Pearson

COPING WITH PERMANENT AUSTERITY: WELFARE STATE RESTRUCTURING IN AFFLUENT DEMOCRACIES

Paul Pierson July 30th, 1999 This essay will appear as the concluding chapter for Paul Pierson, ed., The New Politics of the Welfare State (Oxford: OUP), forthcoming. Thanks to Andrew Karch and Effi Tomaras for research assistance. I have benefited from many conversations with participants in the New Politicsproject and the European Forum at the EUI. I owe special thanks to John Myles and Ann Orloff, although I suppose it would be unfair to hold them responsible for the end result.

1 The welfare states of the affluent democracies now stand at the center of political discussion and social conflict. Analysts frequently portray these conflicts as fundamental struggles between supporters and opponentsof the basic principles of the post-war social contract. They often emphasize that the politics of social policy are played out against the backdrop of a transformed global economy that has undercut the social and economic foundations of the welfare state. While containing elements of truth, such portrayals distort crucial characteristics of the contemporary politics of the welfare state. Changesin the global economy are important, but it is primarily social and economic transformations occurring within affluent democracies that produce pressures on mature welfare states. At the same time, support for the welfare state remains widespread almost everywhere. In most countries, there is little sign that the basic commitments to a mixed economy of welfare face a fundamental politicalchallenge. Nor is there much evidence of convergence towards some neo-liberal orthodoxy. Yet the chapters in this volume have also stressed that welfare states are undergoing quite significant changes. In this conclusion, I argue that the contemporary politics of the welfare state takes shape against a backdrop of both intense pressures for austerity and enduring popularity. In this context, even strongsupporters of the welfare state may come to acknowledge the need for adjustment, and even severe critics may need to accept the political realities of continuing popular enthusiasm for social provision. Thus in most of the affluent democracies, the politics of social policy centers on the renegotiation, restructuring, and modernization of the terms of the post-war social contract rather than itsdismantling. The crucial issue is whether particular national settings facilitate the emergence of such a centrist reform effort, and if so, on what terms. The argument proceeds in three stages. In the first, I outline a basic framework for studying the politics of reform in a context of permanent austerity. In the second, I discuss two complications: the need to incorporate different dimensions ofsocial policy reform and the need to recognize three quite distinct configurations of welfare state politics among the affluent democracies. In the third, I apply these arguments to analyze the politics of restructuring in the liberal, social democratic, and conservative “worlds” of welfare capitalism. I. An Initial Framework for Studying the Politics of Permanent Austerity1 Despite somedisagreement concerning the main sources of pressure on mature welfare states, the chapters in Part I all conclude that the welfare state now faces a context of essentially permanent austerity. Changes in the global economy, the sharp slowdown in economic growth, the maturation of governmental commitments, and population ageing all generate considerable fiscal stress. There is little reason to expectthese pressures to diminish over the next few decades. If anything, they are likely to intensify. Underlining the severe pressures confronting mature welfare states does not, however, imply that the expected result is a collapse or radical retrenchment of national welfare states. Major policy reform is a political process, dependent on the mobilization of political resources sufficient to overcome...