Sociology of institutions week 3
Starke, Obinger en Castles – Convergence towards where: in what
ways, if any, are welfare states becoming more similar?
Doel: its main objective is to map the broad trajectories of welfare state change in advanced
Organization for Economic Co-operation and Development (OECD) countries over recent decades.
Convergence = any increase in the similarity between one or more characteristics of a certain policy…
across a given set of political jurisdictions… over a given period of time.
Convergence, persistence or divergence? Scenarios and causes
A variety of convergence scenarios can be found in the comparative welfare state literature.
However, the imputed causes of such trends differ markedly, as does the expected direction of
change (upwards vs downwards).
Convergence
Five factors potentially conductive to convergence tendencies:
1. Independent problem-solving both the old and new functionalism stresses problem-
solving and share the expectation that increased problems will lead to increased welfare
inputs: convergence will be upwards.
2. Transnational communication convergence in social policy resulting from policy learning
and imitation fostered through transnational policy networks. No clear idea of the direction
of convergence.
3. International harmonization two main channels are relevant for supranational
harmonization: 1) a positive integration secured by means of binding EU legislation and 2) a
negative integration resulting from the judicial imposition of market compatibility
requirements. There is a significant asymmetry in favour of negative integration. Direction of
social policy harmonization is unclear.
4. Regulatory competition a residual or liberal model of social provision as a consequence of
international regulatory competition. There is a decline in social standards paralleled through
convergence caught in a downward spiral.
5. Imposition
Persistence and divergence (afwijking)
However, the mainstream in comparative welfare state research is far from convinced about claims
that welfare states have a strong tendency to become more similar. The three most influential
schools of thought are the classis ‘old politics’ theory of policy determination and two more recent
strands: the ‘new politics of the welfare state’ and the ‘varieties of capitalism’.
1. Old politics socio-economic problems do not necessarily lead to convergence, since
problem pressure always requires political mediation. Old politics scholars do not expect a
race to the bottom triggered by globalization, but divergent responses depending on
different institutional and political contexts.
2. Varieties of capitalism calls into question the notion that globalization drives all
economies towards a uniform market model. A bifurcated (gespleten) response marked by
widespread deregulation in liberal market economies and limited movement in coordinated
market economies.
3. New politics the welfare state is largely immune against radical retrenchment and a race
to the bottom. This approach expect neither radical change nor convergence, but rather
incremental, path-dependent reform shaped by domestic political and institutional forces.
, Types of convergence
There are a few obvious instances where controls are important, most particularly in areas relating to
the demographics of social policy development. In this paper, we have dealt with these instances in
another way: by looking not only at convergence trends in expenditure programmes such as pensions
and unemployment, but also at replacement rates for both age cash and unemployment cash
benefits, thereby removing the influence of the substantial demographic differences in OECD age and
employment structures.
Empirical analysis
The development of social expenditure
The trajectory of social expenditure suggests that the welfare state is not on the retreat (niet op de
terugtocht). On the contrary, social expenditure increased in all but two countries. The rise in social
expenditure was paralleled by convergence. Our conclusion here, as subsequently where this occurs,
is that our findings are potentially indicative of a convergence trend as yet not unequivocally
established by the data.
It can be argued that mature welfare states have converged towards a steady state, with remaining
differences determined by past national power constellation and distinct historical paths. Overall, we
can conclude that aggregate social expenditure levels are converging. With respect to the direction
of change, social expenditure levels have increased, both in absolute and relative terms, evidence
running directly counter to the expenditure variant of the ‘race to the bottom’ hypothesis.
The first basic conclusion that can be drawn is that (as for total public expenditure) there is no
empirical evidence for a ‘race to the bottom’. What is more, all convergence indicators for cash and
in-kind expenditure the range, standard deviation and coefficient of variation diminished between
1980 and 2003.
Breaking down total social expenditure into programme-related spending categories provides a more
nuanced picture of welfare state expenditure.
Some authors suggest that downwards expenditure convergence (a race to the bottom) is most likely
to occur in the area of unemployment transfers where mobilization of popular opinion against
cutbacks is likely to be more difficult than in other programme areas. Expanding family services is
regarded as a potential means to stem the trend of falling birth rates in OECD countries. In this area
of policy, we would, therefore, expect not a race to the bottom, but rather a convergence to the top
or a catch-up movement as countries experience this phase of ‘post-industrial’ structural
transformation.
Spending on pensions manifests a quite different pattern. Here, we find evidence not of sigma-
convergence but of divergence.
Welfare state funding
When we shift attention from expenditures to revenues (inkomsten), we find a picture that is roughly
similar in terms of increasing levels of public commitment, albeit somewhat less indicative of
pronounced convergence tendencies.
Average levels of total taxation relative to GDP have actually increased across the OECD. Overall, the
revenue figures analysed here suggest that increases in social spending were apparently not financed
by larger budget deficits, but by increased taxes and contributions. This is scarcely surprising. For the
EU member states, the Mastricht Treaty made deficit spending less and less feasible, while increasing
financial market integration was, arguably, a factor in extending fiscal rectitude throughout the
OECD.
