Socio-economic regulation in the postwar growth strategy

In Western Europe, the entire welfare-work nexus came on the agenda after World War II. The new Fordist welfare-work nexus rested on the recognition of trade unionism and more or less centralised collective bargaining (Aglietta, Reference Aglietta1987). As a result, wages were indexed to productivity growth, while fiscal and credit policies were orientated towards the creation of effective demand in national economies. The trade unions respected the management’s power to control (often Taylorized) work processes. The state supported this ‘class compromise’ by means of policies designed to integrate the circuits of the capital and consumer goods industries, and by mediating conflicts between capital and labour, especially over individual and social wages. It also helped achieve growth and productivity through public infrastructure spending and permissive credit and monetary policies. As a corollary, production and consumption norms increased in parallel – particularly in the case of mass-produced consumer goods of longevity such as refrigerators, televisions, cars and standardised housing – resulting in unprecedented growth rates in GDP and real wages, especially in the 1950s and 1960s. The state could use the growing tax take from the primary incomes of the labour market parties to create and/or expand welfare systems to cover risks such as old age, sickness and unemployment.

It is well known in social policy circles that the post-war regulation of economic growth assumed different national shapes. Welfare ‘regimes’ (e.g. Esping-Andersen, Reference Esping-Andersen1990; Arts and Gelissen, Reference Arts and Gelissen2002) vary, above all, in terms of the division of social labour between market and public spheres to which different forms and levels of taxation correspond, and are associated with different patterns of stratification. Esping-Andersen characterised the ‘social-democratic’ countries (e.g. Sweden) as having the highest degree of universalism in welfare programmes with a correspondingly weak role for the market, especially concerning care for children and the elderly. This welfare cluster offered the greatest extent of redistribution of the primary incomes from capital and labour, and the lowest degree of stratification. Conversely, ‘liberal’ welfare regimes (e.g. UK) represented the lowest decommodification and highest stratification potential and a corresponding emphasis on individual responsibility in combination with a greater welfare role of private and civil sector agencies. This overall orientation does not exclude that the UK real type nevertheless featured some ‘universal’ elements – particularly in the health sector. The third originalFootnote ² welfare regime was the ‘conservative’ one (e.g. Germany) with medium decommodification and stratification, where state welfare, unemployment and pension policies were not designed to redistribute market inequalities but tended to reproduce original social positions.

The welfare regime approach has subsequently been taken up in ecological modernisation discourses. According to Dryzek (in Gough et al., Reference Gough, Meadowcroft, Dryzek, Gerhards, Lengfeld, Markandya and Ortiz2008), social-democratic countries are better positioned than liberal countries to manage the intersection of social and environmental policies. This is due to the greater support within social-democratic countries for the idea that environmental policies could be good for business, and their more developed state apparatuses and functioning governance regimes, which are seen as preconditions for ‘green growth’ trajectories. The result would be a ‘mainstreaming of both environmental and equality concerns’ (Gough et al., Reference Gough, Meadowcroft, Dryzek, Gerhards, Lengfeld, Markandya and Ortiz2008: 330). Yet, in relation to key environmental indicators such as CO2 emissions per capita and the ecological footprints of production and consumption, comparative research (Koch and Fritz, Reference Koch and Fritz2014; Duit, Reference Duit2016; Zimmermann and Graziano, Reference Zimmermann and Graziano2020) could not verify the ‘synergy hypothesis’ that social democratic countries as a whole perform better than liberal or conservative countries. What in fact most affects countries’ objective environmental performances is not so much welfare regime affiliation but the level of their GDP per capita (Fritz and Koch, Reference Fritz and Koch2016): in general, the richer a country the worse is its performance in environmental indicators. However, there is also comparative research on attitudes towards providing climate and welfare (‘eco-social’) policies simultaneously (Fritz and Koch, Reference Fritz and Koch2019; Otto and Gugushvili, Reference Otto and Gugushvili2020), which supports the synergy hypothesis to some extent. Citizens of the Nordic countries are most prepared to back a combined eco-social policy strategy, even though this has hitherto not had any implications on the objective ecological performance of these countries. The attitudes of Swedish citizens on selected eco-social policies will be explored below.

The most recent period did not bring a loosening of the close link between economic growth and welfare state activity, but a transition in emphasis from Keynesian demand towards ‘Schumpeterian’ supply management (Jessop, Reference Jessop1999) in the context of the transnationalisation and financialisation of production and investment. Welfare institutions became modified and received new functions within the general structure of the ‘competition state’ (Cerny, Reference Cerny2010). Designed to support competing national and/or local actors in the global economy, social policy came itself to be regarded as ‘investment’ (Hemerijck, Reference Hemerijck2018). However, demand and supply strategies of socio-economic regulation have hitherto had in common that they largely ignore the environmental aspects of welfare capitalist development. In relation to ecological and carbon footprints, at no point in time after WWII were Western material welfare standards generalisable to the rest of the planet (Fritz and Koch, Reference Fritz and Koch2016; O’Neill et al., Reference O’Neill, Fanning, Lamb and Steinberger2018) – despite the fact that these were culturally celebrated, ideologically reinforced and exported to many other parts of the world. In fact, had citizens of all nations led similar lifestyles as Westerners, the planet would have ended up in acute climate emergency significantly earlier.

Safe operating space and sustainable welfare

The framework of a ‘safe and just operating space’ (Raworth, Reference Raworth2017) may serve as a point of departure for conceptualising welfare state activity and eco-social policymaking in a postgrowth context, since it considers both planetary and social boundaries. Economy and society develop within a doughnut-shaped space, where resource use is below the level of critical planetary limits (the outer boundary or the safe and ecologically sustainable space), but above the sufficiency level required to meet people’s basic needs (the inner boundary or the socially just space).Footnote ³ Not only is the economy here conceptualised as a subsystem of the biophysical and social systems (Fig. 1), but welfare systems would then likewise be regarded as ‘embedded in the ecological context’ (Hirvilammi, Reference Hirvilammi2020: 6) and grasped as ‘provisioning systems’ (Fanning et al., Reference Fanning, O’Neill and Büchs2020) for sustainable need satisfiers. Considering the upper boundary, welfare state activity and social policies would no longer assume the simplistic form of redistributing growing tax takes (as in the post-war period) but involve controversial decisions targeted at the power resources of affluent and influential groups.

Figure 1. Inner and outer boundaries for economic and societal development.

The concept of ‘sustainable welfare’ (Koch and Mont, 2016) in general and theories of human need in particular may serve as theoretical context for a new generation of state engagement and social policies (Koch, Reference Koch2020a). Starting from the ‘double injustice’ (Walker, Reference Walker2012) – that responsibilities and impacts of climate change often work in opposing ways, since the groups likely to be affected most are the ones least responsible for causing it – sustainable welfare considers the fact that social policies will need to counter the inequalities and conflicts that are likely to emerge as a result of the decarbonisation of production and consumption patterns, and that it will be increasingly necessary to formulate them in ways that create synergies with environmental goals, yet are also acceptable to the electorate. This includes the recognition of critical thresholds and limitations for material welfare, a correspondingly critical review of existing welfare systems and the notion that in a constrained world not all ‘wants’ for often ‘positional’ goods can be politically supported in the name of consumer sovereignty. Some would indeed need to be restrained. Further debates in sustainable welfare and degrowth/postgrowth circles (Büchs and Koch, Reference Büchs and Koch2017) have resulted in the adoption of needs-based accounts (Max-Neef, Reference Max-Neef1991; Gough, Reference Gough2017) over hedonic, utilitarian and subjective accounts of wellbeing.

Max-Neef’s Human Scale Development methodology introduced the term ‘satisfier’ to highlight the culturally specific – and more or less ecologically sustainable – ways in which needs are being met in practice (Guillén-Royo, Reference Guillén-Royo2015). Also in Gough’s ‘dual strategy’ the practical knowledge of citizens complements the various sorts of expert knowledge on sustainable needs satisfaction. From the perspective of a wider social-ecological transformation, policy ideas serving as what Max-Neef called ‘synergetic’ needs satisfiers are particularly relevant as they have the potential of fulfilling more than just one need in different contexts and may hence serve as entry points for initiating a ‘virtuous policy circle of sustainable welfare’ (Hirvilammi, Reference Hirvilammi2020). Academic and policy deliberations circling around welfare provisioning systems within the ‘safe and just operating space’ have further attempted to identify maximum and minimum levels for needs satisfaction as well as eco-social policy instruments with the potential of steering the economy and society towards respecting these ‘floors and ceilings’ (Gough, Reference Gough2020; see below).

There are overlaps between the debates about satisfying needs at sufficiency or minimum levels and vindicating social rights. Themes often addressed in social rights discourses such as housing, education, health and minimum income would be treated as basic needs currently in jeopardy in sustainable welfare approaches. In relation to housing and the sufficiency level of needs satisfaction, the latter would promote provisions to guarantee everyone a certain quantity of square meters to live: that is, independent of ability to pay. Hence, housing at sufficiency level would be treated as a social right and not as an area of financial investment. Yet on top of this and concerning the maximum level of needs satisfaction, the sustainable welfare perspective would call for limitations to living beyond a certain threshold of square meters: for example, by taxation. Targeting inheritance, high incomes and wealth through taxation (Buch-Hansen and Koch, Reference Buch-Hansen and Koch2019) – again the higher end of needs satisfaction or luxuries – would not only simultaneously serve ecological targets (since the rich emit over proportional amounts of greenhouse gases) and social equality but also constitute an important means to decouple the financialisation of welfare state activity from economic growth.Footnote ⁴

Selected eco-social policies and their popularity in a Nordic welfare context

This section reviews a selection of concrete eco-social policy proposals that previous research identified as capable of steering economy and society towards the ‘safe operating space’ outlined above, highlighting both upper and lower boundaries: maximum income, wealth tax, basic income, reduction in working hours and meat tax. It presents and discusses corresponding qualitative and quantitative data from two ongoing projects at Lund University for Sweden and the social-democratic welfare context: ‘Sustainable Welfare for a New Generation of Social Policy’Footnote ⁵ and ‘The New Urban Challenge: Models of Sustainable Welfare in Swedish Metropolitan Cities’.Footnote ⁶ The former project gathered data on needs satisfaction and eco-social policies from eighty-four participants in eleven deliberative citizen forums. The latter conducted a representative survey with new quantitative data on some of these policies. Both data sets were collected in 2020, with the aim of rectifying the current knowledge gap concerning public support for eco-social policy measures within specific welfare contexts. In some cases, such as maximum incomes, there is no data concerning their popularity at all. Which eco-social policies regarding upper and lower levels of needs satisfaction were frequently mentioned in the forums? How popular are the selected policy ideas in the Swedish population as a whole? To what extent can the study findings be generalised to other welfare-state contexts, with weaker emphasis on universalism and state redistribution?

In the debate on the role of the welfare state in safeguarding needs satisfaction at a sufficiency level – the inner boundary of the ‘safe operating space’ – proponents for an eco-social or sustainable welfare state argue for the introduction of a universal and unconditional basic income (UBI, e.g. Van Parijs and Vanderborght, Reference Van Parijs and Vanderborght2017), the expansion/introduction of universal basic services (UBS, e.g. Coote and Percy, Reference Coote and Percy2020), a voucher system (Bohnenberger, Reference Bohnenberger2020) or a combination of the three. Forum participants mentioned UBI particularly often and in various contexts, highlighting the potentially high degree of sustainable satisfaction of needs (in Max-Neef’s terminology) as different as subsistence, participation, leisure, creation and freedom. Yet many also argued for an expansion of UBS: that is, in the Swedish context, beyond health and care and especially in the areas of transport, digitalisation and food provision. Complementing previous contributions expressing the tensions and contradictions between UBI and UBS (see, for the different perspectives, Lombardozzi, Reference Lombardozzi2020, and Coote and Percy, Reference Coote and Percy2020), this points towards a demand for exploring the institutional and financial conditions that would allow combinations of UBI and UBS to function as provisioning systems of sustainable needs satisfiers and how such mixes may look.

Such research could begin from the hypothesis that welfare regimes and institutional path dependency may be important factors in determining concrete national mixes of UBS, UBI and possibly vouchers. Where there is already a strong universal tradition in welfare delivery such as in the Nordic countries, it may be easiest to expand these systems, while there would be a minor role for UBI. This hypothesis is supported by the fact that just over 17 per cent are in favour and 71 per cent against the introduction of UBI in Sweden (Table 1). Hence, here UBS would be a more appropriate institutional basis for a social-ecological transformation, possibly extended and selectively complemented with (more or less means-tested) minimum income schemes. Yet where UBS exists in merely rudimentary forms and liberal welfare traditions predominate, UBI may be the easiest and quickest option for proceeding. This is because the build-up of universal welfare systems takes considerable time and could in all likelihood proceed in the mid- to long-term perspective only.

Table 1 Support for eco-social policies in Sweden 2020 (percentages)

Source. Representative survey conducted within the Project ‘The New Urban Challenge: Models of Sustainable Welfare in Swedish Metropolitan Cities’. Respondents were asked to evaluate the above policy suggestions and answered on five-point Likert scales that contained the following categories: very good and fairly good (‘in favour’), quite bad and very bad (‘against’), neither good nor bad (‘undecided’).

Concerning the upper boundary, much fewer proposals have been tabled. However, there are now philosophical approaches defending ‘limitarianism’ in an ecologically constrained world (Robeyns, Reference Robeyns2019), to which social policy scholars may turn, and more concrete economic proposals (Concialdi, Reference Concialdi2018; Pizzigatti, Reference Pizzigatti2018), suggesting the definition of maximum incomes as some quantitative proportion from minimum incomes (10:1, 20:1 etc.). There is, however, no agreement about where exactly the cap level (beyond which taxation would be 100 per cent) should be set and whether all forms of wealth should be targeted (Buch-Hansen and Koch, Reference Buch-Hansen and Koch2019). Given the newness of a policy proposal, for the introduction of which no major political party currently campaigns, it does not strike one as particularly surprising that no more than a quarter of the Swedish population supports a maximum income set at approximately 145,000 Euro a year (Table 1). However, it is not inconceivable that the backing for such a policy would increase, if it were promoted more actively and made the object of bottom-up policy deliberations.Footnote ⁷ Not surprisingly, support for the comparatively moderate but better-known tax on wealth, which currently doesn’t exist either in Sweden, is significantly higher (42.5 per cent). Forum participants mentioned the latter proposal more frequently as many were unaware of the recent academic debate about caps on wealth and/or income.

Two further eco-social reform suggestions, often highlighted in the forums as synergetic satisfiers for universal needs as different as protection, participation, leisure, creation and freedom (following Max-Neef’s terminology), are a reduction of working hours (especially to defuse the work-spend-consume circle) and a tax on meat consumption (to support ecological agriculture, a more vegetarian nutrition and a general transition to a post-fossil lifestyle). A reduction of working hours is by far the most popular policy instrument selected here: Almost 52 per cent of respondents would like to see a regular working week of thirty hours in Sweden (as opposed to forty now). Despite this, only the Swedish Left party (Vänster) campaigns for this policy. The support for a meat tax stood at 30 per cent with almost 53 per cent opposing this policy suggestion. However, 17 per cent of ‘undecided’ respondents indicates a greater structural potential for popularity.

The relatively high support scores for a wealth tax and working hour reduction seem to suggest that governments, particularly in social-democratic welfare contexts such as Sweden, could be bolder than currently in implementing eco-social policies. But also the attractiveness of increasingly far-reaching Green New Deal models (Galvin and Healy, Reference Galvin and Healy2020; Mastini et al., Reference Mastini, Kallis and Hickel2021) in the USA and beyond indicates that civil society mobilisation, political parties and government agencies may in fact reinforce each other to create the momentum necessary for social-ecological transformations. That governments continue to be capable of initiating far-reaching change is highlighted by Eckersley (Reference Eckersley2020) at the example of the current Covid-19 crisis: After several decades of welfare state retreat, the immediate reaction of Western governments was an expansion of the state’s activity – from restrictions on mobility via new types of welfare payments to stimulus packages for businesses. Concerning a possible exit from the Covid-19 and climate crises in combination, Eckersley (Reference Eckersley2020: 18) suggests a ‘stimulus spending on green infrastructure with a sequenced phase-out of the most emissions-intensive and ecologically harmful industries’ to enable an ecological restructuring of the economy after the Covid-19 crisis.

Yet, in general, the empirical results point to a considerable gap between the far-reaching measures that scientists consider necessary to meaningfully address climate emergency (see Introduction) and the measures that citizens of an advanced welfare state such as Sweden are presently prepared to support.Footnote ⁸ Explanations for this gap include the thorough inculcation of the growth imperative in people’s minds, bodies and day-to-day social practices, often appearing as the ‘natural’ way of doing things (Koch, Reference Koch2018). Since it is part of the collective consciousness that a range of institutions – such as the legal, educational and welfare systems, which have proven to be crucial for the relatively high subjective wellbeing scores measured in Western societies – historically co-developed with the provision of economic growth and are presently coupled to it, any political move beyond the capitalist growth economy would need to reckon with concerns about wellbeing loss, anomy and social exclusion (Büchs and Koch, Reference Büchs and Koch2019). One way to defuse these concerns is to expand already existing spaces, where alternative, sustainable and cooperative forms of working and living together are tested. For this purpose, it would be necessary to carry out participatory exercises (such as workshops, consultations or deliberative forums) much more often and on greater scales than in our forums (Guillén-Royo, Reference Guillén-Royo2020; Koch, Reference Koch2020b). As the Irish example suggests (Harris, Reference Harris, Hogan and Murphy2021), governments could support this by enhancing the status of citizen forums and giving them advisory character. This would be in line with recent arguments from political theorists that an adequate response to the ecological crisis requires augmenting the institutions of representative democracy with mechanisms of direct and deliberate democracy that carry the potential of ‘disruptive deliberation’ (Hammond, Reference Hammond2020).