When people learn that I research post-growth economy, a common first question I hear is “can we have a welfare state without growth?” Because the question is very blunt, high-level, and abstract, it feels awkward to answer. Still, the question is obviously valid and highly relevant to policy discourse, so it should be answered in some way.
Blunt, high-level, and abstract questions are open to different interpretations. Thus, I outline three answers that respond to three different spirits of the question. I hope at least one of them feels satisfying. This blog is primarily aimed at curious newcomers, but perhaps it contains something for post-growth reserachers too.
Yes. Welfare systems are social institutions, and institutions are by nature malleable.
Much of public discourse emphasizes that there is some contradiction between low growth and current welfare provisioning (e.g. social insurance, care services, free education…), and the supposedly only way out of the bind is to downscale welfare systems. However, the principles of who gets what and on what grounds, and the ideologies that support any given system configuration, are social institutions. Though they are difficult to adjust, they do in principle bend, and can be shaped to serve our needs in a low-growth context. In theory, if we want a provisioining system to persist without growth, we can make it persist.
Granted, we can only provision what exists. There cannot be more healthcare provisioining than there are healthcare workers and infrastructure. If the economy does not grow, redistributive systems are zero-sum – additions in one domain are deductions from somewhere else. But within the capacity constraints of society, resources can be allocated in many different ways.
It is also true that higher redistribution is politically controversial, and according to many completely unacceptable (where I live, in Finland, higher redistribution is often not considered a valid policy option in public discourse). Here, I would note that if income/wealth distribution (i.e. income/wealth before tax) is more equal, then less redistribution is required for a given welfare promise. The point is that the degree of political controversy is not only a matter of how much welfare is promised, but also of other societal conditions that are themselves malleable.
Regardless, even though the political difficulty of maintaining welfare states without growth is important to recognize, it is not the only truth that matters. It also matters that societies can and do find a wide variety of ways to care for their members, including ways that are unprecedented. This malleability is as much a “fundamental point” about welfare state resilience as any more cautious point about political conflicts around welfare redistribution.
No. States, including welfare states, are politically unsustainable without growth. Thus, ‘post-growth welfare provisioning’ would be based on communities, not states.
One form of this argument is in an agenda peper titled Research on Degrowth. The paper discusses how ‘welfarist liberal states’ (I understand this to mean: market-oriented, property-securing, facilitates redistribution…) spiral into worsening distributional conflict without growth, which eventually undermines the state altogether. Though the paper does not discuss post-growth welfare, the implication seems to be that there is no sustainable ‘welfare state’ without growth; but there can be other forms of less hierarchical human community. Some, like Koch, emphasize that welfare states are historically class compromises founded on the expectation and pursuit of ever-higher production. The end of growth breaks the social contract and undermines the political stability of welfare states. I don’t want to misrepresent anyone’s view, so I emphasize that neither of these papers focus on ‘solutions’, and thus neither says that “there cannot be a post-growth welfare state” – that is simply an implication.
A similar point could also be made semantically: a post-growth welfare state is an oxymoron, because (welfare) states are growth systems. If welfare is sustainably provisioned without growth, this situation represents something else than a state. However, I don’t think this line of thinking is very useful, and I’m ok dismissing it altogether. The interesting thing is not the definition of words but the anticipation of system behaviours.
The former appraoch, that non-growing welfare states face unsustainable political conditions, could be rephrased as: current welfare provisioning systems are politically unsustainable without growth under the current political economy. To my mind, this extension makes the political unsustainability view more actionable, because it conditionalizes the argument. Perhaps there is something about the system that makes it unsustainable in non-growth context – and if that thing can be named, why could it not be influenced? The thing is question might be power imbalances (labour-capital, haves-havenots…), vested interests, duty to shareholders to extract growing profits even in a zero-sum system, and so on. Whatever the case, some potential resolution is graspable.
I prefer this conditional approach to unsustainability arguments (or growth dependence claims), because I think it gets closer to answering people’s concerns about welfare state futures. When people are concerned of welfare state sustainability, I don’t think they are focused on whether future welfare provisioining is arranged in a liberal/capitalist framework, they are thinking of our shared entitlement to collectively facilitated welfare provisioining.
Still, it can be valuable to argue that prevailing political interests might sooner see welfare states crumble than give up their position. I am not sure that this point is fundamental and dominant (perhaps I don’t understand the argument fully), but it makes an important point about the political stakes in growth. In that sense, the “No” answer has its place, and maybe it answers your question.
Yes. Many (proposals for) institutions already exist that address the economic and social harms that follow from low growth, thus facilitating welfare provisioning without growth.
The political tensions do not (only) stem from low economic growth, but from the economic consequences of low economic growth. These adverse consequences can be mitigated.
If the problem is macroeconomic instability (e.g. rising unemployment and lower tax revenues without growth), we have decades of experience on counter-cyclical economic policies (albeit always with the aim and outcome of generating more growth; that part would need to change). If the problem is cost of public debt, we know that active central banks can keep interests rates low, and that also the originally conservative European Central Bank is now trusted to intervene strongly if crisis raises its head. If the problem is inequality, that became a big research and policy topic particularly after Piketty. If the problem is pension fund underperformance, we already know how to pay pensions without pension funds: by redistributing.
Of course all these problems are nuanced and their possible solutions deserve critical and balanced analysis. But my point is that the economics and social policy of post-growth welfare do not need to invent completely new systems. Much knowledge already exists, and many already existing systems could work fine without economic growth.
What does not necessarily exist yet are coherent macroeconomic theories and policy doctrines of economic stagnation (or controlled contraction). In other words, the post-growth-relevant knowledge that already exists is not compiled to a school of thought with anything near the institutional validity of growth-based economics and policy. Individual authors publishing their visions of post-growth societies is an important start, but not the same as a collectively validated scientific or policy paradigm. For example, the virtuous cycle of economic growth and social welfare are perhaps the foundation of most politicians’ thinking. Many post-growth policies also make more sense together than individually: lower consumption, but also more leisure time; high welfare provisioining, but also low pre-tax income inequality and thus less need to redistribute. The ways in which post-growth policy building blocks “justify each other” are not obvious and perhaps not fully mapped yet.
In The growth-independent welfare state, my co-authors and I present one overview of what kinds of reforms and institutions a post-growth welfare provisioning system might include, and how some of the parts support each other. Some of the required institutions are already in place and others are more speculative. Which reforms are actually necessary depends on scenarios and local context. But what is fairly clear is that the post-growth welfare system and economy needs to have different aims than what we are used to in a growth era, and the post-growth welfare system departs from any historical welfare state doctrine. The ‘post-growth welfare states’ would be based on the following principles:
“valuing well-being outcomes for their own sake; moderating individual enrichment and steering investment towards social purposes within limits; and allowing the state to take a larger economic role if this is required to prevent social harms” (p. 64).
So, overall, I would answer “yes”.
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