On the Political Economy of Welfare Expansion

This article elaborates the thesis that economic growth and various types of collective action by class-linked actors determine the expansion and decline of welfare spending in rich capitalist democracies. Our multivariate model of this thesis, specified to 1960-1971 growth rates in direct cash transfer payments as proportions of gross domestic product, is supported strongly by regression analyses. These indicate that economic growth notably facilitates transfer payment growth. They also suggest that rightist party participation in government notably dampens welfare expansion, while leftist, centrist and Christian democratic party participation in government are conducive to welfare expansion; and they suggest that the political influences of both unions and large industrial corporations are conducive to growth in transfers payments as well. In addition, state authorities appear to augment welfare spending in response to working class protests, strike activity, and capital investment/disinvestment — activities outside the boundaries of political arenas typically conceived. In short, institutional and extrainstitutional class-linked politics along with economic growth seem largely to determine welfare payment changes. In contrast with other comparative research on the welfare state, the fit of model to data is strong and findings are robust in the face of statistical controls, small changes in measurement, and small changes in sample.