20th ICHS, Sydney, 3-9 July, 2005
Specialised Theme Session 21
“Models of the Welfare State Formation in the Global Context”
Determinants of East Central European Welfare Systems: A Comparative Perspective, 1945-2000
Béla Tomka, University of Szeged
The emerging East Central European welfare systems of the 1990s have generated a variety of interpretations about the nature of the new regimes. A major line of discourse has stressed the significance of path-dependency, that is, the communist legacy, in the formation of the new welfare arrangements.1 Other observers described the welfare transition in the region consistent with G. Esping-Andersen’s well-known three-regime typology.2 Although the emergence of “conservative” and/or “social democratic” regimes has also been anticipated,3 a considerable majority of experts, including Esping-Andersen, portrayed the welfare transformation in East Central Europe as the adoption of residual, “liberal-capitalist” regimes.4 Highlighting the institutional inertia of post-communist welfare and assuming a direction of transformation towards a liberal welfare regime are by no means mutually exclusive. Mainstream neoclassical economists and major international agencies (IMF, World Bank) conceptualized the communist legacy as an impediment to the desirable liberal transformation, while many welfare experts with social democratic leanings and other protagonists of extensive social services usually put emphasis on the high social costs of the transition. Independently of their intention and rhetoric, these commentators created a master-narrative on post-communist East Central European welfare transformation, namely, as a sometimes hesitant or gradual but clear movement towards a “liberal” or “residual” welfare state/regime during which variations mostly result from the different level of advancement of the countries in that process.5
However, East Central European welfare systems of the 1990s has been described alternatively as “faceless”, as mixtures of different elements of Western European social democratic, conservative and liberal welfare regimes,6 and the dominance and irreversibility of liberal welfare policies has been questioned as well.7 Since that line of argumentation was based on relatively little empirical material and has not caught up with other interpretations, this paper intends to present further evidence for its validity by considering the antecedents and causes of the “mixed” features of East Central European welfare. We will argue that the determinants of East Central European welfare in the 20th century have differed considerably from the factors of Western European welfare state formation. The factors causing dissimilarities greatly contributed to the present “mixed“ characteristics of the region’s welfare sectors, and also to the instability of the post-communist welfare arrangements there – and these latter features do not simply result from an assumed transition from the communist to the liberal welfare system.
In the paper, the following main questions will be addressed:
– What were the major determinants of East Central European welfare development compared to Western Europe in the post-Second World War era?
– How did these factors influence the welfare development in the East Central European countries? What were the distinctive features of these communist welfare regimes compared to their Western European counterparts?
– Regarding the 1990s, the issue can also be raised to what extent and in what areas the welfare systems of the East Central European transition countries were affected by the communist legacy constituting conditions for the new welfare systems different from that of Western European welfare states?
Investigating the foundations of post-war East Central European welfare might gain considerably from the adoption of a Western European comparative perspective. As indicated above, the emerging welfare systems of post-communist East Central Europe are predominantly described in the relevant research as close relatives of Western European liberal or other welfare regimes. The comparison allows us to test if and in what way the determinants of Western European welfare state formation are relevant to the case of East Central Europe as well. Exploring the similarities and dissimilarities of East Central European and Western European welfare trajectories might also contribute to the improvement of typologies and theories on welfare states that have too narrowly focused on Western countries so far.
The approach presented here undeniably has some shortcomings. In trying to find answers to the above questions, the focus is on the experience of Hungary, while we deal with other two East Central European countries (Czechoslovakia, its successor states and Poland) to a more limited extent. In addition, although the development of Western Europe has not been fully unified, we can hardly take into consideration the internal diversity of Western Europe. The comparison we are embarking on will be an asymmetrical one with all its methodological consequences: first of all, the welfare development of the societies that make up Western Europe will not be analyzed with such a depth as the Hungarian and East Central European trends.8 These limitations can significantly reduce the validity of results. Despite the constraints, we find that the countries and social policy areas examined are good precursors of major tendencies of East Central European and Western European welfare development. Thus the approach might at least serve as a starting point for further, more comprehensive and detailed studies.
In the following, we first briefly review the main interpretations explaining the formation and growth of Western European welfare states. The next part provides a comparative analysis of the determinants of East Central European welfare in the decades prior to 1990, and a discussion of the major characteristics of the communist welfare system. Another separate section will be devoted to recent changes, and in the final part of the paper, we summarize the results along with putting forward some conclusions.
Causes and contours: Approaches to welfare development in Western Europe
Comparative welfare state research has produced a series of competing –but not necessarily mutually exclusive– interpretations of the emergence and development of welfare states in Western Europe. It is not possible to give a detailed discussion of the literature here; we may but briefly survey the most important trends and most characteristic arguments in welfare research.9 Corresponding to the original objective, our primary concern is to consider the major determinants of Western European welfare development so that they can serve as points of reference for the analysis of respective factors in East Central Europe.
here is a major and long-standing tradition in welfare state research, often referred to as a functionalist one, that attributes the emergence and development of the welfare state in Western Europe to socio-economic changes, that is, to the ”logic of industrialism”.10 Representatives of this approach argue that, on the one hand, the growing needs of population emerging as a result of industrialization, required the introduction of state supported welfare institutions from the late 19th century and, in turn, the resources created by industrialization made state welfare programs possible. In this respect, social change refers primarily to the decrease in agricultural employment, growing urbanization, a separation of labor and means of production, and the emergence of a working class, owing no property and concentrated in towns. In the wake of industrialization, individual and family income were separated, family and kinship ties loosened up, and, at the same time, a growth occurred in the ratio of elderly age groups. Therefore, the state helped to address the needs of the social strata more vulnerable to different risk factors through welfare programs. Later, in the course of the 20th century, social deprivation was moderated. Then, on the other hand, a demand for a well trained, reliable and mobile labor force emerged, the supply of which was greatly facilitated by health and other welfare programs. Resources brought about by industrialization included first of all ones created by economic growth, centralization and professionalization of state bureaucracies and thus the increase of their efficiency. In addition, the improving channels of communication could be utilized by both the state bureaucracy and the social classes/groups, which were in the process of organizing themselves.11 Some authors maintain that the primary mediators of economic development to welfare systems are demographic factors –because both mortality and birth ratios decrease as a result of industrialization, and the ageing population creates an ever-growing demand for welfare services. It has also been proposed that program duration or program experience is positively correlated with their coverage, because once created, schemes have a momentum that propels their expansion as a rule. Program duration as a determinant can also be regarded as a bureaucratic correlate of economic development.12
It is a plausible argument that there exists a broad causal link between socio-economic development and state welfare activities. International research on the history of the welfare state, however, seems to refute interpretations which attribute the emergence and development of the welfare state directly and predominantly to socio-economic transformations.13 Empirical studies have proven that, although social security laws were indeed introduced in almost all countries of Western Europe between 1880 and 1914, this took place at different levels of socio-economic development. The first modern social security systems in the 1880s appeared not in the most industrialized and urbanized England, but in Germany and Austria, then significantly less developed countries.14 The time lags between the creations of social security systems cannot be explained by socio-economic differences, as shown empirically with regard to urbanization and industrialization levels and the introduction of social security systems in Western Europe.15
Differences in the level of industrialization cannot justify disparities found at a later stage in welfare policy and welfare institutions, either. In the interwar period, it was the then relatively less advanced Scandinavia where the most dynamic welfare development took place. Countries at similar levels of economic development would spend different ratios of their domestic product on welfare, even after the Second World War and had specific welfare institutions.16 Of these empirical studies supporting the secondary role of economic factors and their derivates in welfare development, we refer here to the decomposition analysis of the OECD regarding the largest expansion period of Western European welfare states (1960-1975). According to the report, in this period, between the demographic components of the growth, the expansion of the population covered by programs, and the improvement of the level of services, the last one was the decisive factor in the growth of social expenditures in OECD countries. The enhancement of services explains approximately two thirds of the growth of health expenditures and half that of the pension and unemployment insurance. The remaining can be attributed to demographic factors and, to an even smaller extent, to the expansion of the number of those qualified for benefits.17 This finding means that the increasing expenditures occurred not in an economically or demographically determined manner, but as a result of political decisions aiming to increase benefits, at least between 1960 and 1975 in the OECD area.18
There are other arguments highlighting the importance of political factors in the formation of Western European welfare states. Exponents of another major thrust of interpretation, the conflict or class mobilization theory, made a strong case that social movements, collective political actors (labor movement, political parties, interest groups) were decisive in the introduction of the first welfare programs as well as in their growth. Social problems will enter the state of consciousness only as a result of social struggles, and their solution is also possible to such an extent as it is in the interest of a social group that can win on the political battlefield against the other social groups. The neo-Marxist line of this view holds that organizations of the working class and especially the social democratic movement advanced welfare development, and argue that, as an example, the level of welfare expenditures depends primarily on social democratic party-power.19 The power-mobilization hypothesis also has a broader, pluralist version, maintaining that not only the working class steps forward to gain new social rights, and for redistribution through the welfare system. Other classes, or even groups impossible to describe within the class framework (e.g. pensioners) also mobilize themselves. Similarly, it was not only workers’ parties, but conservative ones as well that greatly contributed to the expansion of the welfare state.20
n fact, there are convincing empirical evidences that political factors cannot be narrowed down to the social democratic movement, or “left-power”. The welfare programs emerged at rather different levels of development regarding social democratic parties and other workers’ organizations and unions.21 Furthermore, the introduction of social security programs generally took place not as a result of the demands of the socialist workers’ movement, but, often despite its objections fearing the loss of their influence.22 Authoritarian, or rather non-parliamentary systems (Germany, Austria, Denmark before 1901, Finland and Sweden) introduced these laws earlier than parliamentary democracies (e.g. France, Belgium, the Netherlands, Norway and the United Kingdom). The former group of countries implemented seven times as many compulsory social insurance schemes in Western Europe by 1900 than the latter.23 The political elites of these non-parliamentary systems, suffering from legitimacy deficits, felt it necessary to legitimate themselves through social policy measures. These objectives are also revealed by a high ratio of social security programs being introduced in authoritarian countries immediately before not fully legitimate/democratic elections.24 Moreover, the strong bureaucracies of these countries enabled them to carry out the related organizational and administrative tasks, such as effective taxation. The functional need of a capable bureaucracy for welfare state development is expressively stressed by the so-called “state-centered” thesis, according to which, different bureaucratic traditions have strongly influenced the sizes and types of welfare states.25 These early welfare programs have also been plausibly linked to late-nineteenth century nation building processes.26 I
n later periods, diverse political forces have had a leading role in the formation of the welfare state. In the period between the turn of the century and First World War democracies with liberal dominance showed the most dynamic development in this respect. Between the two world wars, the situation changed again: in this era welfare growth was most rapid when and where social democratic parties were successful at the elections.
After the chronologically successive conservative–liberal–social democratic leadership in welfare development, in the decades following Second World War, at least until the mid-1970s, the largest growth period of the welfare state, no leadership by any major political force can be shown in this regard in Western Europe.27 It was not only social democrats ascending to governmental positions that supported the expansion of welfare services, but conservative parties as well, as proven by the example of the Netherlands or France.28 Besides, there are signs that permanent left wing exercise of power was plainly restraining the welfare efforts. In contrast, when parties of the left operated in a very competitive political context, characterized by frequent changes of power with Christian democratic parties, the expansion of welfare programs accelerated.29 Consequently, considering the findings regarding earlier periods as well, we can claim that social democratic or conservative power did not determine the formation of welfare states. At the same time, it is obvious that different political forces had different welfare preferences. While social democratic parties strongly supported the expansion of coverage, resulting generally in lower benefits, conservatives opted for providing higher level services for narrower societal groups.30
According to one of the major outcomes of the research, it is not so much the “left-power,” but rather the creation of a class-alliance behind the welfare state was the prerequisite of the dynamic development of social programs. The welfare state could only appear and could only remain solid to this day, where, besides workers’ groups most in need of social policy, it was possible to include the new middle class (i.e. those parts of the middle strata who did not make their living from their property) among those benefiting from and thus supporting the welfare system. The middle class was completely incorporated in the social democratic welfare state in Scandinavia. Here, the behavior of the rural classes also significantly influenced the development of the welfare state. In Sweden, the rural classes were won over very early, in the first half of the century, to be supporters of the welfare state by making them eligible for welfare benefits –quite an unusual move in the era. At the same time, the nature of class mobilization has also determined the character of the welfare regime. In Scandinavia, the broad class base has greatly contributed to the development of the “social democratic” welfare state, with universal social rights. In the continental European conservative welfare model found in its most characteristic form in Germany, as well as in France and Austria, the loyalty of the middle class was ensured by specific social security schemes designed for it.31 This arrangement has institutionalized the support of the middle class for a work-related, status-distinctive welfare system. In contrast, where the often complex conditions of political coalition formation were not present, such as in Great Britain, and only the lowest income groups received benefits, support for welfare systems was weak. As a result, these nations retained the liberal, residual welfare state model, and, especially in the last third of the 20th century, welfare programs were besieged.32
Despite all their plausibility, interpretations concentrating on political factors can not appropriately explain all major phenomena related to welfare development, either. One of the most important critical points may be that from the outset, there are economic and social transformations behind political processes. For example, the number of voters interested in the increase of state social benefits obviously rose in part because of the growth in the ratio of employees. Also, the influence of individual political parties was greatly affected by societal changes. In addition, there are welfare programs, which, though initially related to political decisions, were later driven more by economic and social development. For instance, demographic factors operated as a kind of automatism. If, indeed as a result of political decisions, a pension program covered the whole population, pension expenditures inevitably increased with the ageing of citizens.33 Similarly, the introduction of unemployment benefits can be regarded as the outcome of political struggles, but once established, such expenditures increased with the rise of unemployment.34
This is why alternative lines of research have also developed, such as the one stressing the importance of social institutions.35 The “historical legacy of regime institutionalization” is a major variable for Esping-Andersen, arguing that past welfare reforms and existing welfare arrangements have promoted the institutionalization of class preferences and political behavior. Social policies, once legislated and implemented, create new popular constituencies favoring extensive welfare programs, and shape themselves the political process from which social policies emerge. In Scandinavia, the initial welfare programs created interest groups favoring further state welfare programs and set in motion a spiral of welfare reforms. Here, social democracy over the past half century was closely linked to the maintenance of a welfare state that benefits both working-class and middle-class constituencies. In the conservative welfare regimes status-distinctive social insurance fixed the loyalty of the middle-class to a peculiar type of welfare state. Finally, in liberal welfare regimes, the middle classes became institutionally attached to the market as provider of welfare services.36
We conclude this overview by referring to two other, much less influential variables of the growth of Western European welfare states–diffusion processes and cultural values. S
ome authors view the emergence of welfare institutions as a transnational diffusion process.37 It is remarkable how rapidly social security based on the Bismarckian principles diffused to other countries, and what advanced forms it took in the proximity of Germany even in less developed countries, more so than in highly developed ones further from it. There are signs that political decision-makers in several countries devoted considerable attention to the developments in Germany in this regard. Moreover, a certain institutionalized form of diffusion is signaled by the visits of several foreign delegations to Germany with the purpose of studying social security programs.38
At the same time, it can be stated that, although ideas of social policy did cross borders, their presence in itself is obviously insufficient for the emergence of welfare programs. The diffusion hypothesis cannot explain why the ideas came to reality in one society and why not in another. To put it more sharply, accepting the existence of diffusion still leaves the question unanswered: why was the German example followed early on in some Scandinavian countries for example and why not in Great Britain.39
The greater conceptual attention to cultural variables in social sciences has also led to a more intense appreciation of the impact of cultural differences between societies on the welfare systems lately.40 It is argued that public welfare is also the outcome of values and norms represented in the preferences and behavior of a society or nation. It has been long observed that welfare arrangements within predominantly Catholic societies differ from that in Protestant countries;41 however, studies have not been systematic in exploring cultural variables. Nevertheless, they produced mounting evidences that cultural values, such as honesty, trust, obedience to state authorities have been instrumental in the development of the generous welfare state of the late 20th century.42 They also demonstrated the high popular acceptance of the states’ welfare activities in Europe, almost independently of welfare regime types and countries.43 This approach might be useful to refine the class mobilization theory by establishing the cultural preconditions of successful class alliance and other forms of cooperation in the welfare arena.