ABSTRACT
For the past 30 years there has been increasing scepticism as to whether welfare states are compatible with globalised post-industrial capitalism. There is a view that welfare states distort the market by eroding incentives to work and invest while fuelling high-dependency ratios (Esping-Andersen 1999). There is an argument that demographic and social changes, in particular the ageing society and the weakness of taxation systems, make welfare states fiscally unsustainable. Finally, and most influentially, it is claimed that global economic integration imposes new disciplines upon governments, forcing them to restrain spending on welfare and social protection in order to remain globally competitive (Korpi and Palme 2003). There is an extensive literature on the causes of welfare state retrenchment in Western industrialised societies; most accounts focus on the so-called ‘globalisation effect’.
