Part I
Key concepts
1
What is welfare and public welfare?
Bent Greve
Introduction
The concept of welfare needs to be defined before one is able to analyse the welfare state and understand its nature (cf. Chapter 2). The development of and changes in the concept of welfare have also had implications for our understanding of what a welfare state and a welfare society are (Greve, 2008). What welfare is also relates to the philosophical and historical underpinnings of what welfare states are, have been and will be. Moreover, as most welfare state analysis deals with the public sector and its spending on welfare issues, it is important to know and understand what the public sector spending is and its implications for a variety of issues, including the organization of the public sector as well as central and decentral ways of organizing welfare states (Barr, 2004), albeit reflecting different ways to welfare (see Chapters 3 to 5). Furthermore, this may also have implications for what public welfare will have to deliver and finance and thereby for what public welfare is.
Core concepts
The core question to be answered here is: What is welfare? This includes a more specific discussion of what public welfare is, as this may have consequences for our understanding and analyses of welfare states and societies, various types of public interventions in the market, and how we draw the borderlines between state, market and civil society.
Welfare may be defined as follows:
Welfare is the highest possible access to economic resources, a high level of well-being, including the happiness of the citizens, a guaranteed minimum income to avoid living in poverty, and, finally, having the capabilities to ensure the individual a good life.
(Greve, 2008, p. 50)
These aspects will be discussed in the following section, but first we need to see how we can understand this concept. It should be borne in mind that the starting point is that welfare derives from wel fare; that is, it originates from âwell in its still familiar sense and fare, primarily understood as a journey or arrival but later also as a supply of foodâ (Williams, 1976, p. 281). Welfare is thus a concept relating to aspects of central importance for individualsâ lives. In addition, it involves an understanding, albeit implicitly, of how a good society, which has many individuals who have a variety of preferences, can be developed, and what and how to understand well-being (see also Chapter 10). This involves the question of what role the public sector should play.
Public welfare thus to a large degree revolves around an understanding of what the public sector finances and most often also what it delivers in terms of income transfers and services. Public welfare is thus not just the support given through the tax system (cf. Chapter 3 on fiscal welfare), or welfare that is fully or partly paid by the labour market partners (cf. Chapter 4 on occupational welfare). It may be argued that the public sector does not always deliver all the services, as some may be purchased from private providers, or money may be transferred to individuals; for example, vouchers giving individuals the right to buy or obtain certain social services offered by private providers, and, in some cases, the voluntary sector, which may include families. The voluntary sector is normally also seen as being outside the public sector, notwithstanding that the boundaries may be blurred, and the public sector may provide the framework within which the voluntary sector can offer social services. In national accounts, the public sector is defined in terms of the delivery of welfare goods or finance at least 50 per cent of the cost, the implication being that in principle a fully private company which aims to create the highest level of profit while delivering care may be seen as part of the public sector as far as the national accounts are concerned. This makes the borderlines between the different sectors very unclear and consequently the statistical data about who is providing what type of welfare and, sometimes, also with what type of outcome is also unclear.
This plethora of possible institutional combinations also indicates why comparative analysis is often very difficult and sometimes gives misleading conclusions, as some often small details may change how we are to interpret and understand national welfare systems.
Welfare can be for all â or especially for the poor (Garland, 2014). This difference in approach, including who is and who is not deserving of various forms of welfare, is an often seen aspect of how to understand welfare, and thus also how this influences the policies in a variety of countries.
Presentation and analysis of the elements of welfare
This section will discuss and analyse what can be included in the study of welfare and public welfare. This is because welfare concerns both the micro and macro levels. At the macro level it can include the overall wealth of a society. We know that citizens in richer countries, at least up to a certain level, are happier than individuals in poorer countries (Helliwell et al., 2017). The level of spending on public welfare thereby also has an impact upon peopleâs happiness, at least up to a certain level and under the condition that the welfare state continues to have electoral support and a high degree of legitimacy. At the micro level, individualsâ happiness has an impact upon the number of people living in poverty as well as the degree of social cohesion and ability to live a secure and stable life. Recent research on happiness also has an impact upon how we perceive welfare, what we know influences individualsâ well-being and the impact of various types of interventions upon daily life. However, the issue of happiness will receive limited attention in this book (but see Chapter 10 (cf. instead Greve (2011) and the yearly world happiness reports from the UN at http://worldhappiness.report/ed/2017/).
Welfare has been discussed in many and very varied disciplines. Economists talk about utility, sociologists about well-being, and philosophers have focused on the good life. There has thus, in reality, never been one unanimous definition of what welfare is and how this can be measured. It may also vary due to historical and cultural differences, including perceptions about who is responsible for the everyday lives of people.
In economic theory it has often been seen as central to examine what individualsâ perceptions or utilities of an available bundle of goods and services are. Individualsâ decisions on how to combine and use their money are thus, it has been argued, the best way to maximize societal welfare. The best way to measure and compare outcomes has been seen as being in terms of GDP per capita. Further reasons are that it allows for international comparisons and reflects individualsâ choices. Thus, in mainstream economic theory, the market plays a central role. Recent developments within behavioural economics have shown an increased interest in other approaches, including non-monetary aspects, and how they influence our welfare and the decisions we take (Wilkingson, 2008). Recent years have seen both the EU and OECD look into broader issues having an impact upon life (see Greve, 2017).
Sociology has been more preoccupied with aspects related to social inclusion, social cohesion and well-being in a broader sense. Well-being may thus be achieved in various ways. Consequently, there are various ways of measuring well-being, including the use of social indicators (e.g. being alone, or having a decent living standard). A distinction between objective and subjective well-being indicators is also made. Recent years have seen an upsurge in publications with data trying to reflect more than the classical measure of GDP per capita (cf. e.g. the OECDâs Society at a Glance publications or Howâs Life, Measuring Well-being).
Giddens (Giddens, 1998) has focused on what he labels positive welfare by emphasizing the welfare state as a social investment state, focusing on elements such as active health, autonomy, education and well-being. This is in line with welfare research underlining the possible positive impact of the welfare state; for example, affordable and high-quality day care not only benefits children, but also ensures a more equal access to and participation in the labour market for both men and women.
Welfare may also be based on needs; for example, Allardt states: âthe amount of welfare is defined by the degree of need-satisfactionâ (Allardt, 1976, p. 228). He also points out that by focusing on needs, welfare may be seen to have two levels: one dealing with the living standard and the other with the quality of life, the implication being that one has to take into consideration both material and impersonal resources as well as human relations to each other and to society, thus focusing on having, loving and being (Allardt, 1976).
Another approach related to the quality of life has focused on capabilities. The concept of capabilities has been promoted by the Nobel Laureate Amartya Sen (Nussbaum and Sen, 1993). Capabilitiesâ center of attention is on the individualâs options and possibilities to be able to choose from among a set of options. In this way, this also relates to the ability to be socially included in society, and to have the ability to choose from among a certain set of possible outcomes.
John Millâs understanding of utility has also given rise to indications of what happiness is, such as that âBy Happiness is intended pleasure, and, the absence of painâ (Mill, 1972, p. 6) and also the moral approach when he states, âTo do as you would be done by, and to love your neighbour as yourself, constitute the ideal perfection of utilitarian moralityâ (Mill, 1972, p. 16).1
Approaches to welfare can and have been influenced by left, right and middle ways of thinking, but have also been influenced by, for example, environmental and gender-inspired approaches. Thus, the emphasis on different elements of welfare reflects upon our understanding of what welfare is. Ideology can thereby influence the understanding of what welfare is and how one perceives the need for public sector intervention. Still, the analysis of welfare and definitions thereof can help clarify what welfare is. The meaning of the word welfare connected to issues such as state, systems, etc. thus has implications that we often overlook in the more direct meaning of the concept of welfare, and instead focus on the role of the state, the institutional systems, etc.
The understanding of welfare can and has thereby presumably also been influenced by the development of more global markets and increased regional integration. Despite this, there is seemingly also room for national interpretations of what is more important in one country than in another in terms of welfare. This may be affected, among other things, by different weather conditions (e.g. in some countries the need for shelter is more important than in others).
When analysing welfare one is thus forced to be aware of a variety of different ways of understanding the concept, but also that, at the end of the day, it is important to adopt an empirical approach in order to grasp and understand the consequences of different welfare policies (cf. Chapters 31 to 44 on central policy areas of welfare states). Furthermore, the welfare of individuals may be influenced not only by the public sector but also by the private and voluntary sectors and the ability to have a job and be in the labour market. Therefore, the mix between public, private and market-based welfare and the borderline, sometimes labelled the welfare mix, is an important aspect of modern welfare states. For individuals, it need not be a specific or important issue as to whether or not welfare is delivered by the public or private sector, or even by the family; rather the central issue is access to services, who finances the services, and under what conditions the individual can get access to benefits.
Thus, the welfare mix (Evers and Laville, 2004) can be an important analytical device, as it may show who has the main responsibility for different aspects of welfare, and thereby can influence the options for access to services and benefits which may have an impact upon the individualâs welfare.
Historically, the establishment of the first social indicators in the 1960s and the examination of subjective and objective aspects of well-being can be seen as the beginning of measuring life satisfaction, well-being or happiness in another way than just accepting the overall level of the value of production (measured by GDP). Recent years have seen a further upswing in the measurement of welfare, including OECD social indicators, various national governments looking at ways to measure happiness, and the EUâs attempt to establish indicators showing the quality of life in different countries. There has also been a tendency to look at human beings not only as individuals maximizing utility (the classical analysis), but as social animals (Brooks, 2011).
The focus within the EU, for example, has also been on trying to integrate the impact based on an understanding of social and environmental issues as well as economic conditions. Quality of life, or satisfaction, seems to be higher in the Nordic welfare states than the liberal and Central European welfare states, and lowest in Southern and Eastern Europe. A variety of studies of European countries and also around the world (cf. Chapters 12 to 22) show that people in more affluent countries and more developed welfare states often have a higher level of satisfaction than others in terms of well-being (Greve, 2017).
Understanding welfare thus needs to embrace a variety of factors, including knowledge concerning the four issues mentioned above (i.e. wealth, public spending on welfare, poverty and happiness). This is also the reason for discussing these issues in further detail.
Spending on welfare, and, in this context, mainly public sector spending on welfare (whether direct or indirect), can have an impact upon the individualâs level of welfare by giving them options that are otherwise not available. Spending on welfare can have a variety of purposes, from trying to support the most vulnerable, to investing in future jobs and ensuring a higher degree of equality. Barr argues that the welfare state has to deal with three specific issues: efficiency, equity and administration. This can be further divided into issues of efficiency (macro and micro incentives), supporting living standards (poverty relief, insurance, consumption smoothing), the reduction of inequality (vertical equity, horizontal equity), social inclusion (dignity, social solidarity) and administrative feasibility (intelligibility, absences of abuse) (Barr, 2004). Another understanding, but one closely aligned to this, may be to look at welfare for the poor, insurance, income maintenance, and health and social services and government at the level of the economy and the population (Garland, 2014, p. 339). Naturally, the way of and understanding how to implement these three specific issues, and also because they have contradictory elements, is influenced by ideological preferences and understandings of how different approaches work. Nevertheless, a good analysis of how, when and why the public sector should be the core provider of welfare should include efficiency, equity and adm...