. That is at one and the same time their intention, their effect, and their justification. Sociologically, protecting the vulnerable is the primary (though not the sole) function of such programs. Historically, that was their advocates’ principal (though not sole) argument for them, and it continues to be one of the most prominent arguments offered for their expansion. Morally, that is the most compelling (though not sole) argument that can be offered in justification of such social welfare programs. (Goodin 1985: 146–7) The norm of reciprocity which ensures that members of a society will feel this kind of responsibility towards one another has to be interpreted in terms of generalized reciprocity. There is no direct expectation of returns on which the willingness of people to contribute can be based, rather people may appreciate that assistance is provided, regardless of their own likelihood to become poor and needy. Beyond this, they realize that they can expect public assistance if they were to face the same type of contingency. The beneficiaries are likely to adopt the interpretation of ‘dispositional reciprocity’ implying that ‘(i)f you do me a favour in certain circumstances, I reciprocate by disposing myself to return the favour (to you or to a generalized substitute for you) should the tables be turned and I find myself in relevantly similar circumstances in the position of the potential aid-giver’ (Arneson 1997: 340). However, since the benefits of social assistance schemes are not, in a strict sense, mutual, and since they have a redistributive bias, the ultimate appeal of these programmes has to refer to a shared understanding of membership. As a rule of thumb one could argue that the closer and more inclusive this shared understanding of communality is, ‘the wider the recognition of needs, the greater the number of social goods that are drawn into the sphere of security of welfare’ (Walzer 1983: 83). Poverty as a contemporary social problem is difficult to grasp because the lack of resources is just one side of the coin. An influential polemic raises the question as to whether poverty in itself is not, at least partly, caused by the perverse effects of welfare benefits on individual behaviour. At its core, this argument claims that the welfare state often rewards vice instead of the virtuous conduct of life. Hence, the welfare state is not a promising remedy against the maladies of the poor, rather it keeps people dependent by encouraging irresponsible behaviour. The calculating poor are those who choose to live ‘on the dole’ due to a ‘rational appreciation of the game’ (Murray 1984: 220). For the moral economy of social assistance the dependency critique plays quite an important role, because it

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casts doubt on whether the granting of benefits truly helps people. If welfare provision is seen as bringing people into dependency rather than providing the means for self-improvement, the ‘ordinary’ taxpayer will be less willing to support such a programme. As Field (1997: 147) puts it: ‘Taxpayers are likely to stump up a contribution for poorer stakeholders only if they approve of the behaviour of those for whom they are contributing.’ In a nutshell, one can hypothesize that the moral case for helping the vulnerable and needy is thwarted by a moralistic interpretation of the habits and behaviour of the poor. The granting of social assistance is tied to behavioural expectations that the poor be deserving, on the one hand, but does not have unwanted effects such as generating dependency, on the other hand. Forms of dispositional and generalized reciprocity may facilitate the public acceptance of such programmes and endow the redistributive effects with legitimacy. But, however, there is also the injunction that the welfare beneficiary is ‘morally obliged to others to make good-faith efforts to earn one’s livelihood by paid work’ (Arneson 1997: 338) as suggested by the rationale of obligating reciprocity. Returns within such a relationship should be made in accordance to the receiving person’s abilities and resources. Where people come to suspect that this norm is not safeguarded by the institutional regime, they might have the propensity to withdraw their support. Poverty regimes from a comparative perspective Social assistance schemes are those intended to assist people who have fallen below a specified minimum income standard, lack resources or share certain traits that makes it difficult for them to meet their needs. General assistance schemes provide benefits for those people who can demonstrate eligibility by meeting the requirements of a means- or income-test. In addition, there are categorical assistance schemes which provide for certain socially defined groups (e.g. families) and benefits for specific circumstances which are granted either in cash or in kind. Within the framework of welfare programmes, social assistance schemes provide a kind of ‘last resort aid’ – or a ‘welfare state in reserve’ (Leibfried and Tennstedt 1985) – taking action when all the other security measures have failed. The main means-tested programmes in Britain are income support, family credit and housing benefits, in Germany social assistance, unemployment assistance and housing benefits. In Britain means-tested benefits have grown over-proportionally from 2.5 per cent of all social spending in 1973 to more than 18 per cent in 1996 (Evans 1998: 270). In terms of cash benefits the social assistance nets make up 6.2 per cent of the GDP in the UK but only 1.6. per cent of the German GDP (Gough 1998). The number of social assistance claimants in Germany is below 4 per cent compared to nearly 17 per cent in Britain.

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The central means-tested benefit in Britain is Income Support, which replaced the older supplementary benefit scheme in 1986. It is designed for people out of full-time work whose incomes and capital are below a defined level. The calculation of entitlement is based on a determination of personal allowances with the addition of other costs such as housing and a subtraction of personal income. The unit for the assessment of the benefit claim is the claimant’s household, including spouse or partner and dependent children. Despite criticism of the stigmatizing practice of the Income Support scheme (see Field 1995: 20), and despite its unpopularity with those who are subject to the means-test, it is more universal than in other European countries. It supplies benefits on a nationally uniform basis. Over time, the take-up rate of means-tested benefit has grown due to improved information flows and changing rules of entitlements. Field (1995) reports that by the early 1990s over 8 million people were dependent upon the major means-tested benefit and that around one-third of the population were receiving some form of means-tested benefit. In addition, a Family Credit scheme exists which supplements the family income for low-paid full-time workers whose incomes are below the poverty line. With the 1986 Fowler reform, this scheme redefined the basis of income so that taxes and insurance contributions could be deducted. While the former only applied to very few people and had a low take-up, the new regulations entitled more families to Family Credit. The scheme is paid for by general taxation. The housing benefit scheme which complements the two other major means-tested programmes is under local administration. It provides assistance to people with low incomes for housing costs and local taxation, such as community charge or poll tax. The cash-limited Social Fund which is administered by local communities for the support of vulnerable groups within the community and for community care is a special scheme. The spending policy follows general guidelines but is largely in the hands of local officers and claimants have no formal right to appeal against decisions. Social assistance in Germany is a non-contributory benefit system financed by general taxation and is targeted at the poor and needy. Claimant status has to be established by a means-test of the respective household. Unlike in the UK, the level of benefits can top low wages since the scale rates are designed to ensure a ‘dignified existence’ (Clasen 1994). The general assistance scheme is intended to provide a subsistence level when other sources, such as income, other benefits or subsidiary sources such as the family, are unavailable or exhausted. Within the German system insurance benefits and assistance benefits are clearly distinguished, with the former deriving entitlements mainly from the labour market position and aiming at ‘wage replacement’, and the latter with benefit entitlements which are determined by ‘individual circumstances’. With regard to the administration of poverty policies, the British system is

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national and centralized, while the German system is decentralized and run by the communities. Although the national legislation sets the legal framework for social assistance, the organization and the financing is carried out by local town halls. The number of claimants for social assistance (general assistance) has multiplied from around half a million in 1970 to 2.9 million at the end of 1997, with a share of 23 per cent of foreigners receiving social assistance. The second assistance scheme, which is oriented towards people in special circumstances such as the handicapped and people in need of home care, covered another 1.4 million people. Nonetheless, as mentioned before, only 4 per cent of the social budget is spent on social assistance (Datenreport 1999). When first established social assistance was intended to be a benefit of short duration, but the number of longterm claimants has grown due to the difficult labour market situation. The social assistance net mainly provides for those excluded from the labour market or for families with children whose market incomes remain insufficient. Those most liable to become social assistance claimants are single mothers, those caring for a dependent relative, the long-term unemployed and non-citizens (Voges and Rohwer 1992). However, claiming social assistance cannot be equated with social decline and marginalization since the trajectory of specific ‘poverty careers’ dictates whether people have to endure entrenched poverty or not. It has been shown that there is a high proportion of short-term claims indicating that many people manage to move off benefit (Leisering and Leibfried 1999). The 1996 social assistance reform introduced new measures that were designed to help claimants move off benefits, more specifically by introducing wage subsidies for employers and paying less regard to income earned. Looking at the policy outcome we find that the relative poverty rate in Britain is significantly higher than in Germany. Data from the Luxembourg Income Study show that the proportion of people below 50 per cent of the average income is, with around 20 per cent, more than double the German figure (Cantillon 1998; data for the end of the 1980s and beginning of the 1990s, exact figures depend on type of measurement and data used; see also Kohl 1992). In Britain, there was an increase in poverty throughout the 1980s. As a result, the poverty rate at the beginning of the 1990s was three times higher than it was at the end of the 1970s. This development was mainly caused by a significant rise in disposable incomes at the top of the social ladder in which other groups could not participate (Goodman and Webb 1994: 25). In contrast, the German relative poverty rate has only experienced a modest increase. The number of households below half of the average equivalent income remained stable during the 1980s; however, there was a significant increase in child poverty (Hauser and Becker 1994). The measurement of relative poverty in East Germany involves some methodological intricacies because the figures tend either

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to underestimate or to overestimate the poverty rate and are even more difficult to interpret in a longitudinal perspective since income distribution moves upwards and fans out at the same time. In an all-German perspective the East German population appears to be poorer, but this improves over time with a rise in East German incomes. If we take East Germany alone we observe a rapid growth in relative poverty due to higher income inequality which is moving closer to the West German standard (Habich 1996). The number of people living on social assistance has increased markedly since 1990 (Olk and Rentzsch 1994). In a multidimensional poverty perspective using a proportional deprivation index, which measures to what extent respondents fall below an acceptable standard of living as defined by the population, 15 per cent of the British, 11 per cent of the East Germans and only 6 per cent of the West Germans live in deprivation (Böhnke and Delhey 1999, database: German Welfare Survey 1998, British Breadline Survey 1990). In terms of targeting benefits at the ‘truly needy’, Behrendt (1999) has emphasized that there are strong variations in the distribution of means-tested benefits amongst the population. In Britain, for example, the recipient rate is comparatively high for the low income sections, whereas in Germany a significantly smaller proportion of people in poverty receive a kind of means-tested benefit. The British system turns out to possess a relatively comprehensive social assistance arrangement, albeit at a low benefit level. Means-tested benefits have proved to be highly effective for the reduction of poverty rates, especially in preventing harsh poverty. Due to the effects of the transfer and tax system, 46 per cent of the households in Britain could be lifted above the 50 per cent median of all incomes in the mid-1980s, whereas in Germany this record was only 36 per cent (McFate et al. 1995: 39). Mitchell (1991: 51) has found that ‘at lower levels of the poverty line the UK transfer system is extremely effective, but this falls quite sharply as the poverty line rises’. As soon as one lifts the poverty threshold up to the 60 per cent of the median equivalence income level, the poverty rate increases drastically (Kohl 1992). Although less effective in the moderate poverty sphere, Britain performs markedly better in closing the ‘strong’ poverty gap. In contrast, the German record of preventing poverty with means-tested benefits is less impressive. As Behrendt (1999: 21) has noted, the German social insurance benefits ‘leave relatively low poverty rates, but a large poverty gap to fill’. Although the social assistance scheme is rights-based, codified and equitable, the effectiveness of means-tested benefits is rather limited. Where the German system is able to prevent a good deal of poverty, this must be attributed to the impact of social insurance rather than to the means-tested programmes. Dynamic poverty research has shown that in Britain most spells of unemployment result in poverty, whereas in Germany people mostly become social assistance claimants only after having ‘exhausted’ their social insurance entitlements (see Leisering and

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Walker 1998). In Germany, there is also a stable polarization in terms of poverty risk between the unemployed and persons in employment. ‘In fact, in . . . West Germany, work and poverty were almost mutually exclusive. The poor didn’t work; full-time workers weren’t poor’ (McFate et al. 1995: 55). Supporting the poor: the moral bottom line Most of the scientific approaches to poverty represent expert perspectives in which the definition of poverty and the demarcation of the poor population draws on measurement standards or a fixing of what can be regarded as an adequate living standard. However, for the moral economy of poverty relief, public images of poverty, in which the identification of poverty and the poor ‘lies in the eye of the beholder’ (Orshansky 1969: 37) are more weighty. When turning to empirical issues the question arises as to whether poverty within a society is perceived as a grave problem, or rather one which is negligible. In order to answer this question, survey respondents were asked which proportion of their own society they believed to be living in poverty (Table 6.7, data refer to 1991). The definition of poverty given in the question refers to a ‘breadline’ concept of poverty, according to which people lack the resources to meet their basic needs. It circumscribes poverty as real destitution and does not encompass the broader ‘cultural’ concept of poverty. It seems there are great differences between the German and British respondents in their view of the poverty problem. The estimates of the number of poor people are much higher in Britain than in West Germany, with more than one-quarter assuming that the percentage of people affected by poverty is above 30 per cent. In contrast, only 14 per cent of West Germans, but 27 per cent of East Germans, believe that the number of poor people is higher than 30 per cent. The British see themselves as living in a country that is confronted with a comparatively widespread ‘poverty disease’ impairing the quality of their society. The data for East Germany are likely to be expressions of a transitional period in which East Germans are aspiring to the same level of living conditions as in West Germany. Due to this point of reference the level of poor people in East Germany might be conceived of as relatively high. The second question in Table 6.7 completes this finding: only a minority of British respondents believe that people get what they need. The West Germans, in contrast, express more contentment with the societal resource allocation. Most tend to believe that their society is able to satisfy the basic needs of its members. The East Germans are more sceptical about the need-satisfying capacities of the society they live in; the ratio of people agreeing and disagreeing is relatively balanced. Since modern welfare societies agree that poverty is a social malady, the identification and awareness of this problem can give reason to call for

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social support for those in need and to urge for a reallocation of public resources. The values of a decent and civilized society imply that we should protect the vulnerable and that nobody should suffer hardship unduly. The vast majority of people in Germany and Britain tend to think that the state should be responsible for guaranteeing a minimum income to protect people from social hardship. Apparently, public responsibility for the fate of the poor is a well-entrenched norm in modern welfare societies. One could even argue that the demand for a minimum income floor is in line with the self-interest of large parts of society, since there is apt evidence that people desire security and that the fear of poverty affects even middle income groups (Dean and Melrose 1999). The data in Table 6.7 also reveal interesting national differences. It indicates that the British respondents support the idea that nobody should be left without social security and the right to claim social assistance from the state authorities. It has been shown that, in the United Kingdom, attitudes towards benefits for the poor are highly correlated with other welfare attitudes, leading Svallfors (1993: 114) to the conclusion that the ‘fate of the poor is more tightly wedded to other welfare issues in the eyes of the Britons’ than it is in Germany, for example. The British public seems to be more or less unified in their moral beliefs as to what is necessary. At the same time, they express more concern for the difficulties in accessing state benefits and the stigma attached to benefit status. It stands to reason to assume that these patterns reflect the imprint different poverty regimes have left. In Britain policies directed at the poor are welfare policies per se. The long British legacy of anti-poverty measures, comprising of the granting of help in combination with a rather harsh treatment of the poor may have some attractive features for the wider public since it attempts to deter those unjustifiably claiming assistance. However, people also seem to be aware of the possible drawbacks. They are conscious that some people might be ‘ashamed’ of claiming social assistance due to public stereotyping and the serious implications this can have for their self-esteem and for their attempts to find work or accommodation (see also Dwyer 2000: 121). There is evidence that those relying on social assistance benefits are truly concerned about the attached stigma, which even prevents people from claiming if they find it difficult to make ends meet (Kempson et al. 1994: 37). The survey respondents seem to recognize that the non-take-up of benefits caused by a lack of information is an existing problem that contributes to the existence of poverty. It is known that there are administrative barriers to benefit take-up, so that a significant proportion of individuals and families remain without the social provision they are entitled to (March and McKay 1993). In Germany we also find a propensity to support the right to assistance. Both the East Germans and the West Germans are rather positive about state responsibility for a basic income security net (see Roller 1992).

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Table 6.7 Perceptions of poverty and poverty relief (%) Britain

West Germany

East Germany

How many poor live in the country* None 0–10 per cent 11–20 per cent 21–30 per cent More than 30 per cent

2.8 30.7 21.4 18.0 27.1

2.2 47.7 25.3 10.4 14.4

4.8 40.2 16.8 11.3 27.6

In our country people get what they need* strongly agree/somewhat agree neither nor somewhat disagree/strongly disagree

25.3 14.0 60.7

56.2 14.3 29.5

40.3 16.1 43.6

Government should provide a basic income for all, a minimum standard of living* strongly agree/somewhat agree

82.9

84.9

93.5

23.5 37.4

17.4 25.9

46.7 44.3

65.1 30.6

24.5 47.8

26.4 42.9

34.5 49.8

30.7 49.1

Nobody needs to be left without social security agree very much 50.0 agree to some extent 31.7 Guaranteed assistance agree very much 73.0 agree to some extent 23.4 Poor don’t know about assistance agree very much 51.9 agree to some extent 36.7 Poor avoid asking for assistance agree very much 45.2 agree to some extent 41.0 Source: *ISJP 1991, otherwise Eurobarometer 1992.

Notes Question wordings Percentage of poor: These days people often talk about the poor (in a country). First of all, roughly what percentage of people in this country would you say are poor? That is, people who have barely enough for food and shelter and are not able to buy much else for themselves and those who do not even have that (question relates to East or West Germany depending on the place of residence). Answer categories second and third question: strongly agree, somewhat agree, neither nor, somewhat disagree, strongly disagree. Questions in the lower part of the table: Do you agree or not with the following statement: ‘In (our country) nobody needs to be left without adequate food and shelter?’ Some people cannot earn enough income to live on because of disability, old age . . . To what extent do you agree or disagree that the RIGHT to claim assistance from the authorities should be granted? Some say that many poor people remain so because they simply don’t know about the existence of support for them. On the other hand, such people who do not have enough to live on sometimes avoid asking for assistance from the authorities because they would be seen as POOR. Answer categories: (1) agree very much; (2) agree to some extent; (3) disagree to some extent; (4) disagree very much.

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About 85 per cent of West Germans and 94 per cent of East Germans assign the responsibility for the provision of social assistance to the state. Nonetheless, compliance with the issues of guaranteed assistance and the idea that nobody should be left without social security is less firm than in the British case. Germans are also less concerned about the non-take-up problems of welfare benefit schemes. Although popular attitudes in Britain and Germany are alike on the broad scale, it is also striking that the British respondents exhibit such an overwhelming support for public poverty programmes. It could be suggested that the perception of acute and severe poverty problems contributes to a preoccupation with the poverty issue resulting in a popular demand for state involvement. The fine line between the deserving and the undeserving poor Although the idea of public responsibility for the fate of the poor enjoys relatively uncontested support, concern for the poor is not identical with unconditional altruism. Rather, we might find a particular kind of ‘conditional obligation to others’ (Bowles and Gintis 2000: 33) that takes the reasons for poverty and the behaviour of the poor into account. This means that people are sceptical of providing social support independently of whether the recipient is regarded as worthy of this support or not. The assumption that the beneficiary of social assistance is also doing his fair share is likely to have an influence on the generosity of the taxpayer. As Arneson (1997: 339) puts it: ‘To work is to reciprocate benefits. Or if one is poor and society offers some form of aid, willingness to work at paid labour in order to eliminate or reduce one’s needy condition is appropriate reciprocity.’ This obligating reciprocity demands that in return for a decent minimum income each citizen has to make good faith efforts to be self-sustaining (White 1997: 319). However, the issue of worthiness is not an objective data, but related to assumptions and public discourses about the behaviour and the attitudes of the poor. The pejorative label of the ‘undeserving poor’, for example, is intended to ‘harass the poor by questioning their morality and their values’ (Gans 1995: 1). Since the ‘undeserving poor’ are considered as being capable of working their social destitution is seen, in part, as a consequence of their own behaviour that deviates from ‘mainstream’ society. Undeservingness, therefore, means nothing else than that the poor’s moral and behavioural faults disqualify their right to social support. Table 6.8 shows that people adhere to different explanations of poverty.13 The causes given differ roughly between those which are quasinatural (‘bad luck’, ‘lack of ability or talent’), those which can be interpreted as individual failures (‘loose morals and drunkenness’, ‘lack of effort’) and societal or economic reasons (‘prejudice and discrimination’, ‘lack of equal opportunity’, ‘failure of the economic system’). In Britain, most people see the failure of the economic system as a cause of poverty,

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Table 6.8 Assumptions about the causes of poverty Agreement (%) Often/very often

Britain

West Germany

East Germany

Lack of ability or talent Just bad luck Loose morals and drunkenness Lack of effort by the poor themselves Prejudice and discrimination Lack of equal opportunity Failure of the economic system

33.2 22.0 33.3 36.0 36.1 38.0 52.1

31.2 22.5 40.8 37.0 36.4 40.8 33.1

21.7 13.6 49.5 26.8 41.1 49.6 45.5

Source: ISJP 1991. Notes Question wording In your view, how often is each of the following factors a reason for poverty in (your country) today? Answer categories: (1) never; (2) rarely; (3) sometimes; (4) often; (5) very often. (4) and (5) are summarized in the table.

followed by a lack of opportunity, and prejudice and discrimination. However, about one-third of the population stresses reasons such as lack of effort and loose morals. Surprisingly, the Germans place more emphasis on behavioural faults such as loose morals and drunkenness. West Germans are less inclined to blame the economic system while lack of opportunity is the most common explanation people are ready to adopt. One can hypothesize that the level of generosity and the acceptance of collective responsibility depends on the perception of why people are poor and how they conform to certain behavioural norms. In order to test this hypothesis a regression analysis (Table 6.9) was carried out, including different explanations of poverty as independent variables and the agreement with the statement ‘The government should guarantee everyone a minimum standard of living’ as a dependent variable. The results suggest that support for a public system of minimum income provision depends to some extent on whether the causes of poverty are believed to be beyond individual control or not.14 However, we have apparent country-specific responses. The explained variance is greatest in Britain and relatively small in Germany. In Britain we find the strongest effects of assumptions about the causes of poverty on the pattern of public support for a guaranteed minimum income. When the causes of poverty are seen as ‘individual fault’ people tend to oppose public responsibility, whereas the social policy objective is likely to be approved if poverty appears to be caused by structural or economic factors. In the instance of ‘individual fault’ the beneficiaries violate the reciprocity norm by failing to make ‘good-faith efforts to be self-supporting’ (Arneson 1997: 339), while, in the latter case, welfare given to the poor is a ‘just’ compensation paid to the losers (or victims) of the system (see Goodin 1998: 188–9). The standardized

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Table 6.9 Causes of poverty and support for guaranteed minimum income: linear regression analysis Britain Lack of ability or talent Just bad luck Loose morals and drunkenness Lack of effort by the poor themselves Prejudice and discrimination Lack of equal opportunity Failure of the economic system Constant R-Square

West Germany

East Germany

⫺0.015 0.080** ⫺0.015 (⫺0.508) (3.456) (⫺0.314) 0.048 ⫺0.069** ⫺0.070 (1.640) (⫺2.984) (⫺1.476) 0.057* ⫺0.029 0.003 (1.842) (⫺1.214) (0.059) ⫺0.111** ⫺0.073** ⫺0.001 (⫺3.576) (⫺3.042) (⫺0.029) 0.007 0.072** 0.038 (0.241) (2.780) (0.777) 0.075* 0.053* 0.001 (2.269) (1.950) (0.013) 0.230** 0.058* 0.075 (7.366) (2.366) (1.593) 0.985* (3.138) 0.102

1.472** (26.124) 0.033

1.328** (4.587) 0.013

Source: ISJP 1991. Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficient ␤, t-values in parentheses. Dependent variable: The government should guarantee everyone a minimum standard of living. Answer categories: (1) strongly disagree; (2) somewhat disagree; (3) neither agree nor disagree; (4) somewhat agree; (5) strongly agree. Independent variables: question wording and answer categories, see Table 6.8.

regression weight of the item ‘failure of the economic system’ is rather strong. In West Germany, the beta-coefficients for ‘lack of effort’ and ‘failure of the economic system’ are less strong, though significant. In addition, beliefs about prejudice and discrimination as causes of poverty and the ‘quasi-natural’ explanations based on individual traits (‘lack of ability or talent’) have a significant impact on the support for a state guaranteed social minimum. Here again, they can be related to ascriptions of personal responsibility, suggesting that if poverty is viewed as resulting from circumstances beyond individual control the notion of ‘deserving’ is strengthened. However, the negative beta-coefficient for the item ‘just bad luck’ in West Germany is not in line with this account. Nonetheless, the overall tendency is that people seem to have little problem granting support if they think that the recipients are not accountable for their misery and are making an effort to reciprocate benefits by adhering to social norms. This is exactly what is meant when it is suggested that generosity and the recognition of public responsibility is conditional. East

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Germany represents a special case as attitudinal patterns do not seem to be determined by the assessment of poverty causes. This result can be attributed to the specific situation in East Germany at the time when the survey was polled. Support for a minimum income was relatively unanimous, hinting at a rather different motivational background for reaching out to those in need. Trusting the recipients and the welfare system: the calculating and the dependent poor One can portray the relationship between welfare providers (taxpayers) and potential recipients as a ‘trust game’ with the providers in the role of trusters and recipients as trustees (Overbye 1999). Accordingly, a commitment to the welfare state is maintained as long as the tax and contribution payers trust that the welfare clients do not abuse the system. One concern is whether welfare benefits are taken up by the truly needy. A second concern which may undermine the trust relation is linked to the longterm effects of welfare transfers. It has been claimed that numerous attempts to help the poor have failed because they encouraged ‘dysfunctional’ values and behaviour (Murray 1984). From this perspective, the welfare state saps the self-sufficiency and self-help capacities of the welfare clients, and thereby contributes to a perpetuation of poverty. One can explore the effects of these two accounts of ‘mistrusting the recipient’ and ‘mistrusting the system’ on the political support for aid to the poor empirically. Table 6.1015 presents the results of two regression models carried out with the British Social Attitude data in order to assess the effects of both interpretative patterns in relation to structural determinants. In the first model, the source of income and the level of income have been used as predictors of attitudes towards the statement ‘The government should spend more money on the poor’. The result is that the higher the incomes are, the less likely people are to be supportive, whereas people relying on transfer income other than pensions are significantly more in favour of increased government spending. This outcome is in line with the self-interest assumption that those who benefit are the strongest supporters of state transfers, while those who have to bear the costs are more likely to oppose them. The second model is more telling with regard to the impact which the claimants image and trust in the system have on the normative commitment people express. Here, the structural determinants are controlled for the different interpretative pattern. All three items – the beliefs that, first, the welfare state makes people less willing to look after themselves, second, that many people who get benefits don’t really deserve help, and third, that most people living on the dole are fiddling the system – have a striking and significant impact on public support for social assistance schemes. The effect sizes are strong, thus the hypothesis can be accepted.

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Table 6.10 Support for poverty policies: structural determinants and moral hazard problems: linear regression analysis, Britain Spending money on the poor Structural determinants Household income quartiles Market income Transfer income

⫺0.126** (⫺5.421) ⫺0.049* (⫺1.981) 0.124** (5.742)

⫺0.116** (⫺5.355) ⫺0.093** (⫺4.047) 0.056** (2.725)

Pensions (reference category) Interpretative patterns of poverty measures Blame the system: dependency The welfare state makes people less – willing to look after themselves nowadays Blame the recipient: undeservingness and scrounging Many people who get social security – don’t really deserve any help Most people on the dole are fiddling – the system in one way or another Constant R-Square

3.640** (36.008) 0.058

⫺0.189** (⫺9.538) ⫺0.124** (⫺5.619) ⫺0.157** (⫺7.259) 5.066** (48.177) 0.194

Source: British Social Attitudes 1996. Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficients ␤, t-values in parentheses. Dependent variable: The government should spend more money on the poor; answer categories for all variables: (1) strongly disagree; (2) disagree; (3) neither nor; (4) agree; (5) strongly agree. Income quartiles based on household income from all sources before tax (response rate 86.1 per cent). Main income source of respondent and existing partner: market income – income from employment; transfer income – welfare benefits other than pensions; pensions – occupational and state pension.

In this model, the model fit has increased substantially from 0.058 to 0.194, indicating that the subjective perceptions of poverty and social assistance claimants play an important role in the attitudes towards social assistance policies. The result strongly suggests that the patterns of interpretations, in other words how the poor and their poverty are ‘socially constructed and understood’, plays an important part in generating or undermining the moral case for poverty schemes. Sympathy for the plight of the poor is dependent on the belief in the efforts of the poor themselves, their trustworthiness and that the giving of aid does not create

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welfare dependency. In this sense the benefactors are not ‘unconditional altruists of utopian thought’ (Bowles and Gintis 2000: 44) but, rather, adhere to a concept of need-oriented generosity related to norm obedience on the part of the beneficiaries and the perceived side-effects of transfers. However, these images are neither representations of objective facts nor random opinions, but related to popular discourses about poverty. First, the ‘dependency debate’ has spread doubt as to whether certain welfare payments are suitable measures for coping with poverty since they encourage people to become over-reliant and lower their desire to regain independence. It has been argued that the unconditional handing out of benefits makes it too comfortable for beneficiaries to live on state subsidies. The Conservative criticism claimed that the government ‘nourished and sustained the assumed dependency culture of poor people through misplaced generosity’ (Dean and Taylor-Gooby 1992: 25). The moral argument has been well summarized by Goodin (1998: 122) who highlights that the objection to welfare dependency is: that people are relying on things on which morally they ought not rely. What crucially differentiates unobjectionable dependencies from objectionable ones, in the view of critics of welfare dependency, seems just to be the moral appropriateness of relying on some things (such as families and friends, social conventions and natural forces) compared with the moral inappropriateness on relying on others (such as public assistance, at least when you do not have to). The second issue is intertwined with the first by the understanding of the poor in terms of economic rationality. The account of the ‘irrational and irresponsible poor’ often goes hand in hand with the picture of the ‘calculating poor’ who misuse the welfare system (Murray 1984; Jordan et al. 1992). Instead of moving off benefit they tend to calculate their gains and losses and base their decisions thereupon. Here, the poor and disadvantaged are depicted as ‘homo calculans’ rather than ‘homo honoris’ (Engbersen et al. 1993: 185–200). Most of the attempts to reorganize the welfare state have emphasized that benefits should be targeted at ‘genuinely’ needy people rather than to those who have chosen to live on benefits. Both issues – the issue of the undeservingness of the welfare clientele and the issue of social fraud – convey a sense of betrayal to the benefactors of welfare, and thus provoke a collapse of the moral economy of public assistance. People do not want to reward undeserving recipients, free-riders or norm-violators.16 In the British case one should recall that the popular media were at the forefront of unsympathetic coverage of welfare claimants. Golding and Middleton (1982: 73) have found that, at the end of the 1970s, nearly half of popular media welfare stories dealt with the issue of abuse leading the

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audience to believe that ‘the world of social welfare is populated by the criminal indigent being brought to justice’. The stories were made up of a scandalizing representation of these cases by mixing moral indignation with colourful exaggerations of the case proceedings. Field et al. (1977: 169) have similarly remarked: ‘An unsuspecting reader of the British Press could think that not only do the rich largely foot the welfare bill, but that much of what benefit is provided goes to “scroungers”, or as they are sometimes more positively called those without “genuine need”.’ Conclusion This chapter set out to explore the moral economy of social assistance. Empirically it has been shown that people are well aware of the existence of poverty in their societies and that they express a general sympathy for the plight of the poor. While the British people have a rather dramatic view on the extent of poverty and destitution in their country, the Germans, especially the West Germans, expressed a lesser concern. However, in both countries people are strongly in favour of a governmental responsibility to guarantee everyone a minimum standard of living. Since large proportions of the citizens regard the schemes of social protection for the poor as insufficient, they are also in favour of improvements in poverty relief. It is a well-entrenched social concern that people view poverty as ‘socially unacceptable’ and demand the state to step in. On these grounds, people also seem to be ready to approve the redistribution of resources based on a motive which has been termed ‘basic need generosity’ (Bowles and Gintis 2000: 37). Nonetheless, as soon as one moves beyond this general level, the matters become more intricate and unveil some of the mechanisms behind attitude formation. It can be established that the citizen’s generosity is conditional, distinguishing between different recipients and causes of poverty. Obviously, people favour those ‘deserving poor’ with ‘genuine needs’ whose destitution can hardly be attributed as their own fault. When causes are identified which allow people to infer that poverty is, in part, attributable to the ‘fault of the poor themselves’ the commitment and readiness to share one’s income is easily undermined. These assumptions are critical because they arouse concerns as to whether or not one’s generosity is being exploited by other people. The interpretative patterns surrounding the causes of poverty and the behaviour and morality of the poor are important in this respect. If people find reason to believe that the ‘wrong people’ benefit and that the ‘wrong behaviour’ is rewarded, they are likely to object to provisions for the poor. In studying the British case, the dimension of trust has been examined by addressing the questions of welfare dependency, deservingness and scrounging. The findings were quite striking, suggesting that judgements about the effects of the welfare state and images of welfare claimants are

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crucial for the motivational underpinning of social transfers. Thus, a policy that promises that idlers will be made to work and scroungers will be disentitled can rely on a good deal of public support. Where people do not trust the welfare system and the welfare beneficiaries, i.e. when the schemes are perceived as failing to accomplish the assigned objectives, people withdraw their support. It has been argued that public discourses and prevailing images have their stake in the formation of attitudes, and that the orchestration of the issues of fraud and malingering contribute to a delegitimation of welfare transfers. In a nutshell, although people are committed to the relief of destitution their obligation to those in social distress remains conditional. Public assistance schemes are firmly approved only when the beneficiaries seemingly conform to deeply held norms of reciprocity and welfare benefits are not suspected of discouraging the recipients from finding work. Overall, it seems that Hugo Heclo (1994: 436) was right in saying: ‘Only the deeply engaged moral commitment of a political community can sustain antipoverty efforts through inevitable policy frustrations . . . without it, every policy evaluation of program failure will be an excuse for giving up rather than a reason for trying harder.’

Unemployment provision: the messy contract Insiders and outsiders The changes in labour market conditions over the last two and a half decades have been widely acknowledged as the major challenges collectivist welfare arrangements are facing. Not only have the problems of economic inefficiency, the wastage of human resources and fiscal strains received the attention of policy makers, but also the increase of social tensions and the high social costs caused by unemployment. Since mass unemployment has become a permanent feature in West European countries, there has been an increasing concern about the growing division between those in employment and those who are expelled from gainful employment. It has been diagnosed that there is a widening rift between the ‘job rich’ and the ‘job poor’ which not only affects the economic dimension, but also the political and socio-cultural face of modern capitalist societies (Gorz 1983; Offe 1985). Clearly, the way in which the system of unemployment benefit is put into operation leaves it up to the people in employment to shoulder the costs of unemployment, as part of their income is used to finance non-employment and to compensate others for the deficiencies of the labour market. Thus the distinction between the active ‘insiders’ and the inactive ‘outsiders’ of the labour market entails not only an exclusion of large groups from gainful employment, but also substantial between-group transfers that can arouse social conflicts.

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However, the distinction between employed insiders and unemployed outsiders does not shed light on the degree of mobility that exists between these two groups which has some significance for the perception of these transfers. Schumpeter’s (1964; also Esping-Andersen 2000: 157) famous omnibus-metaphor highlights the relevance of in-and-out mobility for social closure and the formation of conflicting social groups. The bus might always be full, but because some people may leave the bus, and new people enter, only a proportion can be identified as permanent ‘residents’ for whom the doors remain locked. The more stable the insider and outsider groups are and the less social mobility exists between them, the more likely it is that this social divide might lead to a fundamental gulf between those in secure employment and those out of work. EspingAndersen (2000: 157) argues that if the experience of unemployment is sporadic and mainly short-term, and if there are hardly any signs of long-term entrapment, it is unlikely that outsider classes will be formed. The same can be said for the insider classes of job owners: The less successful in monopolizing their market position and the more confronted with the risk of unemployment they are, the less they will feel that unemployment benefit is a transfer scheme to provide benefits for ‘others’. However, what is evident here is that the conditions of the labour market in terms of mobility, social closure and risk exposure determine the motivational sources of support for unemployment benefit schemes. The institutional architecture of unemployment insurance confers entitlements according to a contributory record. The compulsory character of unemployment insurance obliges (nearly) all people in standard employment to contribute to the insurance fund with a certain percentage of their earnings. However, unlike pension insurance, unemployment insurance scores quite low in terms of ‘return expectations’ as far as the major bulk of the employed is concerned and it can hardly be interpreted as a form of ‘saving for the future’. Therefore, individual compliance with the insurance scheme needs to be attributed to people’s general risk aversion. Unemployment insurance falls into a category of insurance that covers real risks that are not part of a normal life course. The mode of reciprocity can be described as ‘risk reciprocity’, with the prime aim of insurance coverage rather than of a balance of transaction. Such a motive of risk reciprocity becomes even firmer if one takes into account the fact that unemployment is the only sector for which hardly any private welfare market exists. However, there is also a compelling argument that employers and employees are in favour of unemployment compensation because it is advantageous for the promotion of firm-based skills as people only invest in skills if they expect higher returns. When unemployment benefits are earnings-related, for example, there is less downward pressure on specific skill wages. A high replacement ratio and a long benefit duration enables

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skilled workers to find a suitable job that generates wages at a similar level to the one they are used to. Good unemployment protection, therefore, guarantees good returns on ‘skill investments sufficient to compensate for economic fluctuation’ (Estevez-Abe et al. 2001: 152). Where companies engage in market strategies that require firm- and industry-specific skills, they may be interested in complementary welfare programmes that give an incentive to employees to acquire specific skills. From the employers, point of view, support policies give an incentive for employees to invest in skills since they compensate well for a loss of income. That is why there may be formidable support from employers and large groups of employees for retaining and strengthening the existing institutions of unemployment compensation (Iversen and Soskice 2001). This tendency should be especially strong in economies with firm-based training regimes, such as in Germany, and less so in economies where general, transferable skills are more important, such as in Britain. Nonetheless, unemployment is socially biased with a relatively uneven risk distribution. This conditions the perception of whether or not people see themselves as prospective or potential beneficiaries. Less qualified persons and people with unstable employment biographies are more likely to be at risk of becoming unemployed than people who belong to the core sectors of the labour market. For a considerable part of the workforce the costs clearly outweigh the subsidies they can expect. Some precautionary measures are intended to offset the transfer bias, such as minimum time periods of contributory records and the expiration of entitlement after a certain time, but nevertheless, there are people who will never be unemployed while there are others who are strongly reliant on this safety net. There is some truth in the fact that the redistributive impact of the unemployment insurance system can be viewed as an inherent and unavoidable element of its institutional architecture (see Heinelt 1994: 196). The compulsory character of the insurance ensures to a certain extent that the risk of unemployment is collectively dealt with and that all people in employment pay their ‘fair share’ (Lenhard and Offe 1977; Nullmeier and Rüb 1994). Nonetheless, unemployment insurance is not designed to accommodate large numbers over a long period of time. A high level of unemployment and costly burdens on those in employment is likely to contribute to a deepening of social divides (Offe 1991). As with social assistance, the moral economy of unemployment provision also depends on certain assumptions about the nature and causes of the unemployment problem. A highly individualized account of the unemployment problem, in the sense that the unemployed are themselves responsible for their fate, would hardly suggest that there is a normative obligation to render resources. But if the finger of blame is pointed at society – if, for example, unemployment is seen as an endemic problem that has struck the labour markets of industrialized countries and for

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which only limited institutional and regulative remedies are at hand – one could argue that the unemployment problem should be dealt with by society as a whole.17 This kind of responsibility would, at least partly, communalize the social risks of unemployment instead of leaving it for those who find themselves hit by a loss of job. Taking it one step further, one could interpret the benefit transfers from the employed to the unemployed as a pay-off, whereby those who are in employment compensate others for ‘non-employment’. The malfunctioning of the labour market that gives privilege and income to some by excluding others would make it necessary to offset the disadvantaged. Since deregulation measures and labour market flexibility are praised as the keys to an efficient and competitive economy, the downsizing of the workforce and large-scale redundancies have been taken as the inevitable trade-off of such policies. This point is emphasized by Robert E. Goodin (1998: 188–9): (I)n situations of structural unemployment we ought not to just regard welfare recipients as blameless victims, akin to the ‘impotent’ poor. Welfare is then not so much a matter of charitable succouring of the poor as it is ‘just compensation’ paid to victims of our economic system. Insofar as unemployment is structural, and insofar as the rest of us benefit from the economic structures that render those people unemployed, we are rich because they are poor – and vice versa. In that light, any welfare payments we make to them are better conceived as discharge of a debt rather than as a charitable benefaction. This reading suggests that because a core of employees and workers have gained a privilege at the expense of outsiders (the people who are sorted out), the unemployed are entitled to lay claims on benefits. Since the unemployed carry the ‘social costs’ of an efficient economy, job holders can be expected to pay a certain price for it.18 From the point of view of the net-payer, the transfers can be understood ‘as the “ransom” the better-off have to pay for a productive and cohesive society’ (Lowe 1999: 319). The policy context A close look at the unemployment issue within the British and the German welfare states reveals the differences in the programmatic structures of the institutional set-ups. At an organizational level, the German system runs as a corporatist scheme under the participation of the social partners, while the British system is administered by a national state agency. With regard to benefit generosity and universality one can distinguish between the selective German regime and the residual British regime (Ploug and Kvist 1996). The German model can be considered as

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selective because it provides relatively generous benefits for some groups, modest benefits for others and denies access to unemployment support for some claimants. The entitlement to unemployment benefits in Germany is confined to those who were insured for at least twelve months (within the last three years) before the benefit claim, it is paid in equivalence to the former wage and normally lasts for one year. The second scheme for those unemployed who have exhausted their unemployment benefit or who have a shorter contributory record (at least six months of contributions made before becoming unemployed) is the nonterminated unemployment assistance. Whereas unemployment benefit comes from a fund that is financed by employees and employers, unemployment assistance is paid for through general taxation. Eligibility is established as a combination of the contributory credits and a householdbased means test. The standard benefit level of unemployment assistance (53 or 57 per cent of the last income) ranks below unemployment benefit (60 or 67 per cent). Social assistance acts as the last resort net for those with insufficient entitlements. All three elements have a different redistributive logic conditioned by the restriction of access, the mode of financing and the entitlement policy. In 1998, 46.4 per cent of the unemployed were beneficiaries of unemployment benefit and 35.1 per cent recipients of unemployment assistance. Nearly a quarter of the unemployed in West Germany, but only 5.1 per cent in East Germany, were without entitlements for the unemployment security schemes (Datenreport 1999: 108). Overall, the social security programmes in Germany are relatively effective in preventing processes of deprivation and social exclusion (Clasen et al. 1998: 21). However, the long-term unemployed who move over to the lower unemployment assistance, or who are not entitled to benefits, represent a special problem. In the mid-1990s, nearly half of the unemployed had been without work for longer than twelve months, and there was quite a substantial proportion of people who had been without a job for years on end. For this group especially, the insurance benefits were not always sufficient and people had to apply for additional welfare support. It has been reported that about 3 per cent of unemployment benefit recipients, and one in seven unemployment assistance claimants, also received means-tested benefits. However, 600,000 recipients of social assistance stated ‘loss of employment’ as the main reason for their necessity to do so. In the German case, it has been emphasized that the social security system appears to be vulnerable to labour market imbalances, because the labour market determines the number of contributors and the number of beneficiaries (see Offe 1991: 130–1). The risk community appears to be divided into two factions: the groups in regular employment that cover the relatively high costs of the insurance funds, and the people on the edge or outside the market who receive some kind of transfer income.

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Esping-Andersen (1990: 227), therefore, has highlighted the danger of an ‘insider–outsider’ divide within the German system: To support housewives, male earners must rely on high net take-home pay; to support the welfare-state clientele, the employed will have to pay heavy taxes. And this is where the greatest potential for a conflict axis appears. . . . When a shrinking active labour force is compelled to shoulder the costs of a swelling human surplus, there is a likelihood of rising tax-resentment, especially since the transfers are so clearly from the productive to the non-productive segment of the society. With unification this problem has been extended by the highly political transfer dimension of East and West. The British system, however, is partly confronted with the same type of legitimatory problems since it is also organized on a pay-as-you go basis that implies transfers from the employed to the unemployed. However, in terms of costs, coverage and generosity the British system falls far behind the German counterpart: it has a ‘ “residual egalitarian” character’ (Clasen et al. 1998) with flat-rate benefits amounting to only 23 per cent of the average earnings. The National Insurance contributions that establish the right to benefit can be perceived as a hypothecated taxation. But, despite the ‘still fairly widespread belief that people have “paid their stamps” and expect to receive a return on their payments’ (Hills 1993: 44), the link between contributions and benefits is obscure and far from being perfect. The fact that the contributions are income related, whereas the benefits have a flat-rate character is responsible for a non-concordance of contributions and benefits.19 Tight entitlement rules and the introduction of ‘welfare-to-work’ measures indicate that the eligibility is relatively confined and related to behavioural expectations. Though unemployment had risen to 3 million in 1985, it fell throughout the rest of the decade before rising again. During this period the percentage of people with no unemployment benefit entitlement had risen. Whereas at the end of the 1970s around 40 per cent of unemployed people were covered, in the mid-1990s this figure had fallen to less than 23 per cent. The value of National Insurance unemployment benefit fell against the average income by one-third between 1979 and 1994 (Convery 1994). This lowering of the value of the benefit has forced many unemployed people to take up means-tested benefits, and in the mid-1990s over 70 per cent were reliant on this form of social security. Haataja (1998) has demonstrated that means-tested benefits have a much greater significance for the unemployed population in Britain than in Germany. This tendency has continued, especially since the replacement of unemployment benefit and Income Support by the Jobseekers’ Allowance (JSA) in 1996 which restricted the contribution-based entitlement to the first six months of unemployment instead of twelve. Parts of this reform were measures

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designed to motivate the unemployed to search for a job. Claimants were required to attend courses to improve their job procurement opportunities in the labour market. Since the government has abandoned the full employment policy, this was another step to shift the onus further onto the unemployed person. The shortening of the contribution-based eligibility period makes the situation for the long-term unemployed even more stressful since income-tested benefits depend on household composition and take other incomes into account. Overall, this change led to a ‘residualisation of National Insurance’ (Erskine 1997: 136) and to an increased dependency upon means-tested assistance benefits. Labour market fragmentation and welfare collectivism The empirical question is, in the first instance, how popular are the unemployment benefit schemes and whether or not people approve the governmental responsibility for those out of work. On an overall level (Table 6.11), we find a general endorsement of state responsibility to provide a decent standard of living for the unemployed. But nonetheless, the attribution of responsibility to the state is less unanimous than it is for the policy sectors of healthcare and pensions, and in Britain and West Germany we also find a significant section of around 20 per cent of the population who take a stance against it. This pattern hints at the lower degree of popular support for benefits provided for specific groups as compared to that for the mass services. In terms of expenditure, more Table 6.11 Unemployment provision and spending Agreement (%)

Britain

Decent standard of living for the unemployed 1985 85.4 1990 80.5 1996 77.8 Spending on the unemployed 1985 41.2 1990 36.3 1996 35.3

West Germany

East Germany

85.4 78.3 80.4

– 94.4 91.6

33.7 36.6 28.8

– – 56.1

Source: ISSP 1985/1990/1996. Notes Question wordings Responsibility for the unemployed: Do you think it should or should not be the government’s responsibility to provide a decent standard of living for the unemployed? Answer categories: (1) definitely should be; (2) probably should be; (3) probably should not be; (4) definitely should not be. (1) and (2) are summarized in the table. Spending on the unemployed: Should the government spend more or less on unemployment benefits? (Remember that if you say ‘much more’, it might require a tax increase to pay for it). Answer categories: (1) spend much more; (2) spend more; (3) spend the same as now; (4) spend less; (5) spend much less. (1) and (2) are summarized in the table.

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than half of the West German population are in favour of preserving the status quo and 18 per cent wish for a reduction in unemployment expenditure; 29 per cent for an increase. Other sources confirm that the general public’s willingness to accept cuts is greatest in the area of unemployment benefits with respect to the whole spectrum of benefits (Roller 1999: 27). In Britain, 21 per cent support a reduction in expenditure on unemployment, 44 per cent are in favour of keeping the current level and 35 per cent are in favour of an increase. When comparing these figures one must always bear in mind that the actual level of unemployment provision in Britain is much lower and that the benefits are unrelated to previous earnings. Although British surveys have shown that the mass unemployment phenomenon was at the forefront of the political and economic agenda and that the plight of the unemployed received public attention, there was no close alliance between those affected by unemployment and the wider public that could have put pressure on the government to increase the spending (Gallie and Marsh 1994: 2). The East German support for unemployment benefit, in contrast, is relatively unanimous. Roller (1999) reports that cuts in unemployment benefits are, together with cuts in social assistance and old-age pensions, the most unwanted cuts of all. This result is hardly surprising in the face of serious labour market problems; the breakdown of the East German economy destroyed 3.4 million jobs and created more than 1.1 million unemployed. From 1991 to 1994 nearly half of the East German partner households experienced unemployment (Berger and Schulz 1996). For the West Germans, in contrast, the massive transfers to the East which were channelled through the social security system to finance unification were rather problematic. The West German contributors saw their money as being used for the purpose of social transformation and for groups of East German recipients who had not (or hardly) contributed to the fund. This amplified the redistributive bias of the scheme (Gan␤mann 1993). Furthermore, additional discontent may have been caused amongst statutory insurance members by the government’s increase of social security contributions as a response to the surge in demand in the East. Although it would be an exaggeration to interpret the findings for Britain and West Germany as a rejection of the collective responsibility for the unemployment problem, Offe’s (1991) warning that the organization of unemployment support schemes can arouse opposition seems to hold some empirical truth. Public support for unemployment provision cannot be taken for granted and is certainly affected by the changes in the composition of the workforce. First, it can be stated that some of the unemployment insurance rules are ‘set up in such a way that a sort of zero-sum game of the employed against the unemployed emerges’ (Offe 1991: 143). The higher the level of unemployment and the more costly the unemployment support, the more the unemployed will be perceived as a burden by

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those contributing to the welfare state. Second, labour market segmentation determines the risk of unemployment, and thereby the probability of being in need of welfare state support. It stands to reason to assume that those groups which feel exposed to the risk of unemployment are in favour of an adequate level of provision, whereas the employees in the core sectors (with little fear of becoming unemployed) can be expected to take an interest in lowering the cost of unemployment since this affects their take-home pay negatively (see Hamann et al. 2001). In order to test this hypothesis more closely, different criteria of market and class position have been included in a logistic regression model predicting attitudes towards unemployment policy (Table 6.12). First, attributes of class position have been taken into consideration because they have demonstrated a good predictive value for voting behaviour, attitudes towards distributional justice and class consciousness (Marshall et al. 1988). In their work, Erikson and Goldthorpe (1992: 236; see also Breen and Rottman 1995) placed the class analysis emphasis on employment relations because it comprises the ‘experience of affluence or hardship, of economic security or insecurity, of prospects of continuing advance, or of unyielding material constraints’. The class distinction used here does not adhere to Erikson’s and Goldthorpe’s concept in detail. In contrast to their rather sophisticated version of class, an intermediate level has been chosen that makes a distinction between two white-collar groups – the service class (reference category) and the routine non-manuals – the workers and the self-employed. The service class includes all professionals, higher grade technicians, lower grade administrators and officials and supervisors of non-manual workers who can be regarded as being employed. The lower or routine manuals are the employees in the sectors of administration, sales and services located in the middle or lower ranks of the organizational hierarchy who have some traits approaching ‘staff status’. The worker category comprises skilled and non-skilled workers, and also farm workers. By establishing a separate group for the selfemployed it was decided to distinguish people working on their own account.20 The self-employed, although a very heterogeneous group with regard to education and professional skills, have been categorized as one group due to their distinct relations to the social insurance and tax system. In addition, it is also important to encompass the unemployed due to their dependency on state-provided security. Last but not least, a category of people who are not in the labour force (pensioners, students, etc.) has been included. Two issues are regarded here: the first is the governmental responsibility to ensure a decent standard of living for the unemployed, and the second is spending on unemployment (Table 6.12). For the first question, the group-specific effects of attitudes towards governmental responsibility are not great. The status of self-employment significantly increases the odds of rejecting state unemployment protection. In West Germany and

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Table 6.12 Attitudes towards unemployment policy by social position: logistic regression Decent standard of living for the unemployed Britain Routine non-manuals Workers Self-employed Unemployed Not in labour force Service class (reference category) Women Constant Nagelkerkes R-Square

West Germany

East Germany

0.527 (2.747) 1.116 (0.091) 0.380* (5.020) 1.778 (1.358) 1.174 (0.222)

0.810 (1.313) 1.131 (0.489) 0.446** (15.513) 3.528** (8.302) 1.167 (1.086)

0.797 (1.137) 1.568 (3.418) 0.611* (4.104) 4.171* (5.647) 1.389 (3.466)

1.946** (7.258) 4.288** (11.216) 0.047

1.114 (0.842) 3.447** (37.036) 0.029

1.414* (4.054) 1.801* (4.181) 0.048

Spending on the unemployed Routine non-manuals Workers Self-employed Unemployed Not in labour force Service class (reference category) Women Constant Nagelkerkes R-Square

1.779* (5.984) 2.597** (20.842) 0.732 (0.866) 4.700** (39.010) 2.175** (18.264)

1.414 (3.577) 2.757** (40.352) 0.883 (0.245) 7.646** (68.465) 2.139** (29.834)

0.949 (0.072) 2.311** (19.062) 0.524* (5.626) 4.352** (17.521) 1.973** (19.933)

1.671** (13.770) 0.297** (21.534) 0.091

1.228* (3.858) 0.159** (88.210) 0.069

1.228 (1.805) 0.252** (26.323) 0.097

Source: ISSP 1996. Notes *p ⬍ 0.05, **p ⬍ 0.01. Effect coefficients for odds ratios (exp(␤)), Wald-statistics in parentheses. Question wordings see Table 6.11. Responsibility for the unemployed recoded: definitely should be/probably should be (1); probably should not be/definitely should not be (0). Spending on the unemployed recoded: spend much more/spend more (1); spend the same as now/spend less/spend much less (0). The categories higher non-manuals (service class), lower non-manuals, workers and self-employed have been derived broadly from the class schema developed by Erikson and Goldthorpe (1992). A similar fourclass scheme has also been used by Svallfors (1993). For Germany the occupational class was recoded on the basis of the ISCO-1988 classification, for Britain on the basis of the Standard Occupational Classification (SOC 1991). For the assignment of the respondents to the respective class the guidelines proposed by Erikson and Goldthorpe (and the CASMIN project) were followed to a large extent.

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in Britain we find more than one-third of the self-employed unwilling to agree with this policy task. Considering the high economic insecurity many of them experience, one might see their exclusion from the unemployment insurance system as the main reason they show so little concern. In both parts of Germany the independent variable of the unemployment status displays significant effects; the dependent variable’s odds increase if someone is unemployed. In Britain and East Germany there is also a significant effect for women. Rather unexpectedly, the other class categories were not found as major fault lines structuring attitudes towards the government’s task of providing for the unemployed. A more contested issue is that of spending on the unemployed, since it asks directly for an evaluation of the current level of unemployment provision (second part Table 6.12). The patterns are quite striking: the unemployed, workers, people not in the labour force and, in Britain, routine non-manuals are more likely to be in favour of an increase in spending as expressed by the coefficients bigger than one. Their attitudes differ significantly from those of the rather privileged service class. The apparent split between the unemployed and the core group of the labour force is in line with many assumptions made about the significance of the stake different groups have in state security. The workers also seem to be more strongly in favour of state unemployment provision. Understandably, the changes in production processes put non-skilled and low-skilled workers at risk which may lead them to feel more in need of sufficient compensation.21 This finding is consistent with Gallie and Vogler’s (1994) results which pinpoint the impact of the level of insecurity in people’s labour market experience on their views about unemployment benefit. In Britain the low replacement rate, together with the fact that only a minority receive benefits from National Insurance, has hollowed out the system of unemployment compensation so that the unemployed’s call for more can be taken as an expression of existing needs. Since a large proportion of the British unemployed depend on means-tested benefits they want a ‘modest rise to allow them to live more comfortably and with less debt’ (Clasen et al. 1998: 189).22 Nonetheless, the changeover of the unemployed population into means-tested benefit dependants does not seem to have encouraged other groups to share their view. It should also be considered that unemployment benefits were always exposed to public scruples because the beneficiaries are conceived of as ‘marketable’, and it was thought that too generous benefits would weaken the incentives to take up work. It is not only the level of benefit, but also the type of benefit provided which is an important factor for the normative standing of unemployment compensation. Although there is a lack of comparative data enabling us to investigate this issue in more detail, some indicators allow us to gauge the level of public support for either flat-rate or income-related benefits.

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British respondents asked whether they thought a high earner should receive more benefit, the same, or less benefit than a low income earner, expressed overwhelmingly their preference for flat-rate benefits (Table 6.13). Even the highest income group is little in favour of the idea that those who earn more (and are likely to contribute more to National Insurance) should receive more. This broad consensus of support for the ‘same benefits for all’ represents the residualist egalitarian norm which is deeply entrenched within the British system (see also Williams et al. 1999: 35f.). Although no similar questions are at hand for Germany, there are good reasons to give credence to the belief that the responses would be rather different, namely in support of income-related benefits. This would be in accordance with the institutionalist assumption that people tend to accommodate themselves within a given institutional structure. A qualitative study including interviews with long-term unemployed found that the ‘principle of equivalence between earnings-related contributions and benefits was generally accepted as a fair one’ (Clasen et al. 1998: 145). At the political level, the principle of equivalence is relatively unchallenged and debates focus mainly on the problems of financing unemployment, on the one hand, and the extent of coverage, on the other hand. This underlines the predominant perception of benefits as ‘ “deferred” wages to which workers have a contractual right’ (Clasen 1994: 77). The idea of ‘earned’ acquisitions attaches the contribution records quite closely to the benefit rights so that the flat-rate norm is almost ruled out. Attempts to put forward a ‘non-productivist design’ (Offe 1994) of welfare

Table 6.13 Flat-rate or earnings-related benefits for the unemployed: Britain

More benefit for high income earner Flat-rate benefit Less benefit for high income earner No benefit

Highest income quartile

Middle income quartiles

Lowest income quartile

Unemployed

14.7 75.5

12.2 75.6

7.3 74.4

8.5 71.2

4.9 2.0

7.6 2.5

13.4 3.7

8.5 0.3

Source: British Social Attitudes 1996. Notes Question wording Suppose two people working for a large firm each became unemployed through no fault of their own. One had a very high income, one had a very low income. Do you think the very high earner should be entitled to (1) more benefit than the very low earner; (2) the same amount; (3) less benefit; or (4) no benefit at all? Not in the table: other answer and ‘don’t know’. Income measure: respondents’ income from paid work.

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policies, wherein neither earnings nor employment records but, instead, ‘citizenship’ is the basis for entitlement, are facing exactly this kind of normative and institutional rigidity which is difficult to overcome. Benefit effects: the paradox of giving too much and too little One prime distinction which has informed policy making and political thinking is that public responsibility should be restricted to those diswelfares that have not arisen from people’s own choices (Cohen 1989).23 For the moral economy one can also assume that the benefits given to the unemployed are judged by norms of individual accountability and behaviour. The behavioural component is important when we move on to the widely addressed ‘benefit-effects’ which are closely associated with the ‘dependency debate’. The issue at stake points to the fact that unemployment benefits provide an alternative source of income which might affect the attitudes and behaviour of the beneficiary. It has been argued that benefits can undermine the efforts of the individual to find work and that it impairs the preparedness to take up a low-paid job, to acquire new skills and to move to a new area. Assar Lindbeck (1994) suggests that the higher the unemployment benefits, the longer the duration of eligibility and the more limited the ‘work-tests’ are, the more accentuated are the negative effects on job searching and the willingness to accept job offers. Thus, it is likely that people will choose to stay unemployed. Nonetheless, it is highly disputed as to whether there is a strong link between unemployment benefit, on the one hand, and the level and duration of unemployment, on the other hand. In an overview of studies addressing this question, Atkinson and Micklewright (1991; see also Atkinson and Mogensen 1993) have found that evidence for the relationship between replacement ratios and taking up work is far from being robust. Most of the evidence available demonstrates that there are effects of benefits on behaviour, but they are less striking than often suggested, and they are certainly not the main cause for unemployment. Esping-Andersen (2000: 124) argues: ‘What is clear is that welfare state generosity cannot explain levels of unemployment; at most, it affects who happens to be unemployed.’ It seems that it is less the benefit level that produces employment re-entry but rather a number of flexible measures that enhance the ‘employability’ of those living on benefit. Some measures of the unemployment schemes are explicitly designed to encourage the benefit recipients to re-enter paid labour, in other words, to encourage them to be ‘actively seeking work’. This is ensured by active labour market measures such as training schemes, job placement assistance and wage subsidies. Welfare bureaucracies have enforced a close system of monitoring in order to warrant that beneficiaries return to work as soon as possible (King 1995). The second safeguard for a firm work motivation is the level and structure of benefits, the duration of

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entitlement and the eligibility rules. Liberal preferences are straightforward, assuming that generous benefits with only a little rigidity set disincentives for beneficiaries to take up work. In other words, the unemployed are suspected of being unwilling to work when benefits are ‘too’ high.24 Consequently, the British system has taken measures such as the ‘less eligibility’ principle which places the benefit level markedly below the respective market income and makes it rather uncomfortable. In Germany, the basis for benefit calculation is the last income, i.e. claimants receive a proportion of their last net earning, and the benefit level is aimed at income maintenance. However, there is also a clear gap between the transfer income and the market income. However, although there are a number of writings which suggest that providing ‘too’ high levels of benefit would have negative effects on behaviour, there are quite relevant arguments that emphasize the drawbacks of benefit levels that are ‘too’ low. Low state support can be harmful in terms of low labour force attachment, permanent marginalization and social isolation that lead to a ‘culture of unemployment’ (Engbersen et al. 1993) entailing values and beliefs that legitimate passivity. The lack of resources hinders participation in mainstream society and estranges people from prevailing social norms.25 Many of the programmes for the unemployed have been criticized as having the propensity to be constructed around the categories of inclusion and exclusion rather than being designed to ‘transcend such divisions’ (King 1995: 213). Thus, there is a danger that with the inadequacy of the programmes the division between citizens fully integrated into society and those rendered marginal will increase, causing a drifting apart for the long-term unemployed An elaboration of the ‘benefit effect’ issue as represented within the public mind shows that the two interpretative patterns do find resonance (Table 6.14). The British citizenry tends to adopt one of the two versions, either regarding the benefit level as too low – and thereby causing social hardship – or as too high – and thereby discouraging beneficiaries from finding a job. The latter view sees state unemployment compensation as a morally objectionable endeavour and provides reasons not to endorse a more comfortable level of unemployment benefit. In the table, people are also distinguished by their main source of income (market income, pensions, other transfer income) and the income group they belong to. One out of three people living on market income, pensioners and people from the high and middle income groups believe that the benefits are too high. People living primarily on transfer income (other than pension payments) and people in the low income section tend to agree less. Within empirical studies on these matters, the unemployed in Britain report an inadequacy of the benefit level forcing them to ‘juggle’ with their money and to depend on financial support from families and loans in order to cover the most urgent expenses. At the same time, they express a concern for the negative consequences of unemployment in

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Table 6.14 Unemployment benefits in Britain: too high or too low? Level of unemployment benefits (agreement in %)

Too low: Too high: cause hardship discourage from finding jobs

Neither

Market income Pension Transfer income

47.0 37.4 69.7

33.2 35.6 16.3

13.7 15.6 8.8

Highest income quartile Middle income quartiles Lowest income quartile

45.7 46.7 55.7

33.9 32.8 25.0

14.1 13.7 12.0

Source: British Social Attitudes 1996. Notes Question wordings Opinions differ about the level of benefits for unemployed people. Which of the statements comes closest to your view? (1) Benefits for unemployed people are too low and cause hardship; or (2) benefits for unemployed people are too high and discourage them from finding a job; (3) neither nor. Main income source of respondent and existing partner: market income – income from employment; pension – occupational and state pension, transfer income – other welfare benefits than pensions. Rows do not add up to 100 per cent, margins remaining are ‘don’t know’ responses. Income quartiles based on household income from all sources before tax (response rate 86.1 per cent).

terms of their social and financial situation and a desire to stop living on benefits and to get back to work again (Clasen et al. 1998: 183ff.). Empirically, Gallie and Vogler (1994) have shown that the unemployed who suffered greater financial hardship did not exhibit a greater preparedness to take lower-paid jobs. Despite this evidence, public anxiety about abuse and disincentive effects has informed the many attempts to reorganize the benefits system. In their comparative study of Britain and Germany, Clasen et al. (1998: 221) found that in Britain, where the insurance-based benefits are meagre and short-lived, there was, ‘ironically, an even greater official concern about the disincentive effects of benefits’. In Germany, the question of benefit effects has never been as heavily disputed as in Britain. Since unemployment benefits seek to maintain the living standard of those previously gainfully employed, the issue of ‘deserved benefits’ has overlaid the incentive issue. The policy makers interviewed in the study by Clasen et al. (1998: 128) regarded the vast majority of the unemployed as ‘keen to move off benefit and into paid work, not least since employment continued to be seen as “socially desirable” and conferring an “identity” in German society’. Although concerns about abuse or an adverse impact on work incentives were not entirely absent, there was nothing like the ‘moral panic’ as seen in Britain. However, Germany also experienced ‘shirker’ debates which may have

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influenced public attitudes towards the unemployed (see Oschmainsky et al. 2001; Mau 2001). The first, in 1993, was triggered by Helmut Kohl, who was the chancellor at the time, when he warned that Germany might become a ‘collective leisure park’, while the second major debate, in 2001, was caused by his successor in office, Gerhard Schröder, who stated that: ‘There is no right to laziness in our society.’ Looking at the data we find that the benefit-disincentive argument is shared by quite a considerable number of the people (Table 6.15). More than 40 per cent in West Germany, and 18 per cent of the East Germans, agree with the statement that welfare benefits make people less willing to work. To some extent the attitudinal stances of different groups vary according to their economic status and their stake in state security. People in secure employment are most likely to agree about the existence of benefit disincentives. At this point one could take the stances of public opinion solely as an expression of different views people have about the effects of unemployment provision, but since it is assumed that the ‘politics of interpretation’ relate the cognitive with the normative level these latent mechanisms of preference formation are of interest. One can hypothesize that the perceived malfunctions of the welfare state have an effect on the normative obligation people feel when they are asked to share resources. More specifically, attributing disincentive effects to unemployment benefits makes state engagement for the plight of the unemployed less desirable and less worth supporting. However, since the majority of people are rather uninformed about the concrete circumstances and mechanisms of these welfare issues, they are often influenced by media representations of Table 6.15 Benefit system sets disincentives, Germany Agreement (%)

West Germany

East Germany

All Secure employment Precarious employment Unemployed

42.2 45.9 36.8 39.1

18.3 22.9 16.9 17.3

Source: Allbus 1994. Notes Question wordings The level of benefits paid out by the social security system, such as cash sickness benefits, unemployment benefit and early retirement pension are a disincentive to people to work. Answer categories: (1) disagree completely; (2) rather disagree; (3) rather agree; (4) agree completely. (3) and (4) are summarized in the table. Precarious employment: people currently employed, but who experienced unemployment during the last ten years, people who expect to become unemployed or to have to take up a new job, people in short-term work (Kurzarbeit). Secure employment: people in employment without the attributes of precarious employment and not unemployed. Population between the age of 18 and 65: sample West Germany N ⫽ 1966, East Germany N ⫽ 928.

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the topic which tend to generalize single cases and to establish stereotypes. The depiction of the unemployed as passive welfare recipients is ‘creating as well as drawing on the division between those who apparently reap the comfortable benefits of welfare dependency and those inadequately rewarded labourers financing them’ (Golding and Middleton 1982: 107). Such an interpretative script might provide reasons for a defection from the collectivist welfare state arrangements; moreover, it can induce distrust in the relationship between welfare providers and welfare benefit recipients (see Hamann et al. 2001). To test this hypothesis several regression models have been carried out for the German case. First, the issue how employment position affects assumptions about benefits effects and support for state welfare was scrutinized (Table 6.16). Working in a secure employment sector turns out to have a positive significant effect on the incentive issue, while it negatively affects the agreement with the statement that the state has to safeguard that people have the means to meet their ends. While the strength of the effects differs, the patterns are rather similar in East and West Germany. However, the benefit disincentive effect is better explained by the employment status in East Germany, while the same applies to the issue of state responsibility for welfare in West Germany. Column four examines the effect of structural determinants on state responsibility for welfare controlled by the interpretative pattern of welfare disincentives. What we see in the West German case is that the partial effects of the structural determinants become weaker, suggesting that they work, in part, through the interpretative pattern. The independent contribution of the item ‘benefits reduce working motivation’ is ⫺0.101. Though the explained variance remains small, it increases one-third from 0.020 to 0.030. Overall, we find support for an underlying reasoning where ‘welfare providers’ who assume that too comfortable benefits lead to a ‘moral hazard’ are more likely to deny support, whereas people who have faith in the efforts of the unemployed are more likely to be in favour of support. In East Germany, the effect of the interpretative pattern is not significant, indicating that the benefit disincentive issue does not add much to the effects of the structural determinants. A similar analysis has been carried out for Britain starting with the structural determinants of the assumption of benefit disincentives and the support for unemployment provision (Table 6.17). The first regression analysis shows the structural effects of the income variable, the welfare recipient status and the market income status. With a weak effect, high income groups are more likely to believe that benefits discourage people to stand on their own feet, while both income source characteristics have a negative impact. In the second regression, with the attitudes towards the governmental responsibility for providing a decent standard of living for the unemployed as a dependent variable, only the income group turns out to have a negative impact on the attitudinal stance. However, if we include

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Table 6.16 State responsibility for welfare, structural determinants and the welfare disincentive issue: linear regression analysis, Germany

West Germany Secure employment Precarious employment Others not in labour force Unemployed (reference category) Benefits reduce working motivation Constant R-Square East Germany Secure employment Precarious employment Others not in labour force Unemployed (reference category) Benefits reduce working motivation Constant R-Square

Benefit disincentive

State responsibility for welfare Model 1 Model 2

0.095* (2.112) ⫺0.003 (⫺0.068) ⫺0.009 (⫺0.172)

⫺0.186** (⫺3.337) ⫺0.026 (⫺0.551) ⫺0.063 (⫺1.219)

– 2.268** (21.760) 0.009 0.108* (2.261) 0.012 (0.252) ⫺0.045 (⫺0.988) – 1.699** (23.714) 0.016

–

⫺0.167** (⫺2.922) ⫺0.015 (⫺0.317) ⫺0.053 (⫺1.004) ⫺0.101** (⫺4.392)

3.488** (43.488) 0.020

3.650** (39.588) 0.030

⫺0.168** (⫺3.566) ⫺0.136** (⫺2.919) ⫺0.062 (⫺1.392)

⫺0.168** (⫺3.528) ⫺0.144** (⫺3.055) ⫺0.070 (⫺1.564)

– 3.829** (81.583) 0.016

⫺0.046 (⫺1.394) 1.604** (25.601) 0.019

Source: Allbus 1994. Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficients ␤, t-values in parentheses. Question wordings Benefit disincentive: The level of benefits paid out by the social security system, such as cash sickness benefits, unemployment benefit and early retirement pension are a disincentive to people to work. State responsibility for welfare: The state has to safeguard that someone can meet his ends in case of sickness, plight, unemployment and old age. Answer categories for both: (1) disagree completely; (2) rather disagree; (3) rather agree; (4) agree completely. Secure employment: people in employment without the attributes of precarious employment. Precarious employment: people currently employed, but who have experienced unemployment during the last ten years, people who expect to become unemployed or to have to take up a new job, people in short-term work (Kurzarbeit). Population between the age of 18 and 65: sample West Germany N ⫽ 1966, East Germany N ⫽ 928.

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Table 6.17 State responsibility for the unemployed, structural determinants and the welfare disincentive issue: linear regression analysis, Britain Benefit disincentive

Structural determinants Household income quartiles

0.048* (1.988)

Main income source Market income

⫺0.141** (⫺5.637) Transfer income ⫺0.204** (⫺9.363) Pensions (reference category)

Interpretative pattern of benefit effects Benefit disincentive – Constant R-Square

3.008** (39.983) 0.035

Decent standard of living for the unemployed Model 1

Model 2

⫺0.218** (⫺5.222)

⫺0.212** (⫺5.658)

⫺0.079 (⫺0.345) ⫺0.060 (⫺1.479)

⫺0.026 (⫺0.643) ⫺0.033 (⫺0.909)

– 3.470** (34.353) 0.057

⫺0.453** (⫺14.588) 4.499** (38.878) 0.249

Source: British Social Attitudes 1996. Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficients ␤, t-values in parentheses. Income quartiles based on household income from all sources before tax (response rate for full sample 86.1 per cent, subsample 78.8 per cent). Main income source of respondent and existing partner: market income – income from employment; transfer income – welfare benefits other than pensions. Question wordings Benefit disincentive: If welfare benefits weren’t so generous people would learn to stand on their own two feet. Answer categories: (1) disagree strongly; (2) disagree; (3) neither nor; (4) agree; (5) agree strongly. Decent standard of living for the unemployed: Do you think it should or should not be the government’s responsibility to provide a decent standard of living for the unemployed? Answer categories: (1) definitely should not be; (2) probably should not be; (3) probably should be; (4) definitely should be. Sample size: second column N ⫽ 3103, others N ⫽ 993 (question asked only for a subsample).

the interpretative pattern of welfare disincentives in order to predict the attitudes towards unemployment provision, the structural effects become slightly weaker while the gross effect increases. The regression coefficient for the benefit disincentive is rather high and the explained variance aggrandizes markedly. The assumption that if welfare benefits were not so generous people would learn to stand on their own two feet explains most of the attitudinal variance, more so than can actually be explained by the income position and the source of income. The pattern suggests that the ideas people have about the effects of benefits on individual behaviour

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play an extraordinary part in structuring their political attitudes towards unemployment policies. This finding also strongly confirms that people engage with state welfare provision under the condition that the recipients are also assumed to be doing their fair share. Conclusion Unemployment is one of the critical complexes of the collective welfare provision because those in employment are compelled to shoulder the costs of unemployment, while those without a job face the difficulty of accessing the labour market. Therefore, the interests of both groups are not in accord with each other and may come into conflict. Although there is fairly widespread concern for the plight of the unemployed, the public does not display overwhelming solidarity with them. While a majority is in favour of state responsibility for unemployment provision, the support for more welfare expenditure in order to improve living conditions is rather modest. In West Germany, and even in Britain where benefits are rather meagre and many of the unemployed rely on means-tested benefits, there are significant proportions of the population which argue for a reduction in unemployment spending. With regard to attitudinal patterns throughout the electorate, there is a close relationship between job security and support for unemployment protection. However, the self-employed, who are excluded from the state schemes, are those least in favour of collectively provided income protection for unemployment. While the patterns for Britain and Germany are rather similar in this regard, they differ with respect to the type of benefit. Britons are largely in favour of flat-rate benefits, whereas it can be assumed that the German regime’s earningsrelated benefits are widely approved of. What has also been demonstrated is that the public are concerned about the repercussions which welfare transfers have on individual behaviour, and that this concern affects their readiness to support provision for the unemployed. In Britain, and in Germany, significant proportions of the population believe that welfare benefits discourage welfare recipients from taking up a job, and this interpretative pattern clearly has an impact on attitudes towards welfare provision. The results for Britain, in particular, suggest that the assumption of benefit disincentives undermines the commitment to the unemployment scheme. However, it has also been made clear that the widely held popular opinion that the welfare state damages economic incentives stands in contrast to the empirical evidence available (Atkinson 1993: 297). Nonetheless, since public perceptions are rather headstrong and place little faith in sophisticated scientific knowledge, the moral economy of unemployment provision is deeply interspersed with such world views and the related vocabulary of motive.

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Old age: transfers from the active to the inactive Intergenerational transfers and equity The advent of the welfare state has transformed the character of old age and the relationship between the generations. The establishment of public pension schemes has led to an ‘institutionalization’ of retirement as a normal part of life’s course which is relatively independent of the actual physiological decline. Thus, to consider retirement as a distinct phase in one’s life has become the ‘core element of the publicly ratified moral economy’ (Kohli 1987: 139). Public support for the elderly and the definition of a retirement age is designed to exempt the elderly population from the necessity to work. Historically, the principle of seniority as a particular position the elderly person held within the community or family was superseded by a social category of old age by which access to an age-based income entitlement system is regulated. By this means, old-age status has been closely tied to the system of welfare state intervention, requiring, permitting or encouraging exit from the labour market. Myles (1989: 6) points out that one cannot conceptualize old age without referring to the welfare state because public pensions and welfare services ‘now provide the material base that determines the life chances and opportunities available to individuals at the end of the economic cycle’. Old-age benefits are intended to be a replacement for the market wage, in other words, they should not only prevent social destitution but should also enable the elderly to enjoy a dignified and adequate existence. The design of most of the public transfer systems redistributes resources between the younger and older generation, and places the burden of financing old-age subsidies on those in employment. The literature on this subject generally describes the normative logic of intergenerational transfers in terms of an ‘implicit contract’ between working-age adults and people of retirement age. The idea of a generational contract regulates the relations of solidaristic exchanges between generations necessary to meet the financial requirements of the pension funds. It can be read as a ‘metaphor intended to enable us to understand and to predict changes in popular support for old-age entitlement programs’ (Myles 1989: 106). A pay-as-you-go system transfers money from the economically active part of the population to the pensioners by promising the current contributors that they will be future beneficiaries. The system can be interpreted as an ‘obligation to support the economically inactive elderly during employment age, thereby earning the right to be supported in the later life-cycle by the succeeding, economically active generation’ (Hinrichs 1997: 7). It is a relay idea which regulates the succession of generations, giving the younger generation the responsibility for supporting the older generation, and thereby establishing their own entitlement.

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Due to the redistributive nature of the pension scheme the system relies on shared assumptions about fairness in relation to the efforts and merits of the elderly and how to recompense them. These assumptions contain a ‘clear element of reciprocity based on morally bounded claims and expectations’ (Kohli 1987: 128) that cannot be captured by the notion of actuarial fairness alone. A morally grounded solidarity concept regarding pensions suggests that society owes elderly people a decent living in return for their working life. However, a social consensus on transfer policies and the approval of such redistributions can only be achieved if there are some collectively validated beliefs about the rightness of such transfers and ‘if each generation is prepared to honour the moral obligation to both the preceding and the succeeding generations’ (Johnson et al. 1989: 6). This moral demand can be facilitated by binding institutional arrangements which compel each succeeding generation to take over responsibilities for the old. The continuing identity of institutions ‘connects the “inhabitants” of time t0 with those of almost any future time tn, thereby allowing the latter into the circle of possible objects of moral action’ (Offe 1992: 82). In the social-philosophical treatment of generational relationships, as put forward by Rawls (1971: 284ff.), the idea of contractualism and mutuality plays a central role. He claims that persons of different generations have duties and obligations to one another just as contemporaries do. That each generation ‘inherits’ social obligations from the preceding one – i.e. that they are not free to chose the ‘implicit contract’ – and that past public policy decisions are passed on to future generations can be problematic for the issue of justice between generations. Rawls believes that each generation must preserve advances in culture and civilization, putting aside savings and abstaining from immediate gains so that longterm improvements are possible. From this perspective, the obligations placed on the younger generation to pay for the welfare of the retired can violate the precept of a fair distribution of generational burdens if the costs imposed are too excessive. Large-scale shifting of resources between generations can restrain the advances of the succeeding generation. Therefore, although there is a moral argument for supporting the preceding generation, the question remains as to what extent we can call on future generations to contribute. Thompson (1989: 33), for example, has warned that the welfare state arrangements tend to provide profits for the generation of scheme initiators ‘at the expense of the gullible who join later’. In this context, the concept of intergenerational equity serves to safeguard the transfers for old-age security by promising a balanced cost–benefit relation with regard to the life span of all generations. Intergenerational equity exists ‘if the lifetime balance of welfare-related (fiscal) burdens and benefits is the same for any preceding or succeeding birth cohort’ (Hinrichs 1993: 23). The fact that the economically active popu-

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lation is burdened with high contribution rates in order to finance the pension system needs to be countervailed by ‘commensurate’ returns during a later stage in life. This refers to the life course as a whole, whereby any generation is a welfare beneficiary and welfare contributor at different life stages. Generational equity stands for a balance between the contributions made to the pension system and the benefits received, and for the idea that some cohorts do not profit at the expense of others. In other words, it is suggested that the distribution of burdens and benefits remains – in relative terms – constant over time. The recognition of generational inequities, on the other hand, can endanger the legitimacy of the public scheme and lead to a withdrawal of support (Moody 1988). Along this line, the ‘generational accounting’ approach (Kotlikoff 1992) attempts to address the equity issue by drawing up a balance sheet of contributions paid to the state against the allowances and benefits received throughout the lifetime of each successive cohort. The proponents of this approach claim that ‘generations accounting’ does not impose a specific norm, it simply refers to a norm of general interest, ‘namely, that generations born in the future should not pay a higher share of their lifetime income to the government than today’s newborns’ (Auerbach et al. 1994: 84). However, while the equity idea might serve to warrant the legitimacy of the pension transfer system, there is a good deal of politics involved in the distribution of burdens and benefits. Not only actuarial criteria of generational equity, but also social objectives determine intergenerational transfers (Attias-Donfut 1995). Although pension payments rely heavily on a contributory record and can, in some sense, be interpreted as the ‘return’ of foregone payments to the insurance fund, they are by no means merely restitutions of payment made. Rather, they aim at an apportionment of the national wealth between the active and the inactive. They incorporate some sense of solidarity between generations and thus denote ‘an immunity to the temptation of individual utility maximisation’ (Hinrichs 1997: 6). The notion of generational equity, therefore, needs to be amended by the notion of the fair share the elderly should have in the national wealth given a certain socio-economic stage of development. Social insurance and the logic of ‘earned entitlements’ Although public transfer flow from the employed to the retired is supported by the notion of generational solidarity, insurance-based retirement pensions can also be viewed as emphasizing individual return expectations or forms of balanced reciprocity. From the individual perspective the system of pension insurance operates, in part, like a savings bank, compelling income earners to put aside a significant share of their income for a later period in life. It has been suggested that most benefits are self-financed over people’s lifetimes rather than being paid

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for by others. As Hills (1993: 19) points out, in the British case: ‘Nearly three-quarters of what the welfare state does looked at in this way is like a “saving bank”; only a quarter is “Robin Hood” redistribution between different people.’ Contribution payments build up an entitlement record and the benefit payments received at the end of one’s life are justified by the foregone contributions of the recipient. In this way, the insurance rationale – or more specifically the correspondence between individual contributions and entitlements – furnishes the ‘generational contract’ with a powerful instrumental incentive. A good deal of public support for the pension system, therefore, derives from return expectations which are morally undemanding. However, as Kohli (1987: 128) has stated, the pension system mixes instrumental elements in the sense of calculable returns for investments with reciprocal elements in the sense of a normative system of mutual obligations. The decisive point, however, is that the former elements are ‘embedded’ in the latter; therefore, it is feasible to interpret retirement in terms of the moral economy. However, there are some institutionalized precautions that ensure that the elements of redistribution remain limited and that the individual insurance elements are well preserved. The first is represented by the distinction between the insured and the non-insured that precludes people who are not members of the ‘insurance community’ taking benefits. The pension insurance funds can be regarded as tutelary property of a half collective, half private nature on which only the insurance members can make legitimate claims (De Swaan 1988: 165–6). This exclusiveness assures a relative identity of contributors and beneficiaries with regard to a longer time horizon; in other words, every contributor can expect to benefit in the future. The pension scheme realizes mainly horizontal, intertemporal redistribution, and since earmarked contributions are made, the system is, to some extent, protected from political interference. The second element that enforces an individual account refers to the qualifying conditions which establish pension entitlements, namely the employment record and the contributions paid. In both Germany and Britain, labour market participation is the key mechanism for access to the state insurance scheme. The earnings-related contributions to the insurance fund are made by the employee and the employer and have a mandatory character. They are levied from earnings similar to a payroll tax. Therefore, the transfer payments are largely perceived as ‘earned benefits’ in a double sense: as a restitution of contributions made during the years of employment and as a reward for the economic merits one has achieved.26 The third element, the equivalence principle, has much more importance within the German system than within the British, in which the

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income-related supplement plays only a minor role. However, this principle comes close to the conception of actuarial fairness because it constructs a close relation between ‘insurance premiums’ paid and the level of benefits. The logic behind the idea that contributions, as well as pension payments, are income-related is simple and compelling: those who pay more are entitled to receive more. The outcome is a graduated benefit structure which reflects – in relative terms – the income position the recipient occupied in the labour market. In the German case, the replacement rate, in other words the value of a pension as a proportion of the employee’s wage during some base period, is rather high so that the income maintenance objective can be attained. Again, such a measure distributes entitlements according to labour market performance and is based on robust normative assumptions concerning individual efforts. Its rather technical procedures are set up in a way that conveys ‘to each worker-citizen what to expect, how much, and in which order’ (Offe 1991: 128). Pension politics and pension evaluation Britain has a relatively basic and uniform pension system, while Germany has adopted a highly graduated system of earnings-related pensions. The stratification effects of these two systems are rather different: British pensioners are more likely to be reliant on social assistance benefits than their German counterparts. The poverty rate amongst the aged is comparatively high (see Korpi and Palme 1998; Hauser 1999). It has also been shown that the income of pensioner households, as a proportion of the average of all households, is much higher in Germany than in the UK (Hedstrøm and Ringen 1990). In the German case, empirical studies confirmed that the relative status obtained by the recipient during his working life can be maintained and that his income situation does not significantly worsen in old age. The incorporation of East German pensioners into the pension insurance has even prevented social hardship during the transformation process and made East German pensioners one of the groups that benefited from unification (Mathwig and Mollenkopf 1996: 129). Second, the German pension system generates substantive inequalities amongst the elderly and gives a privileged status to people with a long employment biography. The way the pension system is linked to the market system leads to a corresponding old-age income formation. The British elderly living on state pensions, in contrast, are ‘equal but poor’ (Myles 1989: 126), in other words, income inequality is not particularly high and there is a large section of pensioners who are compelled to subsist on low incomes relative to the national standard of living. The existing inequality amongst the pensioners is mainly a result of private and occupational pensions rather than the state system. In terms of inequality, German pensioners are more unequal than the overall

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German population, whereas income inequality amongst the elderly in Britain remains below the average inequality (Korpi and Palme 1998: Table 2). According to Esping-Andersen’s (1990: 50) data, the degree of de-commodification in old-age pensions is rather similar in Germany and the United Kingdom, while the pension replacement rate in the UK is markedly lower than in Germany. The German model of pension provision is a contributory insurance model which is linked to gainful employment. The model covers about 80 per cent of the labour force. The joint contributions of the employer and the employee to the insurance fund represented 19.2 per cent of the gross income in 1997. Nearly three-quarters of the pension fund is financed by contributions; the final share comes from the Federal Government. The majority of pensions paid out of the pension fund are genuine contributory insurance pensions (73 per cent) (Datenreport 1999: 199). Within the statutory pension system there are pension schemes for workers, employees and miners, while the pensions for civil servants and farmers are provided for by separate schemes. Pensions amount to one-third of the social budget, or one-tenth of the GDP, and thereby represent the biggest single bulk of welfare expenditure. The social policy aim of status maintenance is operated by a pension formula containing individual components, such as income during employment and the time of retirement, and general components which relate the pension to the actual level of income (see Fachinger 1994). A person with 45 insurance years and an average income during his entire employment period would receive a pension of 68.2 per cent (in 1992) of the average net income. The role of ‘income packaging’27 as the only possibility for maintaining the standard of living diminished with the evolution of pension insurance during the 1960s and 1970s. The pension formula guarantees a dynamic development of pensions by linking the level of pensions to general income development, and thereby ensuring an apportionment of the increasing national wealth in which the pensioners ought to share. It is one of the central traits of the German pension system that members have strong return expectations and a firm belief in ‘deserved’ entitlements. However, the concept of fairness which is represented within the pension system is a general one of ‘past productivity’ rather than one of direct complementarity of contributions and benefits.28 In reality, the idealized employment biography does not represent the majority of pensioners and the discontinuous forms of employment have left gaps in terms of comprehensive coverage. There are also apparent gender differences due to different employment patterns for the two sexes: 80 per cent of male pensioners and less than onequarter of female pensioners have a record of 35 insured years and more. The formerly employed male pensioners received, on average, twice as much as women due to their better contributory record (Datenreport 1999: 200).

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In terms of the subjective assessment of pension adequacy (Table 6.18), the German system scores very well: more than 77 per cent of West German pensioners consider the level of pensions to be adequate. Although the result is less impressive with regard to the question of whether the pension payments are considered as equitable returns on contributions, half of the pensioners would still agree with this. Welfare research has emphasized that the picture of the ‘poor aged’ is not appropriate and that West German pensioners have gained a good income position (Schölkopf and Sacher 2000: 385f.). Apparently there are marked welfare differences between East German and West German pensioners, but compared to the position at the outset of the social transformation, the situation for pensioners in the East has improved significantly. With unification, East German pensioners were integrated into the West German pension insurance with some transitional regulations that kept the pension level below the West German level. Since East German employment history and net-income development are taken as the basis of pension calculation, as in the West, the average pension level in the East has increased (Schölkopf and Sacher 2000). A new gap is expected to come when the early-retired and the East German unemployed arrive at retirement age. Since the survey data about pension satisfaction were polled in 1992, they are only a snapshot of a dynamic development. Even at this stage, East German pensioners tended to be relatively satisfied with the level of pensions, although only about 30 per cent perceived them as an adequate return for their (rather fictitious) lifetime contributions. The latter may be caused by the current system’s tendency to devaluate some of the biographical achievements of the present pensioners, especially those closely associated with the former state system. Table 6.18 Pension evaluation by the retired Agreement (%) Do you think the pensions you receive now are: Completely adequate Just about adequate Taking into account the contributions you made during your working life, do you receive a pension that allows you to lead the life you would like to lead? Definitely yes Probably yes

Britain

West Germany

East Germany

9.3 39.1

23.9 53.3

9.1 51.9

15.5 23.8

19.4 29.0

7.0 23.9

Source: Eurobarometer 1992. Notes Other answer categories: first question somewhat inadequate/very inadequate; second question probably not/definitely not. Retired population: Britain N ⫽ 213, West Germany N ⫽ 185, East Germany N ⫽ 232.

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The Beveridge rested on the firm belief that the state should only provide a basic pension above which private insurance could operate. The pension scheme established thereafter provided flat-rate benefits intended to put a floor under the market, not to replace it. The notion of equality, which was advanced (flat-rate contributions and flat-rate benefits), was based on the implicit assumption that flat-rate benefits should be equated with low or modest benefits. With the social security reforms of the 1970s the flat-rate principle was undermined by the Conservatives introducing earnings-related National Insurance contributions, and also by the Labour government, which put in place an earnings-related pension supplement, the SERPS scheme. Although the redistributive element of the pension was reduced by these changes, the move towards more actuarial principles was only partial (see Barr 1991). During the 1980s the number of people with earnings-related pension supplements increased so that by 1994, 42 per cent of all pensioners had a SERPS element. This increase in pensions gained through the maturation of the SERPS scheme led to a relative decrease in pensioners who were compelled to apply for means-tested benefits (Evans 1998). Nonetheless, the SERPS did not safeguard a constant upgrading of the pensions. There were severe reductions with regard to the prospective development of the pension scheme, and the replacement ratio of the pension to the incomes of those in work has declined. During the 1980s the increase in pensions was slowed down because they were related to prices rather than earnings. The effect was that state expenditure on pensions as a share of the GDP could be reduced, although only by a margin, from 4.7 per cent in 1982–3 to 4 per cent in 1994–5 (House of Commons 1995: lxvi). The basic pension is not designed to satisfy the upper and middle classes, because the income replacement level is rather low. The encouragement to invest in private or occupational provision and the introduction of ‘portable schemes’ has resulted in a mixed pension system with considerable importance placed on non-state supply. The proportion of pensioners who had incomes from occupational or private schemes rose from 14 per cent in 1979 to 63 per cent in 1993 (DSS 1995). Naturally, this kind of provision does not cover everyone and it is mostly beneficial for the better-off. It is not surprising that data have demonstrated that the income for the average pensioner household compared to the average for all households is lower in Britain than in welfare states such as Germany or Sweden (Hedstrøm and Ringen 1990). Politically, this shift has created a divided constituency or, in Titmuss’ (1958) words, ‘two nations of retirement’: one part with a strong, and often exclusive, dependency on a low level state pension and another part with an income package containing the basic pension plus non-state provision. State pensions are financed by weekly contributions made by all employees and the self-employed on an earnings-related basis (up to a maximum contribution level) to the National Insurance Fund. Employers

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also have to pay contributions for their employees and there is an Exchequer contribution29 to the fund. In general, the insurance works on a payas-you-go basis, which means that current contributions are used to meet current demands. One can view the contributions to social insurance as a form of hypothecated taxation. The individualized contribution record, which constitutes eligibility, fosters the perception that a pension is somehow ‘earned’. Nonetheless, the relation between contributions and benefits remains rather vague and ‘certainly does not match any clear actuarial principles’ (Hills 1993: 44). The pension system is not very well insulated from political contingencies and not as firmly rooted in the idea of subjective property rights as in the German system. In contrast to the German system the management of the funds is done by the central government with no involvement on the part of the contributors or the social partners. Past development has shown that political moves are not overly sensitive towards protecting contributors’ interests and that benefits people had paid for have been abolished (Pierson 1994: 69ff.; Glennerster 1997: 262). The data in Table 6.18 suggest that just about half of the British pensioners are satisfied, and less than 40 per cent consider the pension payments as fair returns. Only one out of ten pensioners says that the pensions they receive are completely adequate. It has been reported that the actual amount of the basic state pension was generally regarded as too low and not sufficient to live on (Williams et al. 1999: 62.). The Hedges (1998) study found that there was a clear wedge between those pensioners depending solely on the state pensions and experiencing social hardship, and those with private or occupational pensions who tend to be more comfortably off. In the public mind the state pension system tends not to provide enough, neither with regard to enabling people to live a decent life nor in terms of ‘fair’ returns for contributions made. By the same token, Williams et al. (1999: 4) report: ‘State schemes did not have the image of giving good returns in comparison with private schemes, and the assumption was that this discrepancy would increase over time.’ Welfare generations and forms of solidarity With the question of whether or not people might endorse the transfers to the elderly, one also has to consider how the language of ‘rates of return’ and the ‘generational equity’ issue enter the moral economy of pension provision. Both have been vividly addressed by public debates. In this context the pay-as-you-go principle has disclosed its Achilles heel, namely the strong dependency on long-term institutional commitments and stability. These stability conditions are not only related to rather technical issues such as the size of succeeding generations and their ability to contribute enough money to the insurance fund, but also to the question of

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motivation. It seems that institutions must not only be compelling enough to convince the working generation to become insured, but they must do so by promising that they can exert the same compulsion on successive generations. Thus, the question of intergenerational solidarity becomes closely associated with welfare state development in general. Research with an interest in pension politics has identified ‘welfare state generations’ that are determined by the stages of welfare state development (Thompson 1989; Leisering 2000). For the German case, it was said that the pressures on the welfare state make the pension system less profitable for the younger generations (Leisering 2000). Calculations of the ‘internal rate of return’ suggest that – on the condition of an unfounded scheme – ‘each birth cohort will make a “worse deal” than the preceding one’ (Hinrichs 1998: 14). Similar findings are at hand for Britain, suggesting that although most generations will get nearly as much out of the system as they have put into it, the scaling back of the welfare state can lead to a situation where the current working generation ends up ‘getting rather less out of the system than they put in’ (Hills 1993: 21). Nowadays the younger generation, so it is hypothesized on an attitudinal level, expects less from the welfare state and is prepared to search for other forms of social provision (see Van Kersbergen 2000: 29). Thompson (1989, 1992) has argued most forcefully that the implicit contract between the generations is endangered because the welfare state has created generations of lifetime ‘winners’ and ‘losers’. According to him, successive cohorts of citizens ‘because of their varied birthdates are accumulating contrary experiences of what it means to live in a modern welfare state’ (1989: 35). The first welfare generation, those reaching adulthood between the end of the Second World War and the end of the 1960s have secured for themselves the main benefits of the post-war welfare state. They did not only heavily profit throughout their lives from diverse benefit schemes and the tax-system, they were also successful in establishing pension schemes that provide comfortable levels of economic security for their aged at the expense of the young. The situation becomes even more troubling if one takes into account the fact that this welfare generation arrives at old age with assets and incomes unlike those of their predecessors, and that they enjoy greater economic security than many younger households. The younger, in contrast, who strive for economic survival and who are confronted with the risk of unemployment, are described as increasingly reluctant to comply with the implicit generational contract. It has been argued that there ‘can be no justification for a pension scheme that takes from poor parents and children and gives to rich pensioners’ (Johnson et al. 1989: 14). Following this, Thompson (1992: 231) has raised the questions that affect the core of the moral economy of the pension system:

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Why should the young adults of the 1990s and beyond feel bound to pay for the welfare state of their predecessors? What bonds, what obligations, what contract requires this of them? What possible moral basis could such an exchange have? Why would they not argue that there now is no contract between generations, because it has been voided by the behaviour of their elders? Under the assumption that the pension system at work involves potential resource conflicts, an empirical approach would need to look at generational differences in attitudes concerning the provision for the aged. The findings in Table 6.19 show that all British generations are strongly in favour of state responsibility for old age and that there is a strong demand Table 6.19 Attitudes towards pensions policy by age cohorts Britain

West Germany

Government responsibility*

Definitely/probably (%)

⫺29 years 30–39 years 40–59 years 60– years

95.6 98.5 97.7 98.0

Government spending*

More/much more (%)

⫺29 years 30–39 years 40–59 years 60– years

64.2 79.4 79.4 85.6

Generational contract**

Agree strongly/agree slightly (%)

⫺29 years 30–39 years 40–59 years 60– years

87.4 90.3 92.9 89.5

94.5 96.8 96.2 96.6

47.0 41.2 41.9 48.7

79.4 75.9 82.3 91.5

East Germany

96.4 97.3 98.8 99.7

51.2 50.3 58.5 73.6

86.0 86.8 87.1 94.6

Source: *ISSP 1996, **Eurobarometer 1992. Notes Question wordings Government responsibility: Do you think it should or should not be the government’s responsibility to provide a decent standard of living for the old? Answer categories: (1) definitely should be; (2) probably should be; (3) probably should not be; (4) definitely should not be. (1) and (2) are summarized in the table. Government spending: Should the government spend more or less on old age pensions? (remember that if you say ‘much more’, it might require a tax increase to pay for it). Answer categories: (1) spend much more; (2) spend more; (3) spend the same as now; (4) spend less; (5) spend much less. (1) and (2) are summarized in the table. Generational contract: Those who are now working have a duty to ensure, through the contribution or taxes they pay, that elderly people have a decent standard of living. Answer categories: (1) agree strongly; (2) agree slightly; (3) disagree slightly; (4) disagree strongly.

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for more spending. Williams et al. (1999: 5) similarly found that ‘there was a strong expectation and desire that the state should be responsible for providing a basic level of retirement income. The general feeling was that this should be higher than the current level of the basic state pension, enabling people to live without hardship and without the need to claim income related benefits.’ People give priority to spending on state pensions, far more than they do to other benefit types such as unemployment benefit, child benefit, or benefits for disabled or single parents (Brook et al. 1996). However, according to our data there is an age gradient in the preference for pension spending. The elderly, whose tangible life circumstances are strongly affected by the low standards, are the strongest supporters for higher spending, while the succeeding cohorts fall behind. Nonetheless, the commitment to the generational contract is, however, rather unanimous with regard to the different cohorts. What we also know is that the majority of British people are in favour of a universally available flat-rate state pension for those without an adequate private pension. The authors of the British Social Attitudes report found that the ‘state’s desired role, it seems, is to give equal payments to all, rather than earning-replacement along continental European lines’ (Hills and Lelkes 1999: 14). The figures for Germany do not seem to suggest that there is a growing wedge between the generations (Table 6.19). There is overwhelming support for the statement that it is the responsibility of the government to provide for the elderly. As in the British case the spending issue shows some generational differentiation in the East, but a rather uniform response in West Germany. Furthermore, and in contrast to the UK data, the demand for more spending is not as strong in West Germany, with half of the respondents expressing a relative contentment with the current level. However, we also know that they are not ready to accept major cuts in pensions (Roller 1999: 27). If we look at the groups which are most affected by pension policies, the employed who contribute to the pension fund and the pensioners themselves, we do not detect sharp group divisions (not documented here). The attitudinal differences in West Germany are remarkably small, and it could be argued that the institutional design gives little reason for such group-specific perceptions since both groups are well integrated. East German pensioners, in contrast, are markedly distinct in their preference for spending. This finding might be explained by the persistent pension gap between the East and the West. Asked whether it is a duty of the younger generation to ensure a decent standard of living for the elderly, there is high support, on the one hand, but some degree of age variation, on the other hand. On the issue of compliance with the ‘generational contract’, the younger generation in West Germany tends to be less unanimous than in Britain, although four out of five still agree that it is the duty of the working generation to ensure that the elderly have a decent standard of living.

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What do the empirical results tell us? First, it is strongly suggested that the public duty to provide for the old is a well-established social norm. More precisely, it is normatively entrenched that the responsibility for people in retirement should be collectively shared, that the state should be in charge of it and that there is a ‘public liability’ for the working generation to finance the pension system. Second, there are no major signs of a generational conflict that would reaffirm the assumptions of the demise of the ‘generational contract’. Even young respondents are strongly in favour of a state responsibility for retirement provision and the vast majority complies with the arrangement of old-age support. A small age bias regarding this issue can only be found in West Germany. Research of a different kind which focuses more on the link between the family and the state has, similarly, come up with the result that there are – in contrast to many hypotheses – no indications for a confrontation of generations and, therefore, the talked-about ‘myth of generational conflict’ (Arber and Attias-Donfut 2000). As far as the attitudinal level is concerned the data here confirm this finding. In this context, economic research has shown that the younger generation is willing to contribute to pay-as-you-go financed plans, even if alternative investment choices are available (Veall 1986). Experimental studies could provide evidence for the effects of altruism and fairness on people’s preferences, and that the utility of individuals is not only determined by their own current and expected future incomes. Moreover, it has been demonstrated that the incomes of the older generations and the sense of generational justice have an impact on people’s utility. The young attach a positive value to the pay-offs to the elderly generation. People’s evaluation of public pension plans discloses the substantial role of ‘intergenerational altruism’ that underpins the public transfers from the young to the old. The upshot is that most people seem to be prepared to maintain a pay-asyou-go system for the sake of the well-being of the older generation, even if this may detract from income maximization (Van der Heijden et al. 1995). Thus, the moral economy of pension schemes rests on the relatively firm ground of a collectively shared sense of fairness and social justice towards the elderly. Another type of argument that has received attention in this context is the relation between the publicly administered transfers and private transfers. In recent years a number of researchers have stressed that the public transfers from the young to the old interact with private transfers from the old to the young. Against the substitution thesis that family transfers are crowded out by public transfer systems, it was found that there are still substantial private transfer flows between generations, mainly from older to younger. It has been said that public transfers from the working population to pensioners are in part ‘returned’ by the latter through private transfers; a fact which diminishes the potential conflict over public transfers (see Kohli et al. 2000: 89; Szydlik 2000). Accordingly, the pension

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system has not set the old against the young, but rather ‘the public contract between generations is a model of generational solidarity from which private contracts between family generations are negotiated’ (AttiasDonfut and Arber 2000: 18). The experience of exchanges within the family context, therefore, can ‘suppress thinking in “we” and “they” categories while it enhances “anticipation effects” on the part of the young’ (Hinrichs 1993: 14). On these grounds it is arguable that the moral economy of pension transfers gains additional legitimacy by flows of private and inter-vivos financial assistance given to the succeeding generations. The macro-social solidarity with the aged is complemented and stabilized by private transfers in the opposite direction. Institutional stability and public confidence Pension arrangements are quite peculiar because they expect their members to have a ‘telescopic’ vision of their own future. Pension payments or pension decisions made in the early stage of one’s professional career, take effect in the later stage of the life-course. Mandatory schemes administer and regulate people’s efforts to shift income from their active working years to old age. Since the arrangements were not set up as capitalreserve systems, but instead as pay-as-you-go schemes, the benefits offered at the end of one’s working life are not tied to contributions by actuarial criteria. They are usually financed through the insurance contributions of the current working generation and supplemented by governmental revenues. Large-scale pay-as-you-go systems have the tendency to induce unexpected and extraordinary costs, because of the system maturation, the growth of the aged population or the loss of revenues due to unemployment and early retirement. These distorting effects are the main reason for state intervention. However, every political intervention has broad implications for the binding forces of the institutional arrangements, since every shift affects the distributive interests of the members and makes the system appear unstable. Motivational reproduction can only be secured if the ‘insured have every reason to expect “security” because the system is stable and reliable in the long run’ (Hinrichs 1998: 9; see also Mau 1998). Frank Field (1996: 26–7), former Minister for Welfare Reform within the Blair government, has taken up this crucial issue: An unspoken assumption about today’s welfare state is that of trust. In a pay-as-you-go scheme, where today’s contributors do not build up capital sums, but merely pay today’s benefit bills, trust that future generations will do the decent thing and continue to pay, so that today’s contributors can later draw benefits, is pivotal. The depletion of the state-administered pension system casts doubt on whether the money contributed to the pension fund will lead to equitable

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returns, and whether the succeeding working generation will equally put their faith into a public system. If the scheme is wound up or altered to the disadvantage of the current contributors, this will cause frustrated expectations. Thus, for the individual bound to invest in a reliable pension portfolio, the quality of a public scheme heavily depends on its long-term prospects. Getting the regulations right means not only that people can be confident that their pensions are secure, it also creates a stable environment in which informed decisions about personal pension portfolios can be made. Only if the system (and its political environment) is compelling enough to make people believe that there will be an equitable redemption of benefit entitlements – in short, if they trust the pension system – can it count on loyalty. In Germany, the issue of the future of the pension system has received a lot of media attention, causing a widespread feeling of unease amongst the population. The problems of finance, the insecure future of the social security system and the unclear reform perspective have induced a rapid loss of trust in the statutory pension system (Bulmahn 1997). Even at the beginning of the 1990s people in West Germany were sceptical about the future of the state pension system (see Table 6.20). A large majority expected fewer benefits from the state. It is interesting to note that this perception is shared by all the cohorts in question and we do not find a linear relation indicating that the younger the people are, the more Table 6.20 Future expectations and solidaristic commitment by age Less pensions in the future

Britain

West Germany

East Germany

67.9 62.2 69.5 65.0

46.4 40.4 39.2 38.4

Yes (%) ⫺29 years 30–39 years 40–59 years 60– years

56.0 61.1 64.9 54.4

Concern about future pension adequacy

Agree strongly/agree slightly (%)

⫺29 years 30–39 years 40–59 years

64.4 69.9 75.1

68.5 73.5 60.0

76.8 77.4 86.8

Source: Eurobarometer 1992. Notes Question wordings In the future there will be more elderly people than there are now. Do you think that people will get less pensions for their contributions? Answer categories: (0) no; (1) yes. I’m worried about how adequate my pension will be. Answer categories: (1) agree strongly; (2) agree slightly; (3) disagree slightly; (4) disagree strongly. (3) and (4) are summarized in the table.

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sceptical they are with regard to their future pension. The East German data suggest a lesser concern for the decreasing pension level, but this can be explained by the ongoing process of pension adjustment which was expected to result in a similar benefit level to that which existed in the old Länder. Nonetheless, a large majority of East Germans were not convinced that the pension they will receive when they retire will be sufficient. Here one finds that the younger the people are, the less pension they expect in the future, but the closer they are to the retirement age, the more they are concerned about this. In general, there is good evidence that the German public tends to have serious doubts regarding the reliability of the existing scheme and the maintenance of current benefit standards. This result has been confirmed and substantiated by a number of other studies (e.g. Bulmahn 1997; Föste and Jan␤en 1997; Roller 1996). The British administrative and legislative process related to the public social security pension has provided little opportunity to develop a lasting consensus regarding the objectives and standards of pension policies. Whenever political parties have taken office they have started to implement reforms and to adjust the benefit level according to social expenditure strains. The mixed structure of the public pension allowed reforms to be initiated ‘without engaging in a public confrontation with the pensioners en masse’ (Ross 1998: 15). Also the process of ‘implicit privatization’ (see Pierson 1994: 58ff.) has contributed to a substantial shift from public to private provision; motivated by the fact that state pensions were neither perceived as a reliable or as a ‘worthy investment’. Hence, the facilitation of ‘institutional trust’ in the public pension system was never high on the public agenda. On the contrary, the insecure image of the public system has been used to encourage people to invest in private pensions and to weaken the relative position of the basic pension. Many people have made an effort to achieve higher and more reliable retirement incomes by channelling resources into the private sector. The Thatcher reforms in support of private provision had a push-and-pull character: ‘bribing’ people to take up private provision via rebates and at the same time introducing a less attractive uprating of the basic pension (prices rather than earnings). In reaction, the public is not very confident with regard to the pensions’ equity criteria: the data presented in Table 6.21 provide striking evidence for the widespread belief in diminishing returns. A large proportion of the population expects less pensions in the future and is worried about this. The older age group (people between 40 and 59 years old), in particular, are rather concerned about the adequacy of their pensions. But does the widespread assumption of diminishing returns truly diminish the norm of ‘generational reciprocity’ as has been reasoned in some parts of the relevant academic literature? Or, more concretely: how does the assumption of diminishing returns affect whether people feel a moral obligation to provide for the elderly? Table 6.21 displays the coeffi-

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Table 6.21 Disapproval of the ‘generational contract’: Logit model Disapproval of the generational contract

Gender (1 ⫽ women) Income quartiles (1 ⫽ lowest; 4 ⫽ highest) Age (3 groups) Worried about future pension adequacy Less pension in the future Constant Chi 2 (df 5) model improvement

Britain

West Germany

East Germany

⫺0.375* (0.151) 0.022 (0.308) ⫺0.028 (0.183) ⫺0.305* (0.148) ⫺0.280 (0.310)

⫺0.128 (0.106) 0.487* (0.215) ⫺0.049 (0.122) ⫺0.174 (0.119) ⫺0.203 (0.220)

⫺0.331* (0.127) ⫺0.113 (0.242) ⫺0.029 (0.151) ⫺0.250 (0.145) 0.690** (0.257)

⫺0.098 (0.759) 9.22

⫺0.548 (0.555) 9.77

⫺0.409 (0.661) 15.30**

Source: Eurobarometer 1992. Notes *p ⬍ 0.05, **p ⬍ 0.01. The coefficients for the Logit function expressing the log odds (log (not supporting/supporting the generational contract)) are reported in the table. Cases with missing values are dropped; standard errors in parentheses. Question wordings Dependent variable: Those who are now working have a duty to ensure, through the contributions or taxes they pay, that elderly people have a decent standard of living. Answer categories: (1) agree strongly; (2) agree slightly; (3) disagree slightly; (4) disagree strongly. Variable recoded as dummy. Independent variables: In the future there will be more elderly people than there are now. Do you think that people will get less pensions for their contributions? (0) no; (1) yes. I’m worried about how adequate my pension will be. Answer categories: (1) strongly disagree; (2) disagree; (3) agree; (4) strongly agree. Income quartiles based on household income measure (total wages and salaries and other incomes such as pensions and social insurance benefits of all members of the household; pounds sterling per month; German Marks per month). Only people up to age 59, three age groups: ⫺29, 30–39, 40–59. Britain N ⫽ 497, West Germany N ⫽ 573, East Germany N ⫽ 540.

cients of a Logit model predicting the disapproval of the generational contract on the basis of socio-demographic variables such as age, income and sex, on the one hand, and on assumptions about the future of the pension system, on the other. All models perform rather poorly, and we find only a few significant effects. For West Germany, the negative subjective predictions about the future of the pensions seem not to affect the probability that people will retreat from the norm of ‘generational reciprocity’. Only in East Germany can one detect a significant effect: those who think that there will be smaller pensions in the future because of an increasing number of pensioners are more likely to reject the

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generational contract. This indicates some conditionality of support for the elderly. In Britain we find that people who are worried about their own future pension adequacy emphasize the working generation’s duty to contribute to the public scheme more strongly, in other words, they are less likely to disapprove the generational contract. The statement that there are less pensions in the future, in contrast, turns out not to be significant. The publicly shared assumption of diminishing returns and the downsizing of pension provision does not seem to erode the normative base of intergenerational transfers. In the model, gender has some effects in East Germany and Britain as does income in West Germany. Nonetheless, since the data focus on the prevailing normative script, it is probable that the decisions taken differ from what has been normatively approved. In terms of active forethought and planning for retirement people value schemes with good returns and a high degree of security. Thus, one might detect some tension between the support for stateadministered collective schemes and the propensity of individuals to secure their income. The strong expectation that the state should be responsible for the elderly and the widespread belief in a generational duty towards the old sustains a firm base of support for the public schemes, but when individuals have to face pension decisions, priority may be given to those options which are promising in terms of ‘good’ and ‘secure’ investments. At the moment, the German system stands at a critical junction: it could move towards strengthening correspondence between individual contributions and returns, it could adopt features of a ‘citizen’s wage’ or it could extend the private elements. The first option was favoured in the recent reforms in 1992 and 1996 by which some entitlements which were not covered by a contributory record were dismantled. One of the main arguments for this option is that it is more likely to be accepted because there is less interpersonal redistribution involved (Schmähl 1997). The ‘citizen wage’ alternative, however, has not yet found sufficient political support so that such proposals remain largely academic matters. The third alternative points to the possible shift towards private provision triggered by a loss of institutional trust and the expectation of diminishing returns (Hinrichs 1998: 33). The so-called Riester reform encouraging private forms of provision to supplement the decreasing state pension has paved the way into this direction. The British experience of retrenchment confirms that the thinning out of benefit standards can facilitate a departure from the public scheme despite the fact that the public is largely in favour of collectivist efforts. However, the British development is also very telling regarding the limits of such a development in terms of public acceptance. The retrenchment efforts did not induce a corresponding public opinion alignment, and where the reforms went ‘too far’ in the public’s view a prowelfare backlash occurred making further retrenchment more difficult (Taylor-Gooby 1991).

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Conclusion Throughout this chapter it has been argued that the public pension schemes combine instrumental motivations with the idea of ‘generational reciprocity’ in quite a unique way. The publicly approved and institutionalized form of retirement provision rests on norms which assign a responsibility to the state and to the generation in employment to provide ‘public wages’ for the old. The age-based income entitlements are state administered and depend, to a large extent, on the contribution payments made by the current generation of employees. The pay-as-you-go type of financing implies a constant and sizeable transfer stream from the young to the old. The acceptance of these transfers is supported by beliefs of fairness and adequacy with regard to the merits of the previous working life of those in retirement. The linkage of efforts and rewards gives the pension payments the image of being ‘deserved’ or ‘earned’ benefits which can justifiably be claimed. The same logic accounts for the motivational viability of the arrangement in the long run. The individual insurance element ensures that those contributing can expect some kind of equitable return once they reach retirement age. The moral economy of public provision, therefore, is constituted by an interlocking of shared moral assumptions regarding public support for the retired and the entrenchment of the contributors’ interest. The two models of pension arrangements, the highly differentiated retirement compensations in Germany and the British flat-rate pension system, have interests entrenched in different ways. In West Germany pensioners are comparably satisfied, while British pensioners are less content. British state pensions do not have the image of being good returns or of allowing for a life free from worries. Those who can afford it are likely to purchase additional private provision if they want to ensure a stable material standard throughout their lives. The German graduated pension system, however, is relatively generous for those with a long employment history, but is disadvantageous for groups with discontinuous employment biographies. The survey data suggest that the governmental responsibility to provide a decent standard of living for the elderly, as well as the generational duty to support the preceding generation, are well-established social norms. What also seems remarkable is that in neither country do we observe a striking or marked retreat from the ‘generational contract’ on the part of the younger generation. Only in West Germany do we find that the younger generation tends to be slightly less committed to the generational duty to provide for the old. Hence, it has been argued that some kind of ‘intergenerational altruism’ underpins the moral economy of public retirement schemes. Kohli (1993: 13–14) advises: ‘This is a moral capital that should not be squandered by heating up the fear of distributional conflicts. There is no support for shifting the welfare mix back to the family or the individual.’

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Problems arise for both models when some of the structural requirements that stabilize the return expectations of the contributors fail to be met. The perception of generational inequity and feelings of being overburdened may equally diminish support for the state system. Since old-age security operates on the basis of a long-time horizon, it relies on institutional trust in the future redemption of accumulated entitlements. The data cast doubt on whether pension insurance contributions are viewed by the population as ‘worthy investments’ which will bring equitable returns. Nonetheless, this does not cause an immediate retreat from the generational contract – at least not on the attitudinal level. However, when making choices about their pension portfolio, people may prefer options which are promising in terms of returns and security and hence depart from the public arrangements. The reform arguments in favour of public pension provision, therefore, must put forward both the normative adequacy and the robustness of the pension schemes, and thereby respond to the subjective security needs of the citizens and their sense of fairness. However, the ‘public contract’ between the generations does not necessarily need to squeeze out the redistributive elements, but it needs to deal with them in a transparent way, to be defined within carefully designed parameters and to take into account the public sense of justice and adequacy without neglecting the contributors’ interests.

Health: risk distribution and cost sharing Collective coverage and participation utility Without doubt, health is the most important and most valued ‘asset’ in each person’s life. Sicknesses, and also physical and mental handicaps, are widely perceived as a misfortune, deeply affecting the well-being of individuals and families. Many health impairments are neither avoidable nor foreseeable, so that it is generally thought that they are beyond individual control. Therefore, it is one of the most fundamental normative standards that sick people are not to blame for their misadventure, rather that they deserve compassion and support. Because of the specific character of ‘health needs’, the public health systems represent an institutional endeavour quite distinct from other social policy branches. Michael Moran (1999: 1) highlights the fact that healthcare is a ‘personal service received, often, in our bitterest moments of pain, despair, and finally, death’. It deals with a social phenomenon which is private in its essence, but which demands remedies which can often only be purchased on a collective level. Public healthcare has the task of providing medical treatment on the basis of collectively financed schemes independent of the actual individual ability to pay. Health is one of the meritoric goods which would be consumed in a less than socially desirable way if the state or collective agents would not regulate the financing, access and, finally, the

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demand. Healthcare, as practised in the UK and Germany, is free at the point of delivery, pre-financed by insurance funds or the state budget and depends on the expertise of a third party, the medical profession. The occurrence of health impairments is socially determined, but appears to be individually random, so that it is ‘completely unforeseeable (and individually almost non-susceptible) whether and when one has to lay claim to health care benefits’ (Hinrichs 1997: 20). Illness and accidents as fateful events disguise the social determination of many health risks, and thus make the full range of services for all desirable (Arrow 1963). It has been argued that universal and comprehensive health coverage is publicly supported because the effects would be fatal if the full range of services granted did not exist. No doubt if medical treatment were not provided according to need it ‘would alarm the currently healthy but virtually all eligible persons as well’ (Hinrichs 1997: 20). Risk aversion and coping with future contingencies can be counted as the main motivational sources of commitment to public health provision. Healthcare is a mass service of which everybody can feel themselves to be potential beneficiaries. Indeed, protection against the event of an illness which could require extraordinary and costly medical treatment is an essential want. Thus, the benefit of health provision lies partly in consumption and partly in access, since those who do not use the services appreciate the security of knowing that they are available. Because of the character of health risk, resource distributions between those in need of medical treatment and the ‘net contributors’ can hardly be conceived of as pure between-group transfers. Apart from the margins of those who are chronically ill or those in longterm care, both groups are in constant flux. Redistribution, therefore, is ex-post redistribution after the ‘unpredictable’ risk incident has already occurred. Risk reciprocity in the case of healthcare means that although the risk exposure might be perceived as small, there is a strong incentive to contribute to a collective scheme because the benefits in case of a risk incident are quite considerable (Ullrich 1996: 176–7). However, public health provision also balances risk differentials, and those paying for the public health system are expected to accept that neither ‘pre-existing conditions’ nor ‘individual qualities’ that might influence the frequency of healthcare use are taken into consideration. Not only are different health risks deliberately ignored, but all people are equally entitled on the basis of need, irrespective of the amount paid in previous contributions or taxes. Since individual risk status can change quite dramatically overnight, and future needs are hard to predict, there are good reasons to approve the redistributive implications such schemes evidently have. Private sector health provision, in contrast, pools more confined risk groups, but it faces many difficulties in forecasting future needs, notwithstanding the fact that many ‘bad risks’ are not covered and certain groups find it hard to insure themselves. However, it may be that people do not want to see the social protection for some of life’s vicissitudes in the hands

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of non-state providers and that there may be a particular concern that the private sector could seek to make a profit out of people’s misfortune (Williams et al. 1999). Therefore, state provision ‘may in fact be the most effective strategy for many such needs which the welfare state currently handles and non-state services may be less popular with “clever” consumers than assumed’ (Taylor-Gooby et al. 1999: 181). Private policies, although based on actuarial principles, may appear disadvantageous in terms of long-term safety. They also demand knowledgeable and timeconsuming decision-making with the risk of unsuccessful planning remaining. The ‘automatic nature’ of collective provision and the regulatory and safeguarding role of the state are the pros of public health schemes, and these pros perhaps offset a perceived redistributive bias. Since for most people an adequate system of state-provided medical care is one of the preconditions of a decent life, the issue of resource allocation has always received a good deal of attention. Frequently, it is demanded that health policies ought to ensure as much benefit from the resources devoted to healthcare as possible. This objective is rooted in a utilitarian account of distribution problems, namely, that resources should be distributed in proportion to the good they do. This implies that claims should be weighed against each other, and that the claims made by people who apparently derive less good from medical resources will be set back.31 Apparently, it is far from clear what ‘maximizing good’ entails and it does not seem easy to enumerate which criteria should be deployed (e.g. social worth, life-expectancy, likelihood of successful treatment). As an alternative to such resource economism, there is a strong normative appeal held by the idea that people’s lives and interest are of equal value. Ronald Dworkin (1977) has led us to understand the prime role of the equality principle whereby people’s moral claims are not reduced by who they are, but on the contrary, everybody should be given equal weight in terms of concern and respect. Based upon this reasoning, one could argue that access to adequate healthcare should be non-discretionary and should only be based on medical expertise. ‘Equality requires both that we treat as many people as we can and that we ensure so far as it is possible that certain sorts of people are not systematically ignored’ (Harris 1988: 95). Gavin Mooney (1994: 83) has argued in favour of an equality of access approach since it is more than just instrumental but is, in part, valued as a principle per se. Due to the particular nature of ill-health, people are likely to prefer a system that provides equal access to all because they think it is fairer. The combination of collective financing and equality of access implies some kind of redistribution, but the redistributive impact depends to a large degree on the patterns of health service consumption. For example, old age and ill-health correlate so that a good deal of intergenerational redistribution is realized through the health system. However, it is not direct transfers between defined groups that regulate redistribution, but

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indirect transfers due to the use of services. From the perspective of the moral economy of welfare provision the redistribution via services appears to be less problematic than direct cash transfers. As Ringen (1987: 197) remarks: ‘To be hospitalized in intensive care without having to pay the bill out of one’s pocket then and there is a good thing, but it is not to receive an income transfer corresponding to the cost of hospitalization.’ In-kind transfers are preferred to in-cash transfers since they are believed to be targeted towards a deplorable state of affairs. They guarantee that social help and care is purchased for the needy and nobody else. That the medical profession has the last say in recognizing the needs of the patient is a highly legitimate mode of granting entitlement and prevents the illegitimate advantages of particular groups. However, although these examinations describe quite optimistically the moral standing of public health provision, financing health is a rather intricate issue. Policy makers are always concerned that the capacity of the health system to absorb resources is almost unlimited and that the demand for healthcare is always likely to outstrip the supply. In truth, the health system is not very immune to ‘cost-disease’ problems, either due to over-utilization of resources by patients and medical professionals or through scientific advances resulting in ‘heroic measures’, that is, in the deployment of expensive, non-standard, experimental technologies. Thus, the debate about cost-explosion has accompanied the development of the public health system and it is likely to last. Central to this debate is how much health a society is able to afford (the quality issue), and which price it is ready to pay (the cost issue). The policy context State healthcare can be defined as ‘that part of any state concerned with regulating access to, financing, and organizing the delivery of, healthcare to the population’ (Moran 1992: 79). In Britain, health provision can be understood as part of an encompassing concept of citizenship covering all residents, whereas the German social insurance model covers the insured and their dependants. Institutionally, Britain has a National Health Service (NHS) that is tax financed, universally available and comprehensive, while Germany has a statutory and compulsory insurance that depends largely on the contributions of its members. In Germany, the obligation to be insured, the fixed rates of insurance premiums and the entitlement to healthcare on the basis of need guarantees the scheme’s accessibility for the vast majority of the population and ‘makes for a degree of equity in burden sharing’ (Freeman 2000: 55). The National Health Service is generally considered as the major achievement of the British Welfare State because it is a free, universal and nationalized service. The basic institutional architecture of the NHS suggests that ‘health care should not be a commodity provided and

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consumed in a market, and that only public provision can ensure an acceptable level of equity in access to and use of resources, as well as making more efficient use of resources available for health care’ (Ginsburg 1992: 178–9). While the British welfare system can be characterized as liberal, the health system also shares some socialist traits.31 It offers equal rights of access to care and medical treatment, and thereby establishes an unconditional citizenship right for the entire population. The major bulk32 is financed by direct national taxation, though there are also minor financial contributions from local taxation, charges for spectacles, dental treatment and medical appliances and insurance premiums. Sickness benefits are granted by separate schemes, cover the employed and self-employed who satisfy certain conditions, and are paid as a flat-rate benefit. In the 1990s, public expenditure on healthcare fluctuated at around 85 per cent of the total health spending, a figure which is higher than in Germany and resembles the Swedish level. However, healthcare spending as a proportion of the GDP is significantly lower than the OECD mean. Spending amounted to 6.5 per cent of the GDP in 1995, with an annual growth under the Conservatives of 3.3 per cent. Financing the NHS is a chronic matter of political concern, not only because it depends on the Exchequer’s budget, but also because of the rising costs of health related to technological and demographic changes. The principles of the NHS were contradictory to the Thatcherite ideology of the supremacy of the market for the supply of social welfare, but because of the popularity of the NHS the system was difficult to reform. During the first two election periods the Thatcher Government extended the private health sector in the hope that this might undermine the sacrosanct status of the NHS. People were encouraged to take up private healthcare, some services were contracted out and the number of private beds in NHS hospitals steadily increased. As a result of a tax relief policy, the number of private medical insurance holders grew significantly from 1.3 million in 1979 to more than 3 million people in the mid-1990s, meaning that 6.2 million people, that is, 10.6 per cent of the population, were covered (Laing and Buisson Ltd 1996). However, the private care is confined to some social groups and risks. The chronically ill, the poor and the aged are unlikely to take up private insurance because the costs of full cover are too high. Overall, the Conservative government failed to dislodge the taxfinanced public health system and Mrs Thatcher was forced to recognize that the NHS was ‘the yardstick by which the population judged the government’s commitment to welfare’ (Jones 1999: 172). Therefore, she declared with some publicity: ‘The National Health Service is safe with us.’ Nonetheless, the lip-service she paid to it did not guarantee that the NHS remained untouched by political legislation. The key aspects of reform – the tax encouragement of private health insurance schemes, the introduction of a distinction between the providers and the purchasers, the

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possibility for hospitals to become self-governing trusts – were aimed at enhancing the competitiveness of the health system. Central here was the strategy of creating ‘internal markets’, because it was found that the ‘NHS was not sensitive enough to people’s wishes or to costs, it was inefficient, and hospitals and local authorities performed with inexplicable variations’ (Jones 1999: 173). The destruction of service monopolies was seen as enhancing choice, consumer orientation and efficiency. The outlook today is clearly that the NHS, reformed and improved, has a future within the British welfare state though it is obvious that the services require larger amounts of money to solve the discrepancies between demand and supply. The German public health system is a statutory insurance mandated by law for employed persons with incomes below a defined ceiling. The financing is secured by earnings-related levied wage taxes imposed on the employee and the employer with some extra governmental subsidies. For civil servants and their dependants, 50 to 80 per cent of the costs of healthcare are covered by a state, the rest mainly by private insurance. Basically, the German system regulates the access to healthcare through labour market integration. Groups not present at the labour market are covered via their relation to an income earner or on the basis of their former labour market participation, as in the case of pensions. Whereas private health insurance calculates risks and contributions according to individual traits such as chronic illnesses, age and special risks, the statutory health insurance does not. Most healthcare is free at the point of treatment and the bills are paid by the health insurance funds. The German system, therefore, implies some cross-subsidization because it is characterized by contributory differentiation, on the one hand, and entitlement universalism, on the other hand (Hinrichs 1994: 128). A good deal of redistribution is realized by the cost-free joint insurance for people who are not liable for insurance, mainly people outside the labour market. On the supply side, the system has a strong old-age bias, because the old use the health system over-proportionally. The sickness benefit, which is paid as a percentage of the claimant’s gross earnings, is assigned as an income replacement, allowing people to maintain their standard of living. The payments are a mix of a reduced wage continuation paid by the employer (expiring after six weeks) and the actual insurance benefits compensating a part of the loss. Healthcare is provided by a mix of public and private providers ranging from single entrepreneurs working on a contractual fee-for-service basis to large care facilities with employed medical staff. German patients have the right to choose their own doctors. It has been emphasized that the German healthcare system delivers highquality care at an almost universal basis (Altenstetter 1999: 57). 88.5 per cent of the population are covered by the all-payer health insurance, whereas only 9 per cent of the population hold a private insurance. Threequarters of the statutory health insurance members are those who are

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insured on a compulsory basis, the remainder, mostly those above the fixed income ceiling, could have chosen a private scheme but remained within the public system (Altenstetter 1999: 57). Although most medical and hospital expenses are covered, a co-payment for defined services (dental bills, spectacles, longer hospitalization) is required. The organization of the health system involves the self-government of corporate parties, the insurance funds, the doctor’s associations, the German states and the hospital providers. There is a large number of independent sickness funds which are part of the compulsory health system. In comparison to the British system, Germany has a relatively high standard of healthcare (medical technology, access, waiting lists, choice of specialists). Health expenditure has grown six-fold between 1970 and 1990, whereas the GDP has only increased 2.5 times. In 1997 it amounted to 19.6 per cent of the social budget. At the same time, however, the insured had to accept a rise in contributions from 8.2 per cent to over 13.5 per cent in the mid-1990s. While some have argued that this overproportional growth of the health sector is partly caused by management deficits within the system (Oberender 1992), others have highlighted that the general mode of operation – the uncoupling of contributions and service entitlements – encourages patients (and doctors) to demand as much healthcare as possible. Since no efficient cost control mechanism exists the system has been criticized as encouraging ‘supply-induced demand’ (Neubauer and Moos 1997). In response a number of reforms during the 1980s and 1990s were aimed at cost containment, for example, the restriction of the number of doctors in local practices, higher charges for patients for hospital care, cures and medicines and the introduction of upper limits for prescriptions. The 1993 Healthcare Structural Reform Act, especially, introduced aggregate spending targets in line with the revenues. Many measures were intended to enhance the cost awareness of the medical profession and patients and to set incentives for economical behaviour. For hospitals, spending targets were set and new controls were imposed regarding new investments and cost reimbursement. Healthcare satisfaction and accessibility In both countries there is a unanimous social consensus that the state should provide healthcare for the sick (see Table 6.22). The way this consensus is politically implemented is via a ‘public contract’ of health provision using public sources, such as social insurance contributions or tax revenues, administered by public agencies in order to provide healthcare (see OECD 1992). It has been argued that the problems a tax-financed National Health Service faces are quite different from those of an insurance system. Elola (1996: 244f.) identifies waiting lists, inefficient management and limitations in the choice of providers as the main drawbacks of a nationalized system, whereas a social insurance system suffers, typically,

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from financing problems caused by oversupply and overconsumption. The NHS has achieved universality but, due to its chronic undercapitalization, the service is delivered in ‘an often dreary environment to patients trained to defer to the discipline of the queue and service routines’ (Day and Klein 1999: 281). The German system, in contrast, is comparatively costly, but it has a very good record in the attainment of professional standards of health treatment. Despite the rather diversified organizational structures of the ‘sickness funds’ and health providers, the holders of the public health insurance enjoy very similar benefits and access to care. How do the publics perceive and evaluate different models of provision and their outcome? In Germany, East and West, we find two-thirds of the population satisfied with the healthcare system, whereas the respective figure in Britain is less than 50 per cent (Table 6.22). The proportion of people who express their dissatisfaction is, with over 40 per cent, four times higher than in Germany. As was argued, this may be due to the wider availability of services including better technologies, the choice of physicians and the modernity of the infrastructure in Germany. Waiting for appointments with specialists and hospital admission are not such major problems in Germany as they are in Britain. The existence of waiting lists, it has been argued, helps to explain much of the dissatisfaction with the NHS (Blendon and Donelan 1989). Due to the rise of the self-confident user of the public health system – showing less gratitude and deference to health personnel, especially doctors – the population has become ‘less tolerant of queuing’ (Day and Klein 1999: 286). Studies have shown that the existence of waiting lists is also the primary reason for people buying private medical coverage (Higgins 1988). As a possible response, Britons demand improvements in the health system, whereas the Germans see less need for substantial reforms. The majority, three-quarters of respondents, state that the healthcare system runs quite well, or that the system is basically good, but could be improved by minor changes. In Britain, we find a significant proportion of respondents who even express a fundamental dissatisfaction with the public health system and who are in favour of a complete restructuring. It confirms that although ‘there may be rising dissatisfaction with the performance of the NHS . . . , there is no sign of decline in support of the NHS as an institution’ (Klein 1985: 55). According to the data, the user satisfactions and the pressure for reform are closely associated. It is not difficult to speculate what would be expected from reforms as the advantages and drawbacks of the respective systems are quite clear: Germans are likely to object to some of the ‘excessive’ utilization which induces high costs (Hinrichs 1997: 29), while the British population envisage a system better equipped to meet their needs. However, people are also pessimistic with regard to future development. Around 60 per cent of the Germans, and

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over 80 per cent of the British, expect that there will be less state-provided healthcare in the future. The findings presented in Table 6.22 also make a clear case of how the public senses, and values, equity. According to the initial discussion, the programmatic structures of the British as well as the German healthcare system embody a specific notion of equity of access. Health is the sector where most people disagree with a residualist approach which says that the government should only provide everyone with essential services, such as care for serious diseases, and should encourage people to provide for themselves in other respects. The comprehensiveness of the coverage and the universality of access are major concerns. The public seems very much in favour of the principle that healthcare should be provided on a collective level irrespective of individual income. The British and East German respondents are especially supportive of a system of non-conditional healthcare for all. This ‘common sense’ morality of providing for those who suffer from bad health is in line with Robert Goodin’s (1985) philosophical account of ‘protecting the vulnerable’. Departing from a narrowly defined understanding of moral duties as deriving from particular relations to particular persons (such as family and friends) he argues that there are general social responsibilities with regard to the ‘undifferentiated other’ simply because they are particularly vulnerable or dependent on a collective form of support. In the area of health the injunction of protecting the vulnerable is morally relatively unproblematic because it involves interdependencies. That is to say that the ‘vulnerabilities are mutual; each party depends on the other’ (see Goodin 1985: 196). Health provision, as already emphasized, is a prime example of relations of ‘reciprocal dependence’ (Held 1974: 178) by which each party gets something out of the relationship. Qualitative studies – without any doubt the more adequate method to access the script of individual motives – confirm the dominance of such an interpretation. Ullrich’s (2000) rather detailed and in-depth account of the German system reveals that the logic of ‘risk reciprocity’ as part of the healthcare system is understood and approved by the ordinary citizen. People see themselves as part of an arrangement that is designed to provide collective protection against a grave risk and hence they abstain from calculating returns. The support for the health system, therefore, cannot be reduced to egoistic preferences. Hinrichs (1997: 28) highlights that the constant threat of falling ill ‘precludes any calculation of one’s distributional position and attempts to alter it. Simply being comprehensively insured stands above any other consideration.’ By the same token, Klein (1980: 424) argues that the NHS’s ‘most important symbolic outcome is equity – i.e., perceived fairness in dealing with people, regardless of their financial circumstance’. Most people invoke the universalist right to treatment in which the needs of an individual override the issue of past contribution (Dwyer 2000: 202). This could be one of the reasons for the

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Table 6.22 Responsibility, user satisfaction and healthcare quality Agreement in per cent

Britain

West Germany

East Germany

Satisfaction with health system Satisfied/very satisfied

48.0

66.2

66.6

The Government should provide healthcare for the sick* Definitely/probably should (other categories: probably not/ definitely not)

98.5

96.6

99.1

14.2

37.6

34.5

27.4

38.4

39.6

42.5

15.7

21.1

14.3

2.2

2.1

57.2

17.8

15.4

84.2

62.6

57.9

41.8

50.8

25.9

49.8

37.4

27.6

67.4

82.5

21.5

11.3

5.0

3.0

How is the healthcare system run in the country Which statement comes closest to your view? On the whole the healthcare system runs quite well There are some good things about how it runs, but minor changes would make it better There are some good things but only fundamental changes would make it better Healthcare run so badly that we need to rebuild it completely Statements about healthcare Agree strongly/agree slightly (others categories: neither nor, disagree slightly, disagree strongly) Health services available to the average citizen are inefficient In the future there will be less healthcare People use healthcare facilities too frequently It is impossible for any government or public or private health insurance to pay for all new technologies and treatments

The national government has to – ensure that healthcare is provided to all people residing here legally irrespective of their income 83.8 – healthcare is provided only for those residing here legally with low incomes 12.1 – healthcare is not a governmental task even for those with low incomes 1.7 Source: *ISSP 1996; otherwise, Eurobarometer 1996.

Notes Question wordings First question: In general, would you say you are very satisfied, fairly satisfied, neither satisfied nor dissatisfied, fairly dissatisfied or very dissatisfied with the way healthcare is run (in your country)?

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public’s strong support of the health system and for the poor reception of alternatives (Pierson 1994: 132). Affordability of quality care Since morals and money are not as distant as some writings about health spending seem to imply, the question of the affordability of a publicly funded health scheme demands some attention. In health economics it has commonly been argued that free access to healthcare unleashes demand without necessarily improving the health of the population. However, it should also be noted that the issue of affordable costs reflects wider societal judgements as noted by Wessen (1999: 6): Can the system provide accessible and acceptable services of high quality to a population at a price that the community can afford or is willing to pay? . . . It is clear that there must be trade-offs between affordable costs on the one hand and the availability and accessibility of high-quality care on the other. But countries differ in how they make these judgements and in the degree to which there is pressure for cost containment. The organizational structure of the British system basically suggests: ‘Your taxes have built an organization to provide you with care. That organization will serve you to the best of its ability’ (White 1995: 121–2). The reality of the NHS provides firm evidence for the tensions between the formal generosity of a universal system and its endowment with only parsimonious financial resources (Moran 1999: 61–2). What the single person contributes to the health system is somehow opaque, since it depends largely on the structure of the tax system and how it channels citizens’ money. The German system, in contrast, relies on the insurance payments, co-payments and subsidies of the government. Due to the different modes of financing, the signposts for the public are of a different kind: ‘If in Britain the most commonly highlighted figure in health care is some measure of aggregate national consumption, in Germany it is the contribution rate levied in the insurance system’ (Moran 1999: 72–3). However, although the Germans can easily attain information on the health insurance contribution rate which is levied from their income, the ‘multiplicity of payers’ and the special clauses for old age and dependants add a degree of complexity. The empirical evidence suggests that satisfaction with the health system is closely related to the amount of money put into it, in other words the health provision a nation ‘buys’ (Blendon et al. 1990). Since the cost issue is pervasive, people are likely to see the trade-offs between quality and costs and may give priority to one or the other. According to the data (Table 6.23), popular dissatisfaction with the NHS in Britain and the wide-

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spread feeling that the system is chronically underfunded motivates people to support more spending. Over 80 per cent of British citizens are in favour of moving to a higher equilibrium, i.e. accepting more costs for better healthcare standards. One-third of them say that they would accept higher taxes for this purpose. The vast majority in Germany, in contrast, expresses its contentment with the current level of spending, and thereby seem less concerned about the level of spending (and implicitly of contributions) than many health policy actors. Although the health bill is more visible to the German insurance payers than to the British taxpayers, it has been shown that people have no exact ideas about the costs of health. A study by Alber and Ryll (1990) on German health insurance as perceived by the public has pointed out that only a minority has a realistic conception of its health contributions. Moreover, most people underestimated the percentage of income which is paid into the health insurance fund. It has also been found that the extent of knowledge does not improve with the contributory burden, on the contrary, those with the highest burden were more likely to underestimate their contributions. At the same time it has been found that a significant part of the population thinks that the health insurance contributions are too high (Rinne and Wagner 1995). However, as qualitative research has shown, people prefer increases in contributions to curtailments of benefits. On this basis Hinrichs (1997: 29) argues that ‘(p)ast increases in the contribution rate have been tolerated as largely justified, and even further increases would not be met with much resistance as long as the health system is considered efficacious and efficient’. Table 6.23 Spending preferences in the area of health Agreement (%) Governmental spending more the same less If more how this should be financed by: spending less on other things raising taxes or insurance contributions both

Britain

West Germany

East Germany

81.9 14.3 0.8

22.9 54.1 7.0

36.4 51.1 2.5

57.7

86.0

88.2

29.2 3.4

4.3 3.4

1.6 0.5

Source: Eurobarometer 1996. Notes Question wording Do you think the government should spend more, the same amount as now or less on healthcare? How do you think the government should find the money for this? By spending less on other things or by raising taxes or health insurance contributions? Columns do not add up to 100 per cent; margins remaining are ‘don’t know’ responses.

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The health sector, as with the other social policy branches, is an arena for distributive conflicts. Nonetheless, the distribution of burdens and benefits within the health sector bears markedly different features to other welfare sectors because the dependency on high-quality healthcare is so widespread and there is a constant flux of healthcare users. Hence, assessments of the redistributive impact of health systems are difficult to make – for the expert as well as for the health consumer. On a comparative level it has been pointed out that tax-financed systems tend to be proportional or mildly progressive, whereas the German insurance levies a fixed proportion of the income up to an income ceiling (Wagstaff and Van Doorslaer 1992). A noteworthy feature within the British system is that the higher income groups which purchase private health are still contributors to the system via taxation. Since paying for health means paying taxes, it is somehow impossible to ‘evade’ this public burden. If they want a better quality of medical treatment, they must bear these costs additionally. When private coverage is not commissioned as strictly complementary, let’s say only for costly treatment that the NHS does not provide, these people are compelled to ‘double’ payments. In other words, the collective arrangement of the NHS is somehow inescapable regardless of the actual use of services or available alternatives. In Germany, in contrast, income earners above a ‘ceiling’ income are not required to join the public programme, and if they choose private coverage, they simply change the scheme. Their contributory strength is lost to the statutory programme and they do not participate any more in the solidaristic risk pooling under the umbrella of the state scheme In a review of NHS development, Charles Webster (1993: 15) has highlighted the fact that a universally funded system brings the ‘maximum redistributive effect and potentially greatest gains for the poorest and the neediest sections of the community’. Nonetheless, tax funding says little about the patterns of consumption, and, in the end, the overall redistributive impact of the system. One problem is that the data available for assessing the equity of services are rather limited so the results are highly contestable (Collins and Klein 1980). With regard to the ‘beneficial involvement’ of the middle classes, LeGrand and Winter (1987: 152) have argued that the ‘families of professionals, employers and managers use the National Health Service . . . more than their numbers in the relevant population would justify’. One can assume that the high equity aspirations of the British system have been downgraded by subtle mechanisms of unequal access. The 1988 report entitled ‘The Health Divide’ (Townsend et al. 1988) pinpointed the fact that the universalist ideology which the health system is built on has not abandoned inequalities in health provision. Inequalities are also apparent within the German system, for example with regard to the effective utilization of the health services. Curative and preventive measures in particular are more frequently used by the middle

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class than by the poor (Siegrist 1989). Health status also differs between the East and the West, indicated by a longer life expectancy and a lesser occurrence of some chronic illnesses in the Western Länder. Another relevant inequality dimension that has materialized in the institutions and policies of public health provision is related to fund membership. Since the German system is composed of relatively independent funds, and since they are linked to the structure of employment, the inequalities between occupational groups and employment sectors have also influenced the budget policies of the different funds. The variations in memberships have the effect that income, age, health and risk status determine the expenditure patterns of the different funds. For the insurance members – who are bound to being part of a specific fund – this could mean the advantage of paying less or facing the drawback of paying more in contributions, but it could also mean having less or more benefits. After the Healthcare Structure Act of 1993, and especially since 1996, most people have the right to access substitute funds, and since job changes can force people to make health insurance choices, there may be a growing propensity on their side to play a more active part. With the reforms being enacted a free choice of insurers became available for most and it has been suspected that this will accelerate a drift from local to substitute insurers. The insurance funds now compete for their members, and this competition implies that they try to attract first of all the younger, the healthy and the financially prosperous.33 Freedom of choice has, not surprisingly, encouraged workers to move to funds charging lower premiums. The culture of solidarity which was for so long part of the bedrock of the system is thus being eroded. The biggest losers have been some of the district funds, historically the funds that in the old system of compulsion insured high risk, like the low paid, and because they insured high risks had to charge higher premiums. The biggest winners have been Betriebskrankenkassen (funds catering for workers in a single enterprise) which, practising de facto risk selection, offer lower premiums. (Moran 1999: 77) Since we have seen that the health systems are not living up to all their equity promises it would be interesting to investigate whether these inequalities result in different attitudinal stances towards the system. The regression analysis presented in Table 6.24 demonstrates that there is little societal dissent as regards spending. The explained variance is small in all three cases and only a few structural characteristics reveal themselves to be significant. In Britain we find that the higher the income34 and the higher the educational attainment, the less emphasis is placed on increased spending on health. Public sector employment also takes an effect. Since the independent variables explain relatively little of the variance, it seems

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Table 6.24 Attitudes towards spending on health: linear regression analysis Government spending

Britain

West Germany

East Germany

Self-employed

⫺0.009 (⫺0.245) 0.052 (1.456) ⫺0.015 (⫺0.291) 0.011 (0.277)

⫺0.076** (⫺3.071) 0.030 (1.213) 0.039 (1.113) ⫺0.027 (⫺0.957)

⫺0.047 (⫺1.245) 0.072 (1.879) 0.058 (1.036) ⫺0.018 (⫺0.500)

⫺0.082* (⫺2.024) 0.003 (0.072) ⫺0.010 (⫺0.198) 0.117** (3.286) ⫺0.132** (⫺3.433)

⫺0.123** (⫺4.869) 0.102** (3.958) 0.013 (0.398) ⫺0.024 (⫺0.942) ⫺0.031 (⫺1.292)

⫺0.020 (⫺0.545) 0.094* (2.657) 0.048 (0.914) ⫺0.038 (⫺1.009) 0.014 (0.414)

4.586** (34.003) 0.046

3.682** (34.266) 0.039

Unemployed Retired Others not in labour force Employed (reference category) Income quartiles Sex (women ⫽ 1) Age (in years) Public sector Education Constant R-Square

3.603** (23.557) 0.034

Source: ISSP 1996. Notes *p ⬍ 0.05, **p ⬍ 0.01. Standardized regression coefficients ␤, t-values in parentheses. Question wordings Government spending: Should the government spend more or less on health? (remember that if you say ‘much more’, it might require a tax increase to pay for it). Answer categories: (1) spend much less; (2) spend less; (3) spend the same as now; (4) spend more; (5) spend much more. Education: lower than secondary (1); secondary (2); higher/university (3). Income quartile based on household income per head measure (1 ⫽ lowest; 4 ⫽ highest). For measurement and response rates, see Table 6.1. Public sector: employed by government or public-owned firm.

that the sizeable demand for more financial resources for the NHS is a cross-group issue that finds support throughout society. The strong ‘popular sensitivities’ (Pierson 1994: 132) which restricted the Conservative’s strategies to contain costs and to privatize the health system appear to have continued throughout the 1990s, compelling the Labour government to find an adequate response. By remaining committed to a comprehensive and universal health service, Labour acknowledged that the health issue is not especially compatible with the ‘third way’ ideology and that a ‘mixed’ system would not do better (Paton 1999).

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In West Germany, gender, income and self-employment have a significant impact on the attitudinal pattern. In particular, the negative effect of income can be interpreted as corresponding to the structural account previously given. Because low income groups are more likely to belong to the regular funds they may be more inclined to give a mandate for higher spending. Since the funds began to be organized along more business-like lines, one can speculate that the members, especially the ‘better contributors’, will have become more cost-aware. Moran (1999: 176) states: There is now convincing German survey evidence that members are shifting to funds with lower premiums, and that the very process is reinforcing the pressures on solidarity: those moving are the better educated, better-off, with lower than average health risk – and the movement is thus accentuating the process of risk selection, widening the divide between funds with high-risk and low-risk members. In 1996, when the ISSP data were polled, there were some significant social-demographic determinants, but the overall picture was still one of the relative containment of this attitudinal differentiation. As long as the ‘retention of generous benefits in the basic service package’ (Altenstetter 1999: 78) works against the rise of a new class-divided system, these attitudinal differences are likely to remain in a confined band. The attitudinal landscape in East Germany reveals gender as the only significant positive predictor of attitudes towards spending. Sickness benefits: independent means for the ill In most West European welfare states, the state is not only involved in the provision of healthcare, it also provides independent means of subsistence to the ill. However, a quick glance at the entitlement systems in Britain and Germany discloses that the national variations in sickness benefit provision are quite remarkable. Until 1983 sick pay in Britain was paid by the local office of the National Insurance or the Social Security Department, thereafter employers were made responsible to pay the first (initially eight, later twenty-eight) weeks; they could, however, reduce their National Insurance contributions. This reimbursement policy was abolished in 1994, and since then employers have had to bear the costs of absence due to sickness. People are covered if they earn enough on average to become liable to pay National Insurance contributions. If the Statutory Sick Pay is exhausted, or people have no entitlement, they can claim Incapacity Benefit paid by the state. Both benefit types are paid as uniform, flat-rate benefits with some deductions for low incomes and long-term sickness. In Germany employers are obliged to continue wage payment at a reduced level for the first weeks of illness (length depending on employment status), subsequently the statutory health insurance

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system grants earnings-related cash benefits which should compensate for the loss of income. Previously, there was a full income compensation in case of sickness, but the replacement rate has been lowered to 80 per cent of the gross income. The payments made by the health insurance are, at the most, 90 per cent of the net income. The Eurobarometer 1996 posed the question of the preferred arrangement of sickness benefit provision regarding the agency in charge and the level of benefit (Table 6.25). In Britain there is a split between those people who want to make the employer liable for sickness benefit, those who count on the state, and those who argue for compulsory health insurance. This seems to deviate from the prevailing regime that has made employers liable for the payments for the last couple of years. The results are also instructive in terms of benefit level: most people (34 per cent) want a flat-rate benefit with an additional allowance for dependants, the second largest proportion (29 per cent) is in favour of graduated, income-related benefits with extra payments for dependants, the rest is split between flat-rate and income-related benefits regardless of the family needs. In West Germany, the majority puts its faith in an insurance Table 6.25 Sickness benefit: which system and how much should be paid out Support (%) Which benefit system Voluntary, private insurance Employer is obliged to pay benefits Compulsory health insurance State benefits financed by taxes How much benefit for sick employees Same amount regardless of wages and dependants Same amount regardless of wages with extra payments for dependants Different amounts depending on wages but regardless of number of dependants Different amounts depending on wages with extra payments for dependants No payments at all

Britain

West Germany

11.3 29.3 26.0 33.3

13.2 24.8 53.1 8.9

17.3

13.3

34.0

14.3

17.0

27.1

29.3

42.5

2.0

2.7

Source: Eurobarometer 1996. Notes Question wordings Imagine that you are a politician and must completely revise the system of sickness benefit in your country. To do so, you would have to make several decisions. In most industrialized countries employees receive cash benefits when they are unable to work due to illness. There are several possibilities for paying out sickness benefit. Which one of these four options would you choose if you were a politician? It is still up to you to decide in which way sickness benefits will be paid out. Keeping in mind that the total amount of benefits depends on the payment scheme chosen, which of these four options would you choose?

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regulation, while one-quarter would like to see the employer responsible for sickness payments. Since the system exists in both forms depending on the lengths of absence, the response pattern tends to be in line with the institutional arrangements. By the same token, we find a majority in favour of earnings-related benefits, most of them for an income-related benefit supplemented by a family allowance. Evidently, there are national differences, especially with regard to the relative importance of a flat-rate entitlement which is more popular in Britain than in Germany. In sum, there is some evidence that the attitudinal pattern corresponds loosely to the existing entitlement system, but also that people place great emphasis on the needs of dependants which people do not want to see unduly affected by the income earner’s incapacity.

Conclusion The results provide overwhelming evidence that the de-commodification of health is one of the most appreciated and valued principles. Equity on the supply side and graduated contributions on the revenue side, either in the form of an insurance premium or taxation, seem to have some moral attraction. The right to healthcare is closely tied to the implicit assumption that the quality of care should not fall below certain commonly and professionally agreed upon standards. The public health arrangements in Germany and Britain enjoy strong support and where dissatisfaction prevails, as in the case of the NHS, an improvement of the system is demanded. A poor service is simply not acceptable since it can cause grave impairments for each single user. Compared to international standards, the German population may be aware that they have achieved a system which scores quite well in terms of quality but they may also be conscious that the political salience of the health cost issue demands changes, either with regard to the level of contributions or health supply. The degree of satisfaction with the health system is also remarkable in comparison to international levels (Mossialos 1997). Thus, the majority seem to favour a stable level of health expenditure in the knowledge that a good range of quality care is being provided. Emphasizing the efficiency of the health system might be electorally popular because it places the responsibility on the supply side, but rationing measures, on the other hand, are certainly not. Until now, the Germans ‘are not unduly suffering from cost containment, despite increasing cost sharing’ (Altenstetter 1999: 78), but the recent changes in fund management and membership might lead to a more structured ‘market’ of insurance coverage and health supply. In the case of sickness benefits people express preferences indicating that the current arrangements have some impact on what they believe is the best choice. There is evidence that the social security schemes in place emanate some kind of normative persuasiveness solely on the basis of their very existence. As the findings confirm, people’s preference for

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sickness benefit arrangements is ‘institutionally biased’, in other words, they tend to give priority to those institutional regimes that are already in operation. The Germans adhere to a system of insurance or employer liability for sickness benefits paid on an earnings-related basis. The largest group of the British respondents prefer flat-rate benefits with extra payments for dependants, and in the second instance, graduated benefits that take account of the wage and the number of dependants. At the same time there is a tripartite division between the sections of the population which ascribe responsibility for sickness benefits to the state, the employer and compulsory insurance. However, the findings also demonstrate that the social preferences do not fully match the institutionally incorporated principles and that the moral economy might be driven by other concerns.

7

The moral economy revisited

The problem of institutional design is not, as the classical economists thought, that selfish individuals be induced to interact in ways producing desirable aggregate outcomes, but rather a mix of motives selfish, reciprocal, altruistic and spiteful – interact in ways that prevent the selfish from exploiting the generous and hence unravelling cooperation when it is beneficial. (Bowles and Gintis 2000: 37)

In this concluding, though not conclusive, chapter an attempt will be made to draw some generalizations about how the social and moral logic of welfare transfers works. The question which has guided much of this investigation into the moral economy of the welfare state is what determines the endorsement of collective welfare arrangements. Collective welfare arrangements can be defined as mutual aid schemes that entail the reapportionment of societal resources. It is comparatively easy to understand collective resource sharing in relations of social vicinity such as families, communities and neighbourhoods where fellow feelings prevail and where communal solidarity forms exist. This type of solidarity is grounded upon ‘part-societies’ which ‘consist of small worlds of personal relationships that are the emotional core of every individual’s social experience’ (Cheal 1996: 91). However, in contrast to the bonds of sympathy that are tied to primary collectives of kin and kind, large-scale welfare schemes pose the question of ‘why care for the stranger’ (Culpitt 1992: 25). Historically, state authority has enforced between-group solidarities and universal risk sharing by the means of social legislation and institutionalization. Important for this process were the interacting developments of state formation, democratization, the rise of political parties and class politics (for example Korpi 1983; Skocpol 1992; Esping-Andersen 1990). The ability of social groups (especially the different social classes and class-coalitions) to press for reforms, and to influence the distributional outcome to their advantage

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has determined the architecture of today’s welfare institutions. When redistributions between the better-off and the less well-off occurred this was less a result of the benevolent behaviour of the privileged. Only when political pressure was put on them, or when their security interests were in accord with those of the less fortunate the latter also could benefit from the interventionist state and gain access to the means of security. As Baldwin (1990: 289) states: ‘The middle classes arranged the things first and foremost for themselves, the unfortunate were the beneficiaries of a comparatively successful trickle down.’ As the introductory chapter has argued, the question of the beneficiality of certain welfare programmes (or welfare regimes) has also been central to most of the writings on the political economy of the welfare state. The baseline argument here is, that ‘beneficial involvement’ is the key to explaining why social groups are in favour of collective welfare arrangements. The expansionary course of the welfare state and the inclusion of large and politically powerful groups into the benefit schemes, therefore, was interpreted as forging a coalition that safeguards the political viability of the welfare state. It was said that a social insurance welfarism immunizes the welfare state against backlash sentiments. Social insurance schemes are viewed as very successful social inventions for the entrenchment of people’s interests, either as income maintenance schemes that act like savings banks or as efficient means for the collectivization of social risks (Goodin and Dryzek 1987). From this point of view, social insurance schemes are less expressions of solidarity, but rather, expressions of people’s interdependence (Baldwin 1990: 33). Accordingly, economists have highlighted the ‘interdependencies in people’s utility function’ in order to explain why people have an interest in some forms of redistribution, especially if redistribution takes place in terms of risk rather than class (e.g. Hochman and Rogers 1969). To some extent, the study agrees on the role self-interest can play for the legitimacy of the welfare state. However, it was also contended against some of the attempts to reduce human motivation to self-interest. Although cases of highly altruistic, unconditional giving are rather rare, the self-interest account fails to explain why people are, in many instances, willing to share their resources with others even if there is no direct benefits for them. One should bear in mind that in modern welfare states a substantial fraction of the total income is redistributed by the state through the tax and welfare benefit systems, and that an all-winner welfare state is unlikely to exist. The welfare state is the major instrument of secondary distribution and thereby affects – positively or negatively – the take-home pay of the wider population. Redistribution often implies that resources are taken from some and given to others. These exchanges are impersonalized and take place between large and often distant social groups and can, therefore, truly be regarded as a universalization of the

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‘gift relationship’ (Caillé 2001: 263). For some, the considerable public support for the welfare state, even among the well-to-do, represents ‘the most significant case in human history of substantially voluntary egalitarian redistribution of income among total strangers’ (Bowles and Gintis 2000: 33). Since it is a morally demanding undertaking to take money from one party and give it to another there is some need for an explanation of why voters should support a welfare state that is not, in the first instance, to their own net-benefit. Those who have assumed the viability and political desirability of the welfare state due to its moral appeal base their arguments on the moral capacities of the citizens. The British democratic socialists, for example, assumed that the better-off would not only cooperate in collectivist enterprises such as national insurance and social services but also acquiesce in paying redistributive taxation that helped the disadvantaged, either because they empathized with the latter’s plight or because they saw it as part of their civic responsibility to do so. (LeGrand 1997: 155) In other words, since support systems are designed ‘to maintain, or to restore, a preferred balance in the quality of life between the members of a collectivity’ (Cheal 1996: 91) they may be endorsed as a matter of justice. Hence, it is not enough to simply launch a concept of the welfare state in which various interest groups compete with each other, each jostling for their maximum share of welfare, rather welfare state theory must also put forward moral and ethical justifications of the welfare state (Culpitt 1992; Goodin 1985). Since the welfare state can be interpreted as a moral endeavour, it stands to reason to assume that the moral dimension has an independent impact on attitudinal stances. The normative ideas embodied in the welfare state institutions may, therefore, appeal to the desire for the fair provision of mutual aid between citizens. These two opposite ends of the debate have provided the background for my empirical analysis. It has been presupposed that satisfying income interests as well as the concern for others provide the underlying motivational bases for the acceptance of welfare schemes. The theoretical perspective taken has emphasized that welfare transfers are insufficiently understood if one considers them only in material terms, one also has to take into account the moral and social attendants of resource exchanges. The language of needs, rights, security and justice which accompanies much of the social policies is not just empty rhetoric, moreover, it exerts its influence on the individual’s motives to approve welfare schemes. Although one has to accept that the (material) stake given to the people provides a compelling incentive to remain committed to the welfare

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system, it is also undeniable that people’s support for the welfare state is also embedded in, and constituted by, moral assumptions. The core argument of this study claims that the social support for welfare institutions is closely associated with the moral economy of social welfare, in other words, a socially and politically validated conception of social justice. The moral economy perspective is interested in mutually gratifying patterns of exchanging welfare resources that rest on moral assumptions determining the distributions of welfare burdens and benefits. Decisive in such an account is the conception of welfare arrangements as reinforcing the ‘communion’ between the groups involved in welfare exchanges. The idea of reciprocal fairness has been viewed as a much better explanatory concept to help us to understand the comfort or discomfort people express with certain welfare practices and policies. Beyond pure self-interest, people tend to adhere to some kind of ‘reciprocal altruism’ (Trivers 1971) that makes them in favour of redistributive arrangements under the condition that they are viewed as normatively sound and appropriate. The basic argument claims that redistributions are possible and will find public approval if they are not in conflict with socially valid reciprocity norms. Most welfare exchanges are stipulated as reciprocal transfers that ensure that ‘each party has both rights and duties’ (Gouldner 1973: 239). However, the concept of reciprocity neither implies equality of burdens or obligations, nor a balancing out of material costs and benefits. In many instances the objects of exchange may not even be commensurable. In other words, a reciprocal relationship does not guarantee the exchange of ‘equal’ values. There is also ‘no written contract with precise terms but a deep-rooted sense of mutual obligation, and trust on both sides that the obligation will be honoured’ (Ferge 2000: 4). However, reciprocity means that people expect some kind of recompensation for their efforts, but these recompensations can be either in the form of having a stake in a collective endeavour, a protection promise, welfare entitlement returns or in the form of norm-conforming behaviour on the part of the beneficiaries. This is the basis on which the benefactor can be motivated to share his resources with the actual beneficiary. From the recipient’s perspective, reciprocity is a pattern of exchange that entails certain obligations or actions as repayments for benefits received. It seems apparent that the obligations of ‘repayment’ are contingent upon the imputed value of the benefit received. As was demonstrated, this varies with the capacity to grant welfare support on the side of the benefactor, the intensity of the beneficiary’s need, the type of relations between beneficiary and benefactor and the motives that govern the act of giving. On an empirical level, the study has made an attempt to investigate the relation between welfare institutions and public attitudes in Britain and Germany, placing emphasis on the question of how the former affects and

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determines the latter. For this purpose, five policy areas have been embraced, namely redistribution, poverty policies, unemployment provision, pensions and social health. The guiding question for the research has been how welfare institutions affect social preferences by entrenching interests and incorporating conceptions of social justice. If one looks at the two welfare regimes from the perspective of beneficial involvement, the programmatic structures of the German and the British welfare regimes appear to be rather distinct from each other. In conservative welfare regimes many welfare schemes are explicitly designed to institutionalize ‘middle class loyalties’ by giving priority to horizontal redistribution and status maintenance, and thereby also providing attractive benefit packages for middle income earners. It can be argued that the beneficial involvement of the middle and upper classes and the sense of entitlement that the insurance system produces contribute to the consensual attachment and high legitimacy. The basic argument here is that those who are favourably incorporated into the insurance schemes are likely to form a pro-welfare constituency. In liberal regimes, where state activity concentrates more on the bottom end of society, the middle classes are believed to be less attached to the welfare state since they purchase a greater share of social security on the market. Much of the political support for the welfare state therefore depends ‘on the loyalties of a numerically weak, and often politically residual, social stratum’ (EspingAndersen 1990: 33). At first glance, the empirical findings appear to be in accord with this account: Germany does not display major distributive conflicts and there is a relative satisfaction with the higher-tier benefits such as pensions. In Britain, in contrast, the attitudinal patterns seem to be less integrated with regard to the principle of income redistribution and the state schemes do not have the image of giving good returns. A social insurance welfarism, as in the German case, seems to be politically relatively secured, because it conveys a sense of entitlement on the side of the contributors. In the British welfare state, in contrast, the middle-class support is less reassured by the means of beneficial involvement. Nonetheless, one would be jumping to conclusions if one equates the benefits that accrue to the median voter with the support for the welfare state. In the first place, one has to be aware that not only are benefits allocated, but also that burdens have to be shared. Thus, different equilibria are possible: a high-level equilibrium, where the welfare state is costly and income earners are asked to contribute a substantial part of their income in order to finance it, but gain a lot from the state schemes, and an equilibrium at a lower level, where the welfare state costs are rather modest, but the benefits are as well. In both cases one could frame the relation between payments and benefits in terms of balanced reciprocity. The data have shown that while the German middle classes may enjoy generous benefits, they are less content with the level of tax and social contributions imposed on them

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than are their British counterparts. The level of social expenditure or social benefits, therefore, cannot be taken as the sole indicator of public attachment to the welfare state. Rather, one has to ask how the aspirations of those paying for welfare are satisfied and whether people believe that their taxes and social contributions lead to adequate returns. Beyond it, the willingness of the people to endorse collective welfare provision also depends on an approval of the moral principles incorporated in the welfare schemes. Turning again to the empirical findings, it could be demonstrated that the East Germans expect the state to be in charge of the well-being of its citizens to a large extent. Used to a universal state system of social protection, and confronted with relatively unknown life vicissitudes such as unemployment, they direct their security aspirations towards state agencies rather than towards the market. While the East Germans overwhelmingly demand and approve welfare state intervention, the West German public is also committed to the principles of a comprehensive welfare state but more reluctant to call for further expansion. In some areas a ‘status quo mentality’ has become the dominant attitude of a saturated and content majority, but there are also some signs of a readiness to accept cuts in benefits. These are signs of a modest and sector-specific ‘demand flexibility’ (Roller 1999: 37) due to a growing realism about what the welfare state can afford. At the same time people are relatively pessimistic with regard to the future development of the welfare state and large proportions fear that their prospective benefits will be lower than the standards they are used to (Bulmahn and Mau 1996). In Britain, it was found that the British public is generally in favour of the welfare state and its institutions. British social attitudes have resisted the ideological confrontation presented by the anti-welfare ideology of the New Right. One can find that the beliefs about the proper role of the state remained relatively robust even in the face of the powerful attacks of the anti-collectivists. Despite some fears that public support might rapidly diminish once privatization, lower public standards and provision alternatives were pushed through, the public has remained committed to the core services. That they demand higher spending is, not least, a reaction against retrenchment which has, according to many, gone too far. High priority is given to benefits with relatively symmetrical risk dispersion and to measures with a mainly horizontal or intertemporal redistribution of resources. However, that the British respondents have shown the propensity to demand more welfare than the West Germans is not an indication that they are more pro-welfare but, rather, underlines that public opinion patterns are compared against different national settings and social welfare standards, a fact which is often overlooked by large-scale comparisons. Overall, the survey data provide striking evidence that collective welfare

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arrangements are widely endorsed. When expressing their attitudes towards collective welfare people are not simply utilitarian ‘cash registers’, there is also some degree of generalized reciprocity involved that abstains from narrow cost–benefit calculations. Apparent conflicts emerge less at a fundamental level of state responsibility or welfare objectives, but rather on the issue of further expansion or curtailment of welfare expenditure. The consensus on the necessity for collective welfare provision extends far beyond the so-called welfare classes, those who actually benefit, and the possible return expectations contributors to the welfare schemes may have. It is especially the support for social insurances which is insufficiently understood if one focuses solely on the benefits people derive from it. Social insurance schemes are not just actuarial arrangements that recompense foregone contributions or pool risks, they also collectivize social risks and serve socially defined policy objectives. The pension system, for example, is organized to ensure that the social integration of the elderly is safeguarded and that people are rewarded for their working life. Hence, an age-based entitlement system realizes not only intertemporal but also interpersonal distributions with the objective of providing a decent material base for those of retirement age. For this purpose, the pay-as-you-go schemes levy money from the currently employed and transfer it to the pensioners. Undeniably, social insurances rest on morally bounded judgements that determine which claims are regarded as justified and which demands are met. The normative infrastructure for such a reapportionment of resources can be described as a ‘generational contract’ that predicates the obligation that the young support the old. Indeed, this norm is firmly entrenched in Britain and Germany. When people evaluate the public pension system they are likely to pay attention to the question of whether pension contributions bring ‘equitable returns’, but also to their sense of generational justice. The survey data have strikingly demonstrated that the ‘generational contract’ enjoys widespread support and that this approval also shows some resilience against a growing distrust of state pensions. The lower degree of support from the younger cohort in West Germany is still relatively contained and is unrelated to the scenarios which have predicted that the pension system would set the young against the old. The pension example also illustrates that the macro-solidarities of welfare arrangements interact with the micro-solidarities of communal relations. This has often been overlooked since welfare theory has always had the propensity to isolate the individual (see Smith 1993: 245). The micro-perspective suggests that we are dealing with an ‘embedded individual’, in other words, everybody is a part of family relations and social networks. These are the people we care for. Thus, one has to link macrosolidarities not only to individuals but also to how these transactions reach into social ties and networks. Welfare state activities do not solely affect the life of the individual but also the lives of those who are socially close to

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the individual. Self-interest, seen from this perspective, can easily include the identification with the interests of a larger social network and family unit. That people identify themselves as members of groups, communities and families could be one motive for refraining from opposition to measures through which they do not personally benefit. Hence, the absence of a strong generational conflict can, in part, be attributed to the family context most people live in which leads them to empathize with the generation of their parents or grandparents and suppresses potential opposition to public retirement schemes. Thus, through the backdoor which is the ‘interdependent individual’, the bonds of sympathy re-enter the analysis of welfare state support. Further theoretical sophistication can be achieved if one departs from an individualistic framing of the social stateindividual relationship and takes into account the sociability of individuals (Blokland 2000). A prime example for an insurance that is an expression of political risk regulation rather than an actuarial one is unemployment insurance. Although constructed in accord with the insurance rationale, the major objective of unemployment protection is to compensate for a loss of income and not to achieve a balance between contributions and benefits. A large majority of the citizens in Britain and Germany agree that the state should provide a decent standard of living for the unemployed. However, under conditions of high and lasting unemployment the constituency tends to be divided into two factions: those outside the labour market dependent on unemployment benefit transfers and those employed who are expected to shoulder the costs of unemployment. The deeper the gulf between the two groups, the less people in the core sectors will view the unemployment scheme as being beneficial for them and the more they will perceive the redistributive bias which is an inherent element of the policy arrangement. The results of this study verify that such disparities have repercussions on the political standing of unemployment schemes. Normatively, they are not as well entrenched as pension or health schemes and the popular engagement towards further spending on unemployment is rather modest. At the same time, attitudes towards unemployment compensation schemes were structured according to the employment status and the unemployment risk people face. The attitudinal gap between the unemployed and people in secure employment was largest in Germany. Part of the moral economy of unemployment is also the concern for possible benefit effects. When people assume that living on benefits is too comfortable and makes people less likely to search for a job, they are less willing to share resources with the unemployed. Such an interpretation makes a generous unemployment provision morally objectionable and comes into conflict with the perspective that regards unemployment payments foremost as just compensations paid to the victims of the economic system. Collective management of risks is one thing, providing benefits to those

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at the bottom of society is another. Hence, the motivational components that underpin the support for insurance schemes are rather different from those on which the support for social assistance rests. However, some writings on the welfare state argue that there are positive interactions between insurance and social assistance schemes. It is assumed that in welfare states that do not only cater for the poor, the middle classes use their political power to obtain more resources so that ‘the welfare programmes will be better funded – and the poor better-off, in consequence – than they would have been had the middle classes not been beneficially involved’ (Goodin and LeGrand 1987: 210). The common assumption is that a ‘welfare state that caters only for the poor will have poor support’ (Leisering and Leibfried 1999: 315) while a welfare state with comprehensive higher-tier protection is likely to forge pro-welfare coalitions between the median income earners and the less fortunate. However, as was argued throughout the book, there are clear differences between the support that is derived through interest-entrenching insurance schemes and the support social assistance schemes can count on. Hence, it cannot be taken as confirmed that weak higher-tier systems necessarily weaken the support for lower-tier systems. The counterposition one could take suggests that people will support a moral cause if, but only if, it is unambiguously and indisputably moralistic. If the welfare state were purely a matter of helping those less well-off than themselves, then, paradoxically, the non poor might support it even more strongly than if it were partly of benefit to themselves as well. (Goodin and LeGrand 1987: 213) In other words, desirable ends can motivate public generosity. What the empirical analysis of attitudinal data suggests is that citizens regard poverty as socially unacceptable and that they call on the state to provide remedies against destitution. The British, especially, feel uncomfortable with the extent of poverty they perceive within their society and urge for the state to step in so that no one is left without adequate means of subsistence. What clearly arises here is that people’s attitudes towards social assistance are not primarily expressions of self-regard, rather, they exhibit a good deal of ‘basic need generosity’ (Bowles and Gintis 2000). However, the moral imperative of social assistance schemes can be undermined by the perception that the beneficiaries do not take over individual responsibility. Identifying a lack of effort, welfare scrounging or forms of welfare dependency can endanger public support for anti-poverty schemes since it runs into conflict with the norm of obligating reciprocity. The moral economy of social assistance, therefore, is not only comprised of moral

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arguments in favour of assistance, it also encompasses moral judgements that can run counter to poverty measures. The health policy area is also strongly supportive of the thesis that norms have an effect on people’s preferences. Since health is considered as the highest ‘good’ in everyone’s life, people adhere to the norm of universal access. The beneficial characteristics attributed to universal healthcare systems can by no means be explained solely in terms of the individual calculus. People are strongly in favour of a system that provides provision for all irrespective of income and do not want to see health treated as a commodity. Normatively, a kind of dispositional reciprocity underwrites the social exchanges within the health sector. The attendant moral economy of health quite strikingly demands that the equality of access for equal need should be guaranteed by the state regardless of costs, social status and social contributions. Although this ideal has not been perfectly realized, the state-run health systems in Britain and Germany are largely in accord with this normative set since they are collectively financed and highly universal. The National Health Service, especially, establishes a citizenship right to healthcare that possesses high legitimacy throughout the electorate. The apparent deficiencies, such as low quality, resource shortages and waiting lists, do not cause a defection from the state system, but rather that people demand improvements. In the German system, which swallows a comparatively large amount of money, people may be concerned about cost increases but they are probably not ready to accept a curtailment of major health services. By no means do they believe that the health supply should be restricted to those who are able to afford it. The deployment of social norms is dependent upon institutional legacies that engrave a normative set and condition attitudinal patterns. While the ‘beneficial involvement’ account was successful in highlighting how different welfare regimes entrench interests and thereby engender system loyalty, it had little to say about why people remain committed to certain distributive practices even if they are sub-optimal when viewed from the perspective of the actor’s income interests. While the preference for earnings-related benefits in Germany may still be interpreted as the rational support of the premium payers, the support of the British electorate for flat-rate entitlements, irrespective of the beneficiaries’ income, gives evidence that the assumptions of what is regarded as an adequate entitlement are rather different. Although people are required to pay earnings-related contributions to the National Insurance, even high income groups in Britain are strongly in favour of unemployment compensation being the same for high and for low income earners. Thus, these policy preferences do not simply reflect the income interests of the electorate, but rather, socially and politically validated conceptions of who is entitled to benefits, how much should be given and under which conditions.

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Much of this study has been concerned with the question of how the institutional design conditions, shapes and makes use of individual’s motives and orientations. By comparing different welfare regimes and policy areas it could be shown that the motivational substructure of welfare institutions differs with their programmatic structure and the way interests are entrenched and norms are validated. It was argued that institutions are not merely environments for gain-oriented attitudes; since they embody conceptions of social justice they also have a preference and tasteforming impact on people’s moral stances. Therefore, what people regard as fair and equitable welfare burden and welfare benefit varies significantly with regard to different welfare sectors and welfare regimes. Since institutions mediate and cultivate a corresponding normative repertoire, attention has been placed on the institutional design, on the one hand, and on the normative orientations of the citizens, on the other hand. By talking about a moral economy of welfare institutions it was suggested that welfare transactions are regulated by moral judgements about ‘who deserves what’. Individual rights to resources are in need of legitimizing principles that make sufficient sense to the citizens and encourage their partaking in redistributive arrangements. The institutional design has its own capacity to validate norms since it colours the notions of right and wrong and there is clear evidence that the cognitive and moral capacities of citizens interact with the institutional environment. However, the institutional valorization of certain rules for distributing social welfare may help to facilitate a social consensus on the allocation of burden and benefits, but nonetheless, the matter of ‘how much benefit’ and ‘under what conditions’ remains contested. Public discourses, the press and political actors play their part in forming what people perceive as being fair and appropriate welfare provision. In addition, one needs to concede that the stipulation of a single, unambiguous and stable standard of social security is unlikely to be achieved, since what is regarded and valued as a ‘collective good’ varies quite considerably throughout society. Some basic social rights may be conceived of as normatively settled, others are subject to ongoing disputes. Thus, the operational meaning of social security and the settlement of what an adequate level of welfare provision entails is always a moving target. At the time being, the quest for welfare state legitimacy is high on the public agenda in most of the western welfare states. It has been argued most strongly that the age of large, unspecified redistributive acts has ended and that every policy maker that counts on the generosity of the larger electorate will be a public menace (Field 1996: 20). Turning private is one of the answers given by policy makers, putting forward new ideas of ‘welfare contractualism’ that strengthen the relation between social contributions and welfare entitlements is another. Both imply that voters will support costly schemes only if they are their own schemes. According to

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the latter, benefits that are not closely linked to contributions should play only a subsidiary role and be sustained only if some people are unavoidably out of jobs. This is the vision of a stakeholders’ welfare state which would be increasingly insurance-based and less redistributive. The problem of the new welfare contractualism arises from the rather narrow and relatively strict account of human motivation. If one redesigns the welfare state as a strategic environment for individual buyers of state welfare, one would come to realize that many programmes will not be able to accomplish their objectives. By the same token, it is arguable that private insurance systems are only a limited alternative to state provision. Private schemes sometimes lack the ‘guarantistic’ character of state-administered solutions that also assure – to some extent – protection against fund exhaustion. Many risks operate beyond the limits of private insurance and are difficult to put into probability equations. The complexity of risk assessment, the emphasis on actuarial solutions and the problems of adverse selection lead people to believe that some social risks are better cared for in the hands of state agencies (Taylor-Gooby 1999a). ‘Going private’, as Leisering and Leibfried (1999: 312) point out, also entails other unsolved problems which are associated with the argument put forward in this book: ‘The moral economy of private schemes is far from being clear: who justifies such arrangements, who loses, who wins, who has to take care of losers, how secure are the social bonds on which insurance markets and capital markets are built?’ However, if one takes the sociological analysis seriously, and abstains from approaches that reduce people’s reasons for paying for welfare to self-interest, one does not need to be sceptical about the tenability of collective welfare provision. In accord with the results of this study it can be suggested that people adhere to values and virtues that are independent of the material incentive structure of the benefit system. People are driven by a mix of motives and if the arrangements are morally plausible and perceived as fair in terms of sharing burdens and benefits they are also willing to make costly sacrifices (Van Oorschot 2000). This by no means implies a return to the ‘welfare altruist’, but rather argues for a welfare state that does not renounce the moral dimension as one component of human motivation. One should remember that one of the major objectives of the welfare state is to deal with collective contingencies and risks and to ‘democratize the burden of bad outcomes’ (Lowi 1990: 38). Even today people are aware of risks they may face throughout their lives and there is a strong desire that the state should play a role in providing for these needs if they occur. A collectivization of social risks on the level of basic security can be a way of reconciling the security interests of the people with their moral concerns. This allows people to exercise generosity towards those in need, whilst knowing at the same time that if they faced similar hardships, they would also be catered for. What

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will be crucial for the future endorsement of collective schemes will be whether welfare institutions are able to tap citizens’ commitment to a fair provision amongst them and, thereby, make effective use of the ‘moral capital’ that is affiliated with the attitudes and the behaviour of the homo reciprocus.

Notes

2 Self-interest and pocket-book attitudes 1 A full-scale presentation of the empirical variants of crisis theory is given by Taylor-Gooby (1985: 14ff.). He summarizes various writings, trying to explain the success of the New Right and why its ideology was falling on fertile ground. 2 Although he quite often refers to stances of public opinion, the political climate or to the obscurely coined ‘fairness issue’, which do not necessarily match with the strong interest notion, these aspects do not have an independent stake in the conceptional framework. 3 This argument has already been pushed by Walter Korpi (1985) who refused the liberal market hypothesis which claims that the welfare state has negative effects on economic growth. In contrast, he showed that the welfare state growth has not decreased economic efficiency and that it complements, rather than supplants, the market. 4 This paradigm shift started under the Thatcher government and was reemphasized and reinterpreted when the Labour government under Tony Blair took office. In Germany these issues remained comparatively quiet and had only marginal policy implications. Nonetheless, in 2001 the shirker-debate together with the new ‘Job-AQTIV-Law’ put the individual’s behaviour and responsibilities at the forefront of the discussion. 5 For an elaboration of such arguments see Wolfe (1989). 3 The admixture of motives: broadening the perspective 1 This issue is still under discussion. Rational Choice authors like Taylor (1990) and Coleman (1990), for example, emphasize that norms and institutions are the outcome of repeated interactions of utility-maximizing individuals. Institutions, once established, stabilize exchange relationships, reduce transaction costs and induce cooperative behaviour among self-interested individuals. Institutional arrangements guarantee the complementary behaviour of others which makes cooperation worth pursuing. The welfare state and its institutions, therefore, can be seen as a set of regulations and norms which make cooperative behaviour rewarding by norms of reciprocity and a higher predictability of social interactions. 2 The relationship between norms and interests is a long-standing issue which cannot be addressed here at length. Buchanan (1986: 11–12) suggests: Both images are widely interpreted, by their own proponents, to be descriptions of a total reality of politics. Each image pulls out, isolates, and accentuates a highly particularized element that is universal in all human

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behaviour. To an extent, political agents, elected politicians and bureaucrats, as well as voters, act in pursuit of what they genuinely consider to be ‘general interest’. But also, to an extent, these political participants act in pursuit of what they estimate to be their own pecuniary interest. Each political actor, regardless of his role, combines both elements in his behaviour, along with many other elements not noted here. The whole point of constitutional inquiry is the proposition that the constraints, rules, and institutions within which persons make choices politically can and do influence the relative importance of the separate motivational elements. 3 There is an intense debate surrounding the problems of collective action, cooperation or defection which are always intertwined with the orientation of actors. Within this framework, the conceptual difference between selfinterest behaviour and regard-for-others behaviour has been weakened by reference to the gains through cooperative behaviour. Accordingly, ‘behaviour is cooperative when actors override their self-interest and act in accordance with the public interest. Fulfilment of the latter in the long run will be to the advantage of all actors and participants in cooperative behaviour’ (Matzner 1988: 178–9). 4 The relationship between the ‘self’ and the ‘other’ is an important issue that sheds light on the modes of co-determination. Thomas Nagel (1970: 37) points out: ‘Altruistic reasons (regard for others) are parasitic upon selfinterested ones; the circumstances in the lives of others which altruism requires us to consider are circumstances which those others already have reason to consider from a self-interested point of view.’ Others, like Schmidtz (1996), have argued that regard for others and self-regard are rather symbiotic, insofar as regard for others has to be nurtured we need self-regard to initiate the nurturing process. 5 For the topic concerned the most relevant contributions come from the sociological and historical institutionalists. Amongst others: Granovetter and Swedberg 1992, March and Olsen 1989, Powell and DiMaggio 1991, Steinmo et al. 1992. 6 The classical notion of a moral economy is related to the works of Karl Polanyi (1957) and Edward P. Thompson (1971). Polanyi introduced the distinction between the embedded and the autonomous economy claiming that embedded (typically traditional) economies submerge exchange and production in the wider societal organization. E.P. Thompson’s (1971) work focuses on the ‘food riots’ of the eighteenth century during which indignation was expressed at the violation of the norm that one should not make a profit out of people’s misery. Both emphasized that norms and cultural background assumptions govern practices of social exchanges in pre-market or early market societies. The concept of the moral economy has not only been fruitfully adopted in the research fields of anthropology and ethnology, but also in political science. In political science, the notion of a moral economy has underlined that (economic) behaviour is embedded in social institutions and values, and that many exchanges have moral attendants (Bates and Curry 1992; Booth 1993, 1994). For the wider social order and the exchange of social goods, one can describe the moral economy as the collective sense of the appropriateness or inappropriateness of certain social practices. The moral economy, therefore, is a popular consensus about the notion of legitimate practices of social exchanges and the allocation of social goods (Arnold 2001). 7 Marcel Mauss (1990: 67), the theorist of the gift, claims that many welfare state practices are permeated with the atmosphere of the gift exchange: ‘All our

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social insurance legislation . . . is inspired by the following principle: the worker has given his life and his labour, on the one hand to the collectivity, and on the other hand, to his employers. . . . The state itself, representing the community, owes him, as do his employers, together with some assistance from himself, a certain security in life, against sickness, old age, and death.’ 8 One should recall that Rawls’ (1971: 490ff.) theory of social justice identifies reciprocity as a feature of social cooperation that helps to support his account of ‘justice as fairness’. The link between reciprocity norms and justice builds upon the fundamental conditions of human sociability. Rawls argues that the most stable conceptions of social justice are presumably those for which the corresponding sense of justice is firmly based on reciprocal relations. Justice as reciprocity is conceived of as a deeply entrenched moral precept that facilitates the endorsement of societal resource sharing. 9 The homo reciprocus idea had already been used by Becker in his book Man in Reciprocity (1956: 5) in which he sees humans not merely as biological entities, but as social beings involved in meaningful social interactions. He states: ‘Let us now dismiss from mind these various meanings of the adjective “social” and their correlative nouns, and say specifically that for us sociology represents the scientific analysis of man in reciprocity, or, less broadly phrased, the predictively oriented study of interpersonal and intergroup relations as such.’ 10 Bowles and Gintis (2000) use the term homo reciprocans, but the concept is close to the one proposed here. As the homo reciprocus is a term already used in social sciences for characterizing people involved in mutual social exchanges that cannot be reduced to factors of economic interest (characterized by the homo economicus), I will adhere to it. 4 An analytical framework 1 Public opinion research in itself has little to say about the wider field of interaction of welfare institutions and public attitudes (see Papadakis 1992). Only in rare cases have models for the understanding of this relationship been incorporated into these types of analyses. What has been lacking is not the amount of data, but an explanation of positive or negative attitudes towards the welfare state which embrace the relationship between opinion and policy, and take institutional diversity into account. However, within the field of attitude research some attempts have been undertaken to relate institutional types or macrocharacteristics with attitudes (e.g. Svallfors 1993, 1997; Borre and Scarborough 1995; Kluegel and Miyano 1995; Taylor-Gooby 1998b; Bonoli 1999; Svallfors and Taylor-Gooby 1999). On some issues, macro-level differences have accounted for attitudinal differences or configurations, on others their explanatory contribution remained weak (see Svallfors 1997). However, public attitudes are not only derivations from the institutional structure; they have their own momentum and in some instances they ‘seem obstinately to resist conforming to the dominant policy themes they inhabit’ (Taylor-Gooby 1998b: 71). Papadakis’ (1992) re-examination of public opinion research on attitudes towards the welfare state has shown that it is difficult to establish causal links between opinion and policy. Again, complexity and the impact of intervening factors obstruct a straightforward analysis and there is the danger of a highly selective interpretation of the data. He shows that there is only a ‘loose coupling’ between institutions and opinion, and even some insensitivity of opinions to the details of policy. Nonetheless, they are not structured in an unpredictable and random manner and most of the research results make sense in relation to the institutional and cultural setting. 2 Attitudinal research has used a related distinction between norms and interests,

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though sometimes using other labels such as instrumental orientation versus values, ideology or symbolic policy. In most contributions, self-interest orientations and moral orientations are analytically separated with the first representing the utility for the self, and the latter, the concerns for society in toto (e.g. Campbell et al. 1960; Sears et al. 1979; Whiteley 1981; Roller 1992). This distinction serves mainly as an analytical tool; it does not reject a wider concept of selfinterest as including the normative orientations of individuals, as forwarded by other approaches. The separation of the two dimensions has a heuristic value for the identification of determinants of attitudes. It allows for discrimination between attitudes directed towards income-maximization for the individual (i.e. their own material gains), and attitudes related to notions of solidarity and redistribution (i.e. gains for others) which indicate a wider social commitment. 3 As already shown by Downs (1957), no individual can compile and process a complete set of information in order to fully assess the political process, so the role of media discourse and political actors becomes important (see Page et al. 1987). 4 Of course, the attitude–behaviour relation has received much attention and significant effects of attitudes on volitional behaviour have been observed (e.g. Fishbein and Ajzen 1975). However, it is naive to construe attitude measurement as a way to establish one-to-one relations between attitudes and behaviour in concrete situations. Most attitude research says little about the attitudes that guide behaviour in particular situations. 5 Another self-evident issue is that people might agree upon a norm, but not be able to live up to its standards. Again, this difference exists, but it is not valid as an objection to survey research. Deducing behaviour from normative orientations is simply a different undertaking that needs a different kind of reasoning and framing. Nonetheless, for some issues this problem is less critical. For instance, predictions about voting behaviour have attained a good record by using individual attitudes and background variables. But it has to be noted that these are probabilistic rather than deterministic predictions, ‘but the probabilities of accuracy are great’ (Dreyer and Rosenbaum 1976: 7). 5 The state of welfare 1 Within this study I will focus on social security issues within the classic social policy branches of redistribution, poverty, unemployment, retirement and health. What remains largely unregarded, though important in the context of the welfare state, are the policy areas of family policy, education and labour market policy. In these areas the discrepancies between the two countries are even more apparent, and their investigation would add relevant contours to the comparative perspective on the whole. In Germany, for example, family policy is an important area of welfare state activity and there is a strong link between social policy and labour market policy. In Britain, in contrast, education has always made up an important part of the welfare state discussion. However, since I have not undertaken in-depth studies in these fields, these issues will only be touched upon rather superficially within the subsequent chapters. 2 In quantitative terms the differences between the UK welfare state and the German welfare state are equally significant in terms of absolute social spending and the composition of spending. Both countries have experienced a significant increase in public expenditure for social security in the last decades, but with differences remaining between them. Germany spends 30.5 per cent of its GDP on social security, Britain 27.7 per cent. In 1996 the social protection expenditure per head in Germany was, with around 6,900 ECU,

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markedly above the EU-average whereas Britain, with less then 4,300 ECU, was under the EU-average. Measured in constant prices from 1985, the expenditure per head increased by 14 per cent in Germany and by 31 per cent in Britain (European Commission 1999). For reasons of measurement, Esping-Andersen (1990) introduces a decommodification score capturing old-age pensions, sickness benefits and unemployment insurance, their replacement rates and requirement qualifications. Esping-Andersen’s analysis does not limit itself to a quantitative grouping of western welfare states, it also aims at an explanatory model for the formation of certain social policy patterns. The historiographical contribution consists of an identification of the driving forces of welfare state development, namely class mobilization and class political coalition. Taken together, these were the driving factors behind the historical evolution of the welfare regimes leading to different institutional architectures. Therefore, the value of Esping-Andersen’s books lies in a fruitful combination of system characteristics and a dynamic, historical argument incorporating social and political forces. In financial terms, the British system relies on the pool of general taxation, as in the case of the NHS, social assistance and family credit, and on insurance contributions, as in the case of unemployment benefit and pensions. Due to the social and labour market patterns and as a result of the low level of insurance benefits, a large part of the British Welfare state, around 70 per cent, is financed out of general taxation. Titmuss, in contrast to other welfare thinkers, had a very critical view of the market. The market, in his perspective, responds to demand and not need and he places all his faith in the potential and the possibilities of social policies with ‘little acknowledgement that it is this system which actually generated the wealth on which social policy depends’ (Wilding 1995: 151). His interest in the social divisions of welfare is worth mentioning, in which he encompasses not only the social services, but also fiscal welfare and occupational welfare (Titmuss 1958). By widening the perspective, he could detect spheres and mechanisms of a consolidation of injustice and inequality. He argued that private markets damage public services and add decisive inequalities which remain beyond state control. Plant (1990: 7) argues that: Since the 1970s the New Right in its neo-liberal form has dominated the debate about welfare and social policy. When properly presented, their arguments strike at the heart of the normative assumptions of the post-war welfare state and only if they are answered with the same vigour in terms of defending basic principles is it likely that the alternative view will recover the ground it has lost.

8 The pension reform in 1957 epitomized the social policy approach within the social market economy. Its insurance character rewarded those who participated in the productive sphere of society and ensured status maintenance in old age. 9 However, the conservative CDU/CSU never formed a unified ideological camp; their political position was an amalgam of different traditions rather than a consistent theoretical framework. When the term ‘Social Market Economy’ was adopted in the 1950s, it provided an encompassing concept that included the important school of Catholic social theory as well as the fundamental belief in the virtues of the liberal market economy. Both still represent the major ideological streams for the Conservatives which account for frequent inner-party conflicts (Michalsky 1985).

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10 For a historical approach which frames the legacy from Bismarck to the Weimar Republic as a set-up for different developmental paths thereafter see Hockerts (1998). The social policies during the NS-dictatorship, the GDR and West Germany are viewed as specific forms and modifications of the German welfare state, taking up specific traditional assets in each case. 11 Offe (1991) examines the employment-centred nature of the German security system. According to him, the system establishes a premium for all those who ‘lead an ordinary and orderly work life by “earning” a full (and preferably uninterrupted) record’ (1991: 126). This is what he called the ‘hidden curriculum’ of the social security system. 6 The logic of popular support for welfare schemes and their objectives 1 Research concerned with the politics of redistribution has focused on the relation between voters’ interests and transfer policies (e.g. Hibbs and Dennis 1988; Denters 1993). Accordingly, political parties are supposed to respond to the wishes of their constituencies (partisan theory) or the general electorate (vote-seeking model) in order to maximize votes. It has been assumed that the politics of income redistribution were demand driven, with political parties representing the interests of (groups of) the electorate. 2 This does not need to be on exclusively moral grounds. Wilson and Wilson (1991: 11), for example, make clear that: ‘The willingness to provide assistance may derive not from altruism or some sense of social solidarity so much as from a desire to prevent social unrest. Desperate need could lead to desperate action and it is prudent, therefore, to meet the need.’ 3 Nonetheless, aside from the economic consideration, Inglehart (1990: 252) still sees other motives that can motivate an emphasis on social solidarity. His post-materialism thesis in which people gradually give way to other than material values would suggest that ‘further progress toward equality would come not from an emphasis on materialistic class conflict, but through an appeal to the public’s sense of justice, social solidarity, and other nonmaterial motivations’. 4 However, data coming from the Political Action Study undertaken in 1973/74 suggest that the issue of redistribution had lesser importance at that time for the British people. Only 52 per cent agreed that the Government should even out income difference whereas the figure was 71 per cent in West Germany. Thereby, it can be assumed that political and economic realities inform these attitudinal stances and that they are not ideological constants. 5 With other measures, especially with fewer independent variables, these kinds of effects would appear to be more pronounced. Roller (1995: 190), for example, has shown that the extent of the disagreement between the employed and the recipients of welfare benefits has become somewhat larger since the 1970s. 6 It appears that people might have, in the back of their minds, the idea that the money raised by progressive taxation should be used for specific purposes. Of course, citizens prefer tax expenditure on their personal programmes rather than spending on other groups and it is well established that some public programmes, especially those where a relatively small clientele group is perceived as profiting, polarize the citizenry (Peters 1991: 152). 7 The inconsistencies in people’s attitudes have been emphasized by foregone research, since many people simultaneously desire both tax reductions and increased levels of governmental services (Sears and Citrin 1982). Although this ‘more for less’ paradox could be established by attitude research, there are also clear signs that people are aware of the trade-offs and that only a minority expects ‘free lunches’. Most citizens realize that if they want more services they

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9

10

11

12

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have to pay for them through social contributions or taxes (Peters 1991; Confalonieri and Newton 1995; Welch 1985). In the following section, taxes and social contributions are treated in a similar manner, although crucial differences exist. For the sake of the argument these differences are widely neglected since the relation between ‘welfare costs’ (taxes and social security contribution) and ‘benefits’ is of primary interest, notwithstanding the fact that insurance contributions suggest, by their very nature, a closer contribution–return link than fulfilling a tax duty. I owe this point to Richard Breen. He suggested that there are two possible levels of equilibrium on which welfare state support and the acceptance of taxation could rest on. For the issue of redistribution, the British welfare state expects people to be ‘reasonably altruistic’ because the relatively low degree of tax imposition only affects the take-home pay of middle-class people in a limited sense. What the state asks for can be viewed as a reasonable amount since a basic safety net for most is provided in return. The German welfare state, in contrast, compensates the middle classes for their high contributory duties towards financing the welfare state with good benefit returns, while financing a second less costly tier of social assistance out of general taxation at the same time. Obviously, the willingness of citizens to pay taxes varies with the political and economic circumstances, but also on the discoursive framing of the tax issue. In this context, it has been shown that it is difficult to adopt macro-level explanations of attitudes towards the tax system. Newton and Confalonieri (1995) report that there is no systematic relation on a cross-country level between the support for progressive taxation, on the one hand, and the equality of post-tax and transfer income, the average income tax levels for workers and the average take-home pay for workers, on the other. Nonetheless, if the middle classes are asked to assess the tax burden for those with high and those with low incomes, the perception that the low income groups pay more than a fair share correlates with a pro-redistribution attitude, whereas the same perception for the high income earners is negatively correlated with redistribution. On the extremes of the income distribution the analysis suggests rather coherent ideological patterns where perceived injustices and the attitudes towards state intervention are highly related. A quotation from The Economist (2001: 11–12) might support this thesis: Helping the poor, the truly poor, is a much worthier goal than merely narrowing inequality. If the rich get poorer thanks to high taxation, some people may feel pleased but few are better-off. If the poor get richer, however, the whole country will benefit. Focusing resources and policy on poverty would be worthwhile simply on humanitarian grounds. But also, the disadvantages of growing up in extreme poverty are a challenge to a belief in equality of opportunity. And helping the underclass rejoin society is in the interest of all.

13 For an exemplary examination of assumptions of the causes of poverty in different countries see Van Oorschot and Halman (2001). 14 It has even been claimed that this cognitive dimension has a stronger impact on support for aid to the poor than income and social status, for example. The issue of ‘why the poor are poor’ seems to be more crucial than sociodemographic variables related to economic interests (Fong 1998). 15 Unfortunately, I have to confine myself to the British case since equivalent questions have not, to my knowledge, been included in German surveys. Nonetheless, these discourses and arguments are also existent in Germany although with less prominence than in Britain.

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16 The question of why images of the poor and the normative commitment are so closely related has been addressed by Overbye (1999: 9) by emphasizing the mode of justification of one’s advocacy. How, then, may a person support welfare cutback and still maintain an image as a responsible and trustworthy person? Well for one thing, nobody would blame a person for advocating cutbacks in welfare schemes if welfare recipients were regarded as scroungers who abuse the system whenever they see an opportunity to do so. If this is the prevailing view of welfare clients it would jeopardize, rather than enhance, a person’s social standing if she or he expressed support for welfare schemes. It is only to the extent that a person regards, or at least assumes his or her interactants to regard potential welfare recipients as trustworthy persons who by and large do not try to cheat the system, that support of welfare schemes is likely to enhance a person’s reputation as a sincere and dedicated person. 17 In a study covering the early 1980s it has been found that the individual account of unemployment has become less emphasized with respect to the growing unemployment problem. This leads to the conclusion that direct and indirect confrontation with mass unemployment makes an individualized account more unlikely and suggests unemployment is viewed primarily as an economic problem (Brenke and Peter 1985). 18 Admittedly, this is a one-sided argument since there exists the widespread belief that unemployment is partly caused by a ‘competitiveness problem’ due to ‘excessive’ wage costs and high tax rates. The scientific advisory board to the Ministry of Economic Affairs in Germany argues, for example, that Germany’s performance in creating jobs is poor because of high wage costs, the increasing social expenditure rate and the tax burden (Wissenschaftlicher Beirat 1996). High unemployment expenditure which is put onto the costs of labour makes job creation less likely because it decreases international competitiveness and advances the propensity to invest abroad. 19 Until 1966 NI contributions were flat-rate, then they became earnings related and some earnings-related supplements were introduced. The earnings-related supplements were abolished again in 1982, with the effect that many families which were previously kept above the level of benefits for families, became claimants of the means-tested scheme. 20 This is a crucial difference to the original scheme because the service class and non-manual categories do not distinguish between the self-employed and employees. For Erikson and Goldthorpe (1992), large proprietors are part of the higher non-manuals because their number is small and they differ from the ‘petty bourgeoisie’. Nonetheless, since we are investigating the normative standing of the unemployment issue, the distinction between employers and self-employed, on one the hand, and employed people, on the other, seems to be substantive in terms of shared relations to the means of state security. 21 It is also interesting to look at whether we find support for the argument that the skill system – in Germany, a combination of firm- and industry-specific skills, and in Britain, a general skill regime – structures the attitudes towards the protection of unemployment (see Estevez-Abe et al. 2001). The hypothesis predicts that German workers who possess asset-specific skills, have a stronger interest in supporting generous social protection because only ‘secure’ benefits guarantee returns on skill investment and ensure that re-employment will generate the same skilled wages as before. The attitudinal pattern, however, looks rather similar in both Britain and Germany, though one should be aware that German

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workers already enjoy a relatively comprehensive protection system. As far as their plea for retaining or extending the level of social protection goes this needs to be related to the existing welfare production regime, whereas British respondents evaluate a meagre, low-level protection system. 22 On a more general level there is evidence that the unemployed are particularly in favour of governmental strategies redressing inequality because they are those who lose in the primary distribution of resources. State intervention in offsetting the failures of the market is in their political and social interest (see Matheson and Wearing 1999). 23 Rothstein (1998: 11) argues that such distinctions between those situations which are caused by individual choice and those by factors beyond the individual’s control are difficult to make. Should, for example, an unemployed person be deemed responsible for his condition – for not having acquired an adequate education, or for not seeking work effectively, or for not having foreseen in time the impact of international economic downturns and structural shifts on the demand of his labour, etc.? Or does unemployment instead depend on macroeconomic circumstances which its victims cannot reasonably be expected to influence or to foresee? 24 The American economist J.K. Galbraith encapsulates this approach in a witty remark: ‘The rich don’t work because they get too little money, while the poor don’t work because they get too much.’ 25 The most influential account of the social problems which are generated by the experience of unemployment is provided by Marie Jahoda (1982). According to her, employment participation fulfils a number of vital functions that gives people a sense of participating in the wider collective purpose and affects identity and status. The exclusion from employment causes not only financial deprivation but also psychological distress and social isolation. For a more recent account of the effects of unemployment (and different unemployment regimes) on social integration see Gallie and Paugam (2000). 26 However, for British pensioners over 80 there is also a non-contributory pension scheme available. 27 The role of private provision is a minor one. The figures for elderly couples show that only 11 per cent of their gross income comes from private provision in the West and three per cent in the East (BMAS 1997). 28 When the East Germans were integrated into the pension insurance without having made the respective contributions to the pension fund, their entitlements were based on the same normative principle of ‘past productivity’. Thus, the pension insurance became a major instrument for West–East transfers, cushioning the impact of social transformation in the East. 29 In late 1980 the government ceased to make contributions to the National Insurance, but reversed this policy some years later because of increasing financial pressures. 30 Such an implicit ‘resource economism’ is represented by the QALYs (quality adjusted life years) approach. The QALY approach suggests that resources should be distributed in the health service so that they produce most QALYs, in other words most lifetime. QALY aims at maximizing the overall good, i.e. producing the maximum health output with the resources available, instead of giving equal access to all. Hence, the unequal distribution of resources can be justified. 31 The NHS represents, as Lindsey (1962: 474) has pointed out, ‘something magnificent in scope and breathtaking in its implications’.

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32 The figures for 1994–95 are the following: 83 per cent from general taxation, 13 per cent from a small addition to the weekly National Insurance contribution and three per cent from charges (Cm 2812). 33 The diversity of funds is still embedded in an overarching ‘risk balancing’ between the funds. On one hand they are treated as competing budgetary units trying to attract members but there is also a crucial state involvement that redistributes money between the funds on the basis of the socio-demographic characteristics of their members (Risikostrukturausgleich). 34 It should be noted that around one in three of the higher income groups have access to private insurance (Bosanquet 1994). Nonetheless, the support for the principle of a universal health service is also part of the normative script of the highest income quartiles.

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Index

age and attitudes: to healthcare 180; to old age transfers 147–60, 161–2; to redistributive policies 97, 98 Alber, J. 78 ALLBUS (German General Social Survey) 53–4 altruism 196; and preference formation 23, 24, 26–7; and public policy 18 Arneson, R.J. 120 balanced reciprocity 36, 38 Baldwin, P. 89, 186 basic needs generosity 111, 126, 193 Bauman, Z. 24 Behrendt, C. 116 Beliefs in Government study (Kaase and Newton) 21 beneficial involvement 2, 186, 189, 194; and the German and British welfare models 55, 189–90; and self-interest 5–7, 45, 185–6 Beveridge style of welfare state 39–40, 57–9; and the Beveridge report 4, 62–3 ‘big government’: and ungovernability 7–8 Bismarckian social policy model 40–1, 58–60, 71–3 Bowles, S. 185, 187 Britain: democratic socialists 187; healthcare see National Health Service (Britain); and the International Social Justice Project (ISJP) 52; and the International Social Survey Programme (ISSP) 51; and the liberal model of welfare states 3, 57–8; neo-Conservatism in 56, 66–9; old age transfers, attitudes to 157, 158, 161, 162, 163, 164; old

age transfers, pension system 151, 154–5, 165; poverty in, anti-poverty measures 3, 118; poverty in, attitudes to 117, 118, 119, 120–3, 127, 193; poverty in, rates of 115; poverty in, support for poverty policies 124, 126; redistributive policies, attitudes to 95–9; redistributive policies, beneficiaries of 92; redistributive policies, and taxes 100–9; sickness benefits 181, 182, 183, 184; skilled workers 17; Thatcherism and welfare retrenchment 15, 21; unemployment provision 129, 130, 132–3, 192; unemployment provision, attitudes to 140–1, 145; unemployment provision, and ‘less eligibility’ 140; unemployment provision, and spending 133, 134; welfare institutions and public attitudes 190; welfare legacy in 60–71; welfare legislation 64; welfare model 55; welfare regime and the moral economy 81–4 British Social Attitudes (BSA) survey 21, 53 Brooks, C. 51 Brown, Gordon 71 capital accumulation, and modern welfare capitalism 9 capitalism, varieties of 16–17 Castles, F.G. 92 Christian Democrats (Germany) 15, 77; and the Social Market Economy 75 Churchill, Winston 62 citizenship, and healthcare in Britain 169, 194 Clasen, J. 85, 138, 141

Index collective bargaining, in Germany 76 collectivities, destructuration of 10–11 collectivization of social risks 196–7 comparative framework 55–60 conditionality, and reciprocity 38, 39 conservative authoritarianism, in Germany 71–4 conservative model of welfare states 3, 57–8 Conservative Party (Britain): and New Right ideology 66–9; and the NHS 170, 180; and the post-war welfare state 64–5 contingent consent 27 corporatist welfare regimes 57, 58; and the German welfare state 84 Coughlin, R.M. 21 Crosland, A. 65 cultural values, transmission of, and the legitimation crisis 11–12 de-commodification: and the Esping-Andersen typology 56–60; of healthcare 183; in old age pensions 152 Dean, H. 111 differentiated integration, and the German welfare state 85 dispositional reciprocity 36–7; and social assistance 112 distributive justice, and redistributive policies 91 Douglas, Mary 29–30 Doyal, L. 35 Dworkin, Ronald 168 earnings-related benefits: and beneficial involvement 6–7; and the Bismarckian social policy model 40; and pensions 150–1, 154–5; in Britain 66, 69; in Britain, and unemployment provision 138; in Germany 194 East Germany 79, 80, 86–7, 190; healthcare, affordability of quality care 177, 180, 181; healthcare, satisfaction with 173, 174, 175; old age transfers, attitudes to 153, 157, 158, 161, 162, 163–4; old age transfers, pension system 151, 153; poverty in 116; poverty in, attitudes to 117, 119, 120, 121, 122, 123; redistributive policies, attitudes to

233

95–9; redistributive policies, and taxes 101, 103, 106, 107, 108; unemployment provision, attitudes to 133, 134, 136, 137, 142, 143, 144 Economic Beliefs and Behaviour (Taylor-Gooby) 22 egalitarian programmes, opposition to 91 Elola, J. 172–3 Elster, John 23, 24 employers, and unemployment protection 128–9 equality, and healthcare 168, 178–9 Erhard, Ludwig 75 Esping-Andersen, G. 3, 31, 92; criticisms of welfare state typology 58–9; on German social insurance 73, 84; on old age pensions 152; on redistributive policies 94; The Three Worlds of Welfare Capitalism 56–7; on unemployment provision 128, 132, 139 Etzioni, Amitai 23, 25 Eucken, Walter 75 Eurobarometer survey 51 Fabian socialism 62 Family Credit scheme (Britain) 113, 114 feminist critique, of Esping-Andersen’s ‘worlds of welfare’ 60 Ferrara, M. 59 Field, F. 113, 114, 126, 160 flat-rate benefits: and the Beveridge style of welfare state 63; in Britain 83; in Britain, sickness benefits 181, 182, 183, 184; in Britain, unemployment provision 132, 138 Freiburg School of economics, and the Social Market Economy 74–5 Friendly Societies 61 Galbraith, J.K. 13 GDR (German Democratic Republic) see East Germany gender: and attitudes to healthcare 180, 181; and attitudes to old age pensions 163; and attitudes to redistributive policies 97, 98; and pension provision in Germany 152 generalized reciprocity 37, 38; and social assistance 112 German General Social Survey (ALLBUS) 53–4

234

Index

Germany: and the Bismarckian social policy model 55, 58, 71–3; and the conservative model of welfare states 3, 57, 58, 84–7; earnings-related benefits in 92–3, 131, 138, 151, 181–3, 194; healthcare 183, 194; healthcare, affordability of quality care 176, 177, 178–9, 180, 181; healthcare, satisfaction with 173, 174, 175; healthcare, sickness benefits 171, 181–3, 184; healthcare, and social insurance 30, 167, 171–2, 178; National Socialism 74; old age transfers, attitudes to 153, 157, 158, 161, 162, 163–4; old age transfers, pension system 151–3, 154; poverty in 115–16; poverty in, attitudes to 117–20, 120–3, 126; poverty in, and social insurance 116–17; redistributive policies, attitudes to 95–9; redistributive policies, beneficiaries of 92; redistributive policies, impact of 93–4; redistributive policies, and taxes 100–9; skilled workers 17; social assistance 113, 131; social insurance 84–5, 86; social insurance, and the equivalence principle 150–1; social insurance, and healthcare 30, 169, 171–2, 178; social insurance, and pensions 152–3; Social Market Economy 74–6; Socialist Workers’ Party (SAP) 72; unemployment provision 129, 130–2, 192; unemployment provision, attitudes to 136, 137, 141–3, 146; unemployment provision, and the long-term unemployed 131; unemployment provision, and spending 133–4; unemployment provision, and type of benefit 138; unification and effects on the welfare state 79–81, 86–7; Weimar Republic 73–4; welfare legacy in 71–81; welfare regime and the moral economy 84–7, see also East Germany; West Germany Gintis, H. 185, 187 Glennerster, Howard 64, 82, 83 Godbout, Jacques T. 1 Golding, P. 126 Goodin, R.E. 7, 18, 26, 82, 92, 111–12, 125, 193; on healthcare 174; on unemployment provision 130 Gough, I. 35

Gouldner, A.W. 33 group-interest, and self-interest 25–6 Habermas, J., and the legitimation crisis 11 healthcare 166–84, 194; affordability of quality care 176–81; collective coverage and participation utility 166–9; cost issue 169; de-commodification of 183; equality of access to 168; policy context 169–72; private sector 167–8, 170; quality issue 169; and redistribution 167, 168–9; satisfaction and accessibility 172–6; sickness benefits 171, 181–3, 184; spending preferences in the area of 177, see also National Health Service (Britain) Hechter, M. 49 Heclo, Hugo 127 Hedges, A. 155 Heidenheimer, A. 59 high income groups: attitudes, to taxes and redistribution 103, 104, 106, 107, 108, 109, 110; attitudes, to unemployment provision 138 Hills, J. 150 Hinrichs, K. 30, 34, 177 Hirschman, Albert 23 housing benefit (Britain) 114 Huntington, S. 9 income groups: attitudes, to taxes and redistribution 103–4, 105–10; attitudes, to unemployment provision 138 Income Support (Britain) 113, 114, 142 income targeting, and redistributive policies 92–3 individual responsibilities, and policy reforms 17–19 industrial achievement-performance model 56; and Germany 84 inequality: and healthcare 178–80; and old age transfers 151–2; and redistribution 92–4 Inglehart, R. 94 institutionalism 2–3; and individual motives 195; moral economy of welfare state institutions 31–7; and social norms 27–31; welfare institutions and public attitudes 43–7; and welfare retrenchment 16

Index insurance: private insurance schemes 196, see also social insurance International Social Justice Project (ISJP) 51, 52–3 International Social Survey Programme (ISSP) 51–2, 181 Jencks, C. 24 Jobseekers’ Allowance (Britain) 132–3 Just Institutions Matter (Rothstein) 28, 29, 36, 43 justice, and institutions 29–30 Kaase, M. 21 Kangas, O. 24 Keynes, John Maynard 62–3 Kohl, Helmut 142 Kohli, M. 150, 165 Korpi, W. 93 labour market fragmentation, and unemployment provision 5, 127–9, 135 Labour Party (Britain) 62; New Labour and the activating welfare state 70–1; and the NHS 180 laissez-faire in Britain 60–2 Lane, R.E. 91 Latin Rim countries, and the Esping-Andersen typology 59 legitimation: crisis of 9–12; and the German social insurance system 85; quest for welfare state legitimacy 195; of redistributive policies 94–9 LeGrand, J. 18, 92, 178, 187, 193 Leibfried, S. 6, 59, 89 Leisering, L. 6, 89 Levi, Margaret 26, 27, 30–1 liberal model of the welfare state 3, 40, 57–8; in Britain 81–4 liberalism: New Liberalism in Britain 60–2, 64 Liebig, Stefan 52 Lindbeck, Assar 139 Locke, John 60 low income groups: attitudes, to taxes and redistribution 103, 104, 106, 107, 108, 109; attitudes, to unemployment provision 138 Luhmann, N. 8 Luther, Martin 71 Luxembourg Income Study (LIS) 93 Macmillan, Harold 65

235

Major, John 69 Mansbridge, J.J. 24, 26, 27 March, J.G. 20, 28 Margolis, H. 25 Marshall, G. 52 Marshall, G. et al., Social Class in Modern Britain 96 Marshall, T.H. 65 material incentives, and social norms 27–31, 41 means-tested benefits: in Britain 3, 82, 113, 114, 116; in Britain, and New Liberalism 62; in Britain, and the New Right 69; and liberal welfare regimes 57; and the reduction of poverty rates 116 media: coverage of welfare claimants 126; and public attitudes to welfare institutions 46–7 Melrose, M. 111 middle classes: and beneficial involvement 6–7, 189–90; and the British National Health Service 178; and the British welfare state 83; and collective welfare systems 186; and the German welfare state 85; and redistributive policies 90–1; and the tax burden 105, 107; and the welfare backlash 12–13 middle income groups: attitudes, to taxes and redistribution 103–10; attitudes, to unemployment provision 138 Middleton, S. 126 Mishra, R. 12 Mitchell, D. 92 moral capital, and reciprocity 197 moral economies 31–7, 41–2, 185–97; in Britain 81–4; and collective welfare arrangements 185; in Germany 84–7 Moran, Michael 166, 169, 176, 179, 181 motivation: public attitudes and welfare institutions 44–5; taxonomy of 38–41 National Health Service (Britain) 64, 65, 82, 167, 169–71, 183, 194; and affordability of quality care 176–7, 178, 180; expenditure 170; reform 170–1; satisfaction and accessibility 173–6; waiting lists 173

236

Index

National Insurance (Britain) 66, 68–9, 82; and pensions 154–5; and unemployment benefit 132, 133 Nell-Breuning, Oswald von 77 neo-Conservatism (New Right): and the British welfare model 56, 66–9; and the welfare backlash 13, 14, 21 new institutionalism 28–31 New Liberalism, in Britain 60–2, 63 New Right ideology, in Britain 56, 66–9 Newton, K. 21 norm-guided behaviour, and preference formation 23 norms: and institutional arrangements 27–31, 41, 195; and redistributive policies 91, see also social norms obligating reciprocity 37, 38; and social assistance 113, 120 O’Connor, J., The Fiscal Crisis of the State 9 Offe, C. 9–11, 32, 34, 44, 85, 134 old age transfers 147–66, 191–2; attitudes to 147; attitudes to, by age 147–60, 161–2; and the generational contract 147–9, 155–60, 165, 191; and the generational contract, ‘winners’ and ‘losers’ 156; institutional stability and public confidence 160–4; pay-as-you-go systems 160, 165; pension politics and evaluation 151–5; and social insurance 149–51 Olsen, J.P. 28, 29 Palme, J. 93 Papadakis, E. 22, 24 pensions: and the Bismarckian social policy model 40–1; in Britain, attitudes to 83; in Britain, SERPS scheme 66, 69, 154; in Germany 76, see also old age transfers Peters, B.G. 99–100 Peters, G. 90 Pierson, P. 4, 15, 16, 21, 69 policy reforms, and individual responsibilities 17–19 Poor Law 61, 62 populism, and the welfare backlash 14 poverty 110–27; and basic needs generosity 111, 126; in Britain 82, 83; in Britain, anti-poverty measures 3, 118; in Britain, attitudes to 117, 118,

119, 120–3, 127, 193; in Britain, and old age pensions 155; in Britain, rates of 115; the calculating and the dependent poor 112–13, 123–6, 127; the deserving and undeserving poor 120–3; in Germany, attitudes to 117–20, 120–3, 126; in Germany, rates of 115–16; and the liberal model of the welfare state 40; and the morality of social assistance 110–27, 193–4; and old age transfers 151; social construction of 111; social and economic causes of 111; supporting the poor 117–20 preference formation, beyond self-interest 21–7 private insurance schemes 196 privatization: and British social attitudes 190; and pensions 162; and welfare contractualism 195–5 probabilistic reciprocity 36 public attitudes: and preference formation 21–7; to redistributive policies 94–9; and welfare institutions 43–7 public sector employment: attitudes to healthcare 179–80; attitudes to redistributive policies 98–9 rational choice theory: and taxes 102; and the welfare backlash 13–14; and welfare retrenchment 16 Rawls, J. 148 reciprocity 35–7, 41–2; balanced or probabilistic 36, 38; and conditionality 38, 39; dispositional 36–7, 112; generalized 37, 38, 112; and moral capital 197; and the moral economy of welfare state institutions 32–3, 188; obligating 37, 38, 113, 120; and old age transfers 148, 160, 162–4; and redistributive policies 91; risk reciprocity in healthcare 167, 174; and social transfers 45; and support for the poor 120; and welfare exchanges 2 Rediscovering Institutions (March and Olsen) 28, 29 redistributive policies 1, 2, 3, 4, 89–110; and acceptance of the welfare state 20; assessing the impact of 92–3; and the Bismarckian social policy model 40; and the ‘gift relationship’ 186–7;

Index and healthcare 167, 168–9; interests and interpretations 89–91; legitimation of 94–9; and reciprocity 32–3; and taxation 99–104; and taxation, burden of 104–9; and the welfare backlash 14 residual welfare states 56, 57–8; and beneficial involvement 6 retired people, attitudes to redistributive policies 97, 98 Ricardo, David 60 Ringen, S. 50, 169 risk reciprocity 36–7, 38, 40; in healthcare 167, 174 risks, collectivization of social risks 196–7 Robson, W.A. 12 Roller, E. 134 Rose, R. 90 Rothstein, Bo, Just Institutions Matter 28, 29, 36, 43 Sahlins, Marshall, Stone Age Economics 23, 37 Schröder, Gerhard 142 Schumpeter, J. 128 Second World War, and the Beveridge style of welfare state 64 self-employed people: attitudes to redistributive policies 97; and healthcare 180, 181; and unemployment provision 135–7 self-interest 3, 4–19, 20, 186–7; and beneficial involvement 5–7, 45; and the legitimation crisis 9–12; and pensions 192; and policy reforms 17–19; preference formation beyond 21–7; and reciprocity 32, 41; and social norms 29; and ungovernability 7–9; and ‘varieties of capitalism’ 14–17; and the welfare backlash 12–14 Sen, Amartya 23 sickness benefits 171, 181–3, 184 sickness insurance: in Britain 61, 181–3; in Germany 171–2 skilled workers: and social protection 17; and unemployment protection 128–9 Smith, Adam 60 social assistance: in Britain 83, 113, 114; comparative perspective on 113–17; in Germany 113, 114–15, 131;

237

morality of 110–27, 193–4; morality of, attitudes to 117–20, 193; morality of, justifications and objections 110–13 social class position: and unemployment provision 135, 136, see also middle classes Social and Community Planning Research (SCPR) 53 Social Democrats (Germany): and policy formation 77–8; and the Social Market Economy 75–6 social insurance: and the Bismarckian social policy model 41, 72–3; and the British welfare state 83; and the conservative welfare model 58; Germany 84–5, 86, 150; Germany, and the equivalence principle 150–1; Germany, and healthcare 30, 169, 171–2, 178; moral economy of 33–4; and old age transfers 149–51 Social Market Economy: and the conservative welfare model 58; in Germany 74–6 social norms: attitude-related measurement of 48–9; deployment of 194; and material incentives 27–31, 41, see also norms social relations: social insurance 33–4; and welfare transfers 31 social support, moral economy of 31, 41 social-democratic welfare regime 57 socialism, Fabian 62 Steinmetz, G. 73 Stone Age Economics (Sahlins) 23, 37 survey data and methods 47–54; and interviewees’ lack of information 50–1; and public opinion 47–8; and social norms 48–9; and trustworthiness of respondents 49–50 Svallfors, S. 46, 118 Sweden: social-democratic welfare regime 57; welfare retrenchment 21 Swift, Adam 52 taxation: and the British National Health Service 170, 177; burden of and disapproval of redistribution 104–9; and redistributive policies 99–104; and social assistance 113; and support for welfare spending 22; and unemployment benefit 131; and the welfare backlash 13, 14

238

Index

Taylor-Goodby, Peter 18, 22, 24 Thatcher, Margaret 66–7, 68; and the NHS 170 Thompson, D. 148, 156 Three Worlds of Welfare Capitalism (Esping-Andersen) 56–7 Titmuss, R. 35, 64; three models of social policy 56, 84; on universal versus selective benefits 65–6 transfer classes 90 trust, and social relations 34 Ullrich, C.G. 174 unemployed people: and attitudes to healthcare 180; and attitudes to redistributive policies 97–8 unemployment provision 127–47, 192; and benefit effects 139–46; and the Beveridge model of welfare 40; in Britain 66, 192; in Britain, attitudes to 140–1, 145; in Britain, and New Liberalism 61; in Britain, and the New Right 69; in Britain, and poverty 116–17; in Britain, system of 130, 132–3; in Britain, and ‘welfare to work’ 71; and the causes of unemployment 129–30; and the dependency debate 139; in Germany 86, 130–2, 192; insiders and outsiders 127–30, 132; insurance 128–9; omnibus metaphor of 128; policy context 130–3; and skilled workers 17; spending on 133–4, 137; and type of benefit 137–9; and welfare collectivism 133–9 ungovernability, and rising demands 7–9 United States, as a liberal welfare regime 57, 59 universal versus selective benefits, and the British welfare state 65–6 utility functions, and preference formation 24–6

Walzer, M. 33 Webb, Sidney and Beatrice 62 Webster, Charles 178 Wegener, Bernd 52 welfare backlash 12–14; and social insurance 186 welfare collectivism, and labour market fragmentation 133–9 welfare contractualism 195–6 welfare dependency, objections to 123–6 welfare institutions: and public attitudes 43–7 welfare retrenchment 14–16; and beneficial involvement 7; and old age pensions 164; and taxes 102 welfare transfers: acceptance of 187–8; and beneficial involvement 45; reciprocity 37; and reciprocity 32–3; and social relations 31 Wessen, A.F. 176 West Germany: healthcare, affordability of quality care 177–8, 180; healthcare, satisfaction with 173, 175; old age transfers, attitudes to 153, 157, 158, 159, 161, 162, 163, 164; poverty in 116, 117; poverty in, attitudes to 117, 119, 120, 121, 122, 126; redistributive policies, attitudes to 95–9; redistributive policies, and taxes 101, 103, 105, 106, 108; sickness benefits 182–3; unemployment provision, attitudes to 133, 134, 136, 137, 141–2, 143, 144, 146; welfare state 76–9, 79–80 Wilensky, H.L. 12–13, 104–5 Winter, D. 178 Zapf, W. 84