¹ Because of the extraordinary lack of consistency and precision characteristic of the use of relevant terms – including social welfare, social security and social insurance – in research, it seems appropriate to clarify how the terms are being used here. A social welfare effort refers to all state efforts to maximize either the society's aggregate material well-being or the relative well-being of groups in society. It includes housing policy, policies for economic development, education and health as well as income maintenance programmes. Social security refers to a specific group of state programmes used to ensure income security. Social security benefits can be provided via assistance and/or insurance programmes. The welfare state is the term used to refer to the states which have developed the general social welfare approach characteristic of advanced capitalist societies.

² Notable exceptions include: Heclo, Hugh, Social Politics in Britain and Sweden (New Haven, Conn.: Yale University Press, 1975)Google Scholar; Anderson, Odin, Health Care: Can There be Equity? The United States, Sweden, and England (New York: John Wiley, 1972)Google Scholar; Woodsworth, David, Social Security and National Policy (Montreal: McGill-Queens University Press, 1977)CrossRefGoogle Scholar; and Heidenheimer, Arnold, ‘The Politics of Public Education, Health, and Welfare in the USA and Western Europe: How Growth and Reform Potentials have Differed’, British Journal of Political Science, III (1973), 315–40.CrossRefGoogle Scholar

³ Heidenheimer, , ‘The Politics of Public Education, Health, and Welfare in the USA and Western Europe’, p. 315.Google Scholar For a complementary discussion, see also Heclo, Hugh, ‘Review Article: Policy Analysis’, British Journal of Political Science, II (1972), 83–108.CrossRefGoogle Scholar

⁴ Wilensky, Harold, The Welfare State and Equality: Structural and Ideological Roots of Public Expenditures (Berkeley: University of California Press, 1975), p. 15.Google Scholar

⁵ Wilensky, , The Welfare State and Equality, p. xiii.Google Scholar

⁶ Those who have taken exception to this assumption include: Castles, Francis G. and McKinley, R. D., ‘Public Welfare Provision, Scandinavia, and the Sheer Futility of the Sociological Approach to Polities’, British Journal of Political Science, IX (1979), 157–71, p. 162CrossRefGoogle Scholar; and King, Anthony, ‘Ideas, Institutions, and the Policies of Governments: Parts I and II’, British Journal of Political Science, III (1973), 291–313 and 409–23.CrossRefGoogle Scholar

⁷ O'Connor, James, The Fiscal Crisis of the State (New York: St Martin's Press, 1973), p. 6 and Chap. 3.CrossRefGoogle Scholar

⁸ Wilensky, Harold and Lebeaux, Charles, Industrial Society and Social Welfare (New York: The Free Press, 1965)Google Scholar; and Woodard, Calvin, ‘Reality and Social Reform: The Transition From Laissez Faire to the Welfare State’, Yale Law Journal, LXXII (1962), 265–328, p. 288.Google Scholar

⁹ Mencher, Samuel, Poor Law to Poverty Program (Pittsburgh, Penn.: University of Pittsburgh Press, 1967).Google Scholar

¹⁰ O'Connor, , The Fiscal Crisis of the State, Chap. 3Google Scholar; Adams, Paul, ‘Social Control or Social Wage: On the Political Economy of the Welfare State,’ Journal of Sociology and Social Welfare, V (1978), 46–54Google Scholar; and Gough, Ian, The Political Economy of the Welfare State (London: Macmillan, 1979), Chap. 6.CrossRefGoogle Scholar

¹¹ Heidenheimer, , ‘The Politics of Public Education, Health, and Welfare in the USA and Western Europe’Google Scholar; King, , ‘Ideas, Institutions, and the Politics of Governments’Google Scholar; and Korpi, Walter, ‘Social Policy and Distributional Conflict in the Capitalist Democracies: A Preliminary Comparative Framework’, West European Politics, III (1980), 296–316.CrossRefGoogle Scholar

¹² Titmuss, Richard, Social Policy (New York: Pantheon Books, 1974), p. 32.Google Scholar

¹³ Korpi, , ‘Social Policy and Distributional Conflict’, pp. 301–2.Google Scholar

¹⁴ Korpi, , ‘Social Policy and Distributional Conflict’, p. 304.Google Scholar

¹⁵ Burns, Eveline, ‘Social Insurance in Evolution’, American Economic Review (Supplement II), XXXIII (1944), 199–221Google Scholar; and Fisher, Paul, ‘Minimum Old Age Pensions I & II’, International Labour Review, CII (1970), 57–78, p. 59.Google Scholar

¹⁶ Wilensky, Harold, ‘The New Corporation’, Centralisation, and the Welfare State (London: Sage Publications, 1976), p. 8Google Scholar; Offe, Claus, ‘Advanced Capitalism and the Welfare State’, Politics and Society, 11 (1972), 480–1Google Scholar; and Epstein, Edward Jay and Steingarlen, Jeffrey, ‘Europe: The End of a Miracle’, The Atlantic, CCLII (07 1981), 11–18.Google Scholar As Ian Gough points out, ‘Social democracy is always involved in a tightrope act – balancing the concessions it can offer to its mass base on the one hand with the need to serve the political interests of capital on the other hand. So long as the concessions are there to be given, “it can walk quite a way along this tightrope without actually falling off”; when the economy is in a downturn however its political survival is considerably more precarious.’ See ‘State Expenditures in Advanced Capitalism’, New Left Review, XCII (1975), 53–92, p. 66.Google Scholar

¹⁷ Miller, S. M., ‘The Recapitalism of Capitalism’, Social Policy, IX (11–12, 1978), 5–13.Google Scholar

¹⁸ Wilensky, , ‘The New Corporatism’, Centralisation, and the Welfare State, p. 14.Google Scholar

¹⁹ Korpi, , ‘Social Policy and Distributional Conflict’, p. 305.Google Scholar

²⁰ Based on comments from reviewers of an earlier draft of this paper, controls have been introduced into the data in order to increase the comparability of the insurance and assistance totals for the different countries. First, because countries vary significantly in the share of their health services which is financed through a social insurance system, the share of social insurance expenses used for health services was deducted in all cases. Totals presented for social insurance expenditures include expenditures for unemployment benefits, disability benefits and various pensions provided through the social insurance system. This total was compared with the total for assistance expenditures, as shares of the total for both. It is important to note that, when health expenditures were excluded, the range between the assistance/insurance ratios for the countries with the highest and lowest ratios was reduced. Two countries moved from the high to moderate category, although only one country, France, significantly changed its relative rank, nevertheless remaining within the moderate category. The surprisingly small effect of excluding health expenditures reflects the fact that expenditures for pensions comprise the major share of social insurance expenditures for all countries. Adding or subtracting less major categories of expenditures, including health, does not significantly affect the countries' ordinal rankings. This was confirmed by a second trial, establishing ordinal rankings with expenses for family allowances counted as social insurance expenditures. Once again, the ordinal rankings were not significantly affected.

This second trial was part of an attempt to develop a response to a reviewer's suggestion that, since demogrants are neither earned nor means-tested, it may be more appropriate to divide income maintenance expenditures into a triad of insurance/demogrant/assistance rather than a diad of insurance/assistance. My unwillingness to separate old-age demogrants from social insurance is based on two factors. Firstly, the rationale for the old-age demogrants is that the elderly can be assumed to have made at least indirect contributions to society's aggregate well-being. Benefits are considered to be earned even if not formally purchased. Secondly, in all cases, old-age demogrants are administered as a part of the social insurance system and are literally inseparable from it, either administratively or in terms of benefits or expenditure data. Demogrants are only one means used to extend entitlement to a wider population. Other states use other means, such as crediting provisions, which can have the same effect. Exclusion of benefits using one such means would result in a lack of comparable data for different states.

The issue of family allowances poses more of a problem because they are generally considered investments in future productivity rather than benefits earned through past direct or indirect contributions. The need for a third theoretical category seems more compelling here, and needs to be explored further. It should be noted, however, that it was found that the relatively small size of expenditures for family allowances in all countries means that whether or not they are counted as social insurance benefits does not significantly change the ordinal rankings of the countries.

²¹ See Stein, Bruno, Work and Welfare in Britain and the USA (New York: Wiley, 1976)Google Scholar, for a description and comparison of the extremely complex network of unemployment programmes in the two countries. It is this complexity which makes structured comparisons of several countries' programmes so difficult.

²² Flora, Peter and Alber, Jens, ‘Modernization, Democratization, and the Development of Welfare States in Western Europe’, in Flora, Peter and Heidenheimer, Arnold J., eds., The Development of the Welfare State in Europe and America (New Brunswick, N.J.: Transaction Books, 1981), p. 59Google Scholar; Kaim-Caudle, P. R., Comparative Social Policy and Social Security: A Ten Country Study (London: Martin Robinson, 1973).Google Scholar

²³ It is acknowledged that two kinds of redistribution can take place within an old-age insurance system. The first is intergenerational redistribution which is very significant in a system that uses current revenues to pay current obligations. Since all countries in the sample use pay-as-you-go financing, this intergenerational redistribution can be treated as a constant. The second type of redistribution occurs between higher and lower income groups. It is this second type of redistribution which is assumed to vary and is thus the focus of this study.

²⁴ As shown in Table 3, the states have designated different formal target populations for their old-age income insurance systems. Using demogrants, Canada, Sweden and Denmark have defined a universal constituency. In contrast, Switzerland and the United States limit entitlement to those who have actually made contributions. This contrast is blurred by the fact that most of the other countries, while formally employing a contributory system, use mechanisms to credit contributions for individuals who cannot make them for themselves. Theoretically, in a contributory system with liberal crediting provisions, coverage can be almost as universal as in systems which use demogrants. In a situation of long-term full employment, the same could be true of a contributory system without crediting provisions. It remains true, nevertheless, that the coverage provided by a contributory system is, in practice, less universal than that provided through a system which uses demogrants.

²⁵ A score of ‘4’ designates systems providing universal entitlement: ‘3’ represents entitlement linked to contributions with liberal crediting provisions; ‘2’ represents contributory systems with less liberal crediting provisions or modest contribution requirements; and a score of ‘1’ represents a contributory system in which the right to benefits is closely linked to contributions. As shown in Table 4, assigned scores ranged from 2 to 4. It should be emphasized that all scores are ordinal and relative to those assigned to other countries in this sample. Higher values are assigned to those categories which are assumed to lie closest to a situation consistent with a comprehensive social insurance system.

²⁶ As Fisher pointed out in his research, there are many ways to assess adequacy of old-age social security benefits. These include relationship to minimum wage, average wage, poverty level, modal wage, standard of living, or average per capita income. The results for particular countries vary according to the method used, but the overall ranking is generally consistent. Average per capita income was used here as the base because it was for that figure that the most recent and comparable data were available. The results were not significantly different from Fisher's. Average per capita income figures are taken from United Nations Statistical Yearbook, 1978 (New York: United Nations, 1979), Table 193.Google Scholar

²⁷ A score of ‘1’ was given for a low (or modest) basic benefit or no minimum benefit, ‘2’ for a moderate basic benefit, and ‘3’ for a relatively high basic benefit compared to per capita national income. Scores ranged from 1 to 3.

²⁸ Habib, Jack and Lerman, Robert I., ‘Options in Income Support for the Aged’, Journal of Public Economics, XI (1979), 159–77, p. 160.CrossRefGoogle Scholar

²⁹ A score of ‘2’ for this variable means that all funding comes from the same or from a pooled funding source, while a ‘1’ means that funding for the two components is distinct.

³⁰ Wilensky, , ‘The New Corporatism’, Centralisation, and the Welfare State, p. 20.Google Scholar

³¹ SirJoseph, Keith, Secretary of State for Industry, quoted in The Times (London), 25 11 1980, p. 4.Google Scholar See Gough, Ian, ‘Thatcherism and the Welfare State’, unpublished paper, 11 1980Google Scholar, for a review of the premises of the Conservative Government's welfare state policies.

³² Thatcher, Margaret, quoted in The Times, 26 11 1980, p. 8.Google Scholar

³³ Quoted from ‘Address to the Nation’, broadcast 27 07 1981.Google Scholar

³⁴ Thatcher, Margaret, quoted in The Times, 26 11 1980, p. 8.Google Scholar It is recognized that the term ‘welfare’ is used differently in Britain and the United States. It is clear, however, that when Mrs Thatcher argues that Britain must reduce ‘welfare spending’, she means it must reduce excessive unproductive commitments, whether provided through assistance or insurance programmes. In this sense, it is not altogether different from how the term is traditionally used in the United States.

³⁵ Early assessments of the impact of the cuts suggested that the negative effects of reductions in some programmes might be offset by increased eligibility and thus increased expenditures for other programmes (Congressional Budget Office, An Analysis of President Reagan's Budget Revisions for Fiscal Year 1982 (Washington, D.C.: USGPO, 1981), p. 94Google Scholar). There does not seem to be significant evidence of such offsets. By intent, the reductions have been universal enough to negate the possibility of one programme assuming responsibilities from which another withdraws.

³⁶ One change in the social insurance system which was proposed as part of the effort to reduce unproductive state commitments was the elimination of the minimum old-age insurance benefit. Even before Reagan was elected, that change was argued to be justified because ‘the minimum benefit [because it is unearned] is an undesirable welfare aspect of the Social Security Programme’ (U.S. General Accounting Office, Minimum Social Security Benefit: A Windfall That Should be Eliminated (Washington, D.C.: USGPO, 1979), p. 4Google Scholar). In the face of criticism that the elimination of the benefit represented an unjustifiable violation of the obligations of the Social Security system, the Reagan Administration responded by saying that insurance principles would not be violated because, after the elimination of the minimum benefit, ‘people will get what they have earned’. The Roanoke Times and World News, 30 07 1981, p. A–3.Google Scholar For summaries of recent related arguments, see the Washington Post, 20 and 21 07 1981, p. 1.Google Scholar See Derthick, Martha, Policymaking for Social Security (Washington, D.C.: The Brookings Institution, 1979), especially pp. 224–7 and 272–4Google Scholar, for discussions which link continuing perception of the Social Security programme as an insurance system to the level of support it has consistently enjoyed.

³⁷ The Times, 31 03 1980, p. 2.Google Scholar

³⁸ The Times, 26 11 1980, p. 8.Google Scholar Specific proposals which reflect the intention to emphasize insurance principles in the National Insurance system include provisions to increase the level of employee contributions by 1 per cent of earnings, while slowing the growth of value of benefits, in order to strengthen the relationship between actual contributions and benefits; shifting responsibility for provision of some unemployment benefits to assistance programmes, and reducing general revenues to the system from 18 per cent to 14·5 per cent. See The Times, 25 11 1980, p. 1; and 8 12 1980, p. 2.Google Scholar

³⁹ The Times, 8 06 1980, p. 2.Google Scholar

⁴⁰ The Times, 19 11 1980, p. 15; and 11 06 1980, p. 2.Google Scholar

⁴¹ The Times, 3 09 1980, p. 3.Google Scholar

⁴² See, for example, ‘The Counter Innation Policy’, The Times, 25 11 1980, p. 13.Google Scholar

⁴³ It is recognized that the issue of selectivity of entitlement to benefits is closely related to the insurance/assistance choice. While not inherently necessary, universal benefits are more likely to be provided in states which prefer a social insurance system to social assistance. That tendency is illustrated in Chart I and has been explained by Richard Titmuss. Targeted or selective benefits inevitably and inherently imply stigma, which functions as a deterrent to dependancy. This explains why targeted programmes are more consistent with a residual approach than with the institutional social policy model. Arguments in favour of the efficiency of targeted benefits are a more recently offered rationale for their use. The more traditional rationale is that selective assistance programmes, by definition, separate productive from unproductive segments of the population and encourage productivity. See Titmuss, Richard, ‘Universal Selective Social Services’, in Commitment to Welfare (New York: Pantheon, 1968), pp. 113–23.Google Scholar

⁴⁴ See, for example, Kutza, Elizabeth A., ‘Toward an Aging Policy’, Social Policy, XII (05/06 1981), 39–43.Google Scholar See Habib, and Lerman, , Options in Income Support for the AgedGoogle Scholar, for a critical assessment of the argument that targeted elements of social insurance programmes are inherently more redistributive than more universal elements.

⁴⁵ This argument has not been lost on British policy-makers who for some time have perceived a growing resistance to the scale of the welfare expenditures required to meet the commitments implied by a close-to-universal social insurance system. Pressures to contain state expenditures have been building up for over a decade in Britain, and the argument about the merit of targeted programmes surfaced during the last Labour Government. (See Gough, Ian, ‘Thatcherism and the Welfare State’, pp. 11–14.)Google Scholar

⁴⁶ Kutza, , ‘Toward an Aging Policy’, p. 42.Google Scholar