A post-growth welfare system

Alexandra writes*

High-income capitalist welfare states provide social security to their citizens in the form of basic goods and services. However, they are faced with a challenge: To what extent are they able to provide (social) welfare in the face of the climate crisis? I propose a post-growth welfare system —  which assumes a non-growing economy — that can deliver on these two goals (Walker et al., 2021).

Historically the welfare state developed after the industrial revolution, when many previously existing institutions of social security were eroded and replaced by the state (Esping-Andersen,1988). Following World War II the welfare state was consolidated and social provision expanded in line with the Keynesian prediction of higher public spending stimulating the economy (Walker et al., 2021). After the financial crisis in the 1970s however, public spending came to be regarded as an inefficient inhibitor of private investment and thus economic growth (Quadagno, 1987).

Setting aside that controversy, we now need to consider environmental sustainability, which means decarbonising both the private and public sectors. How should this happen?

First, Gough (2017) suggests redefining “wellbeing” (aka, welfare or Wohlfahrt) to include social, economic, and environmental dimensions, each with their own measure.

Next, some scholars argue that the transition to a post-growth economy means that the public sector should shrink, which leaves fewer resources for the public sector to deal with social disruptions and environmental crisis (Bailey, 2015).

Finally, Walker et al. pose five questions to post-growth welfare systems:

  1. Where will a post-growth State get its revenues?
  2. How can the State pay for increased welfare needs?
  3. How can the State’s institutions break their dependencies on growth?
  4. How should the State manage increasingly scarce resources?
  5. How can political barriers to a welfare state transformation be overcome?

Bottom Line: The welfare state needs to be critically examined and re-developed to cope with post-growth economies, ecological limits and evolving social needs.

* Please help my Real Donut Economics** students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice 🙂

** Why “Real”? In short, because (a) Raworth’s claims to being a “21st century economist” denies that all of her ideas were presented by others in the 20th century and (b) she presents no viable mechanisms (besides “be nice”) for achieving equality and sustainability. My students are more realistic. In long? Read this.

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

3 thoughts on “A post-growth welfare system”

  1. Very interesting post! The main thing I wondered after reading your post was if there have already been specific suggestions for policies that are in line with post-growth welfare states. Equally, I wonder why the reduction in the size of the State is proposed as a solution, I would assume that this would merely free up resources for the private sector to use.

    1. Thank you for your comment!
      Not really, the little literature that does exist focuses more on developing the connection between the welfare state and environmental sustainability, thus, they lay out the difficulties in connecting these two.
      I think that your point is really valid, and it calls to pay attention from what standpoint and motivation such calls are being made. One reason, as I understood it (assuming no “resource-grabbing” by the private sector) has to do with the fact that the state’s revenue relies on economic growth, which is bad for environmental sustainability. Thus, post-growth, assuming no economic growth, would imply a reduction of the public sector’s revenue. One possible reaction to this would be to reduce the size of the public sector, to ensure the state’s long-term fiscal sustainability.

  2. There seems to be, to me, an inherent contradiction in the questions posed by Walker et al. at the end of your post. They seem to be asking how it would be possible to provide for increased welfare needs while simultaneously reducing the share of public spending in an environment without growth (and where a budget deficit would be far harder to sustain). The implied transformation in question five would then be a reduction in welfare spending while needs remain at least as high. I am very interested if you think this is feasible and/or necessary in countries that have established welfare systems.

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