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There are two main interpretations of the idea of a welfare state:
  • A model in which the state assumes primary responsibility for the welfare of its citizens. This responsibility in theory ought to be comprehensive , because all aspects of welfare are considered and universally applied to citizens as a "right".
  • Welfare state can also mean the creation of a "social safety net" of minimum standards of varying forms of welfare.
There is some confusion between a "welfare state" and a "welfare society," and debate about how each term should be defined. In many countries, especially in the United Statesmarker, some degree of welfare is not actually provided by the state, but directly to welfare recipients from a combination of independent volunteers, corporations (both non-profit charitable corporations as well as for-profit corporations), and government services. This phenomenon has been termed a "welfare society," and the term "welfare system" has been used to describe the range of welfare state and welfare society mixes that are found. The welfare state involves a direct transfer of funds from the public sector to welfare recipients, but indirectly, the private sector is often contributing those funds via redistributionist taxation; the welfare state has been referred to as a type of "mixed economy."


The English term "welfare state" is believed by Asa Briggs to have been coined by Archbishop William Temple during the Second World War, contrasting wartime Britain with the "warfare state" of Nazi Germany. Friedrich Hayek contends that the term derived from the older German word Wohlfahrtsstaat, which itself was used by nineteenth century historians to describe a variant of the ideal of Polizeistaat ("police state"). It was fully developed by the German academic Sozialpolitiker—"socialists of the chair"—from 1870 and first implemented through Bismarck's "state socialism". Bismarck's policies have also been seen as the creation of a welfare state.

In German, a roughly equivalent term (Sozialstaat, "social state") had been in use since 1870. There had been earlier attempts to use the same phrase in English, for example in Munroe Smith's text "Four German Jurists", but the term did not enter common use until William Temple popularized it. The Italian term "Social state" (Stato sociale) has the same origin.

The Swedish welfare state is called Folkhemmet andgoes back to the 1936 compromise between the Union and bigCorporate companies. It is a Mixed economy, built on strongunions and a strong system of Social security and universal health care.

In French, the synonymous term "providence state" (État-providence) was originally coined as a sarcastic pejorative remark used by opponents of welfare state policies during the Second Empire (1854-1870).

In Spanish and many other languages, an analogous term is used: estado del bienestar; translated literally: "state of well-being".

In Portuguese, a similar phrase exists: Estado de Bem-Estar Social; which means "Social well-being state".

Early welfare states

The "concept of what one might call a welfare state" appeared during the Abbasid Caliphate in the 8th century. The concepts of welfare and pension were introduced in early Islamic law as forms of Zakat (charity), one of the five Pillars of Islam, since the time of Caliph al-Mansur. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058-1111), the government was also expected to store up food supplies in every region in case a disaster or famine occurred.

Modern welfare states

Modern welfare states developed through a gradual process beginning in the late 19th century and continuing through the 20th. They differed from previous schemes of poverty relief due to their relatively universal coverage. The development of social insurance in Germanymarker under Bismarck was particularly influential. Some schemes, like those in Scandinavia, were based largely in the development of autonomous, mutualist provision of benefits. Others were founded on state provision. The term was not, however, applied to all states offering social protection. The sociologist T.H. Marshall identified the welfare state as a distinctive combination of democracy, welfare and capitalism. Examples of early welfare states in the modern world are Germanymarker, all of the Nordic Countries, the Netherlandsmarker, Uruguaymarker and New Zealandmarker and the United Kingdommarker in the 1930s; although even in current times the question is the U.K. a welfare state or not is as hotly debated in the United Kingdom as it is in the United States today.

Changed attitudes in reaction to the Great Depression were instrumental in the move to the welfare state in many countries, a harbinger of new times where "cradle-to-grave" services became a reality after the poverty of the Depression. During the Great Depression, it was seen as an alternative "middle way" between communism and capitalism. In the period following the Second World War, many countries in Europe moved from partial or selective provision of social services to relatively comprehensive coverage of the population.

The activities of present-day welfare states extend to the provision of both cash welfare benefits (such as old-age pensions or unemployment benefits) and in-kind welfare services (such as health or childcare services). Through these provisions, welfare states can affect the distribution of wellbeing and personal autonomy among their citizens, as well as influencing how their citizens consume and how they spend their time.

After the discovery and inflow of the oil revenue, Saudi Arabiamarker, Bruneimarker, Kuwaitmarker, Qatarmarker, Bahrainmarker, Omanmarker, and the United Arab Emiratesmarker all became welfare states.

In the United Kingdom, the beginning of the modern welfare state was in 1911 when David Lloyd George suggested everyone in work should pay national insurance contribution for unemployment and health benefits from work.

In 1942, the Social Insurance and Allied Services was created by Sir William Beveridge in order to aid those who were in need of help, or in poverty. Beveridge worked as a volunteer for the poor, and set up national insurance. He stated that 'All people of working age should pay a weekly national insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired or widowed.' The basic assumptions of the report were the National Health Service, which provided free health care to the UK. The Universal Child Benefit was a scheme to give benefits to parents, encouraging people to have children by enabling them to feed and support a family. This was particularly beneficial after the second world war when the population of the United Kingdom declined. Universal Child Benefit may have helped drive the Baby boom. The impact of the report was huge and 600,000 copies were made.

Beveridge recommended to the government that they should find ways of tackling the five giants, being Want, Disease, Ignorance, Squalor and Idleness. He argued to cure these problems, the government should provide adequate income to people, adequate health care, adequate education, adequate housing and adequate employment. Before 1939, health care had to be paid for, this was done through a vast network of friendly societies, trade unions and other insurance companies which counted the vast majority of the UK working population as members. These friendly societies provided insurance for sickness, unemployment and invalidity, therefore providing people with an income when they were unable to work. But because of the 1942 Beveridge Report, in 5 July 1948, the National Insurance Act, National Assistance Act and National Health Service Act came into force, thus this is the day that the modern UK welfare state was founded.

Welfare systems were developing intensively since the end of the World War II. At the end of century due to their restructuration part of their responsibilities started to be channeled through non-governmental organizations which became important providers of social services.

Two forms of the welfare state

There are two ways of organizing a welfare state:

According to the first model the state is primarily concerned with directing the resources to “the people most in need”. This requires a tight bureaucratic control over the people concerned, with a maximum of interference in their lives to establish who are "in need" and minimize cheating. The unintended result is that there is a sharp divide between the receivers and the producers of social welfare, between "us" and "them", the producers tending to dismiss the whole idea of social welfare because they will not receive anything of it. This model is dominant in the US.

According to the second model the state distributes welfare with as little bureaucratic interference as possible, to all people who fulfill easily established criteria (e.g. having children, receiving medical treatment, etc). This requires high taxing, of which almost everything is channeled back to the taxpayers with minimum expenses for bureaucratic personnel. The intended – and also largely achieved – result is that there will be a broad support for the system since most people will receive at least something. This model was constructed by the Scandinavian ministers Karl Kristian Steincke and Gustav Möller in the 30s and is dominant in Scandinavia.

Effects on poverty

Empirical evidence suggests that taxes and transfers considerably reduce poverty in most countries, whose welfare states commonly constitute at least a fifth of GDP. Surprisingly, the information shows that "welfare states" would have higher poverty rates than a "non-welfare state" such as the U.S. before the transfer of wealth; an example would be Sweden that has a 23% poverty rate pre-transfer while the U.S. has a 21% poverty rate pre-transfer.
Country Absolute poverty rate
(threshold set at 40% of U.S. median household income)
Relative poverty rate
Pre-transfer Post-transfer Pre-transfer Post-transfer
Swedenmarker 23.7 5.8 14.8 4.8
Norwaymarker 9.2 1.7 12.4 4.0
Netherlandsmarker 22.1 7.3 18.5 11.5
Finlandmarker 11.9 3.7 12.4 3.1
Denmarkmarker 26.4 5.9 17.4 4.8
Germanymarker 15.2 4.3 9.7 5.1
Switzerlandmarker 12.5 3.8 10.9 9.1
Canadamarker 22.5 6.5 17.1 11.9
Francemarker 36.1 9.8 21.8 6.1
Belgiummarker 26.8 6.0 19.5 4.1
Australia 23.3 11.9 16.2 9.2
United Kingdommarker 16.8 8.7 16.4 8.2
United Statesmarker 21.0 11.7 17.2 15.1
Italymarker 30.7 14.3 19.7 9.1


Some criticism of welfare states concern the idea that a welfare state makes citizens dependent and less inclined to work. Certain studies indicate there is no association between economic performance and welfare expenditure in developed countries (see A. B. Atkinson, Incomes and the Welfare State, Cambridge University Press, 1995) and that there is no evidence for the contention that welfare states impede progressive social development. R. E. Goodin et al., in The Real Worlds of Welfare Capitalism (Cambridge University Press, 1999), compares the United States, which spends relatively little on social welfare (less than 17 per cent of GDP), with other countries which spend considerably more. This study claims that on some economic and social indicators the United States performs worse than the Netherlandsmarker, which has a high commitment to welfare provision.

However, the United States, until the banking collapse and credit crunch of 2008 which brought a significant fall in GDP, led most welfare states on certain economic indicators, such as GDP per capita (although in 2006 it had a lower GDP per capita than Norway and Denmark). [31533] Until the recession of 2008 brought about a significant rise in unemployment in the USA, the United States also had a low unemployment rate (although not as low as Denmark, Norway) and a high GDP growth rate, at least in comparison to other developed countries (its growth rate, however, is lower than Finland's and Sweden's, two nations with relatively small populations but comparatively high commitments to welfare provision; the United States' growth rate is also lower than the world's overall). [31534] [31535] The United States also had led most welfare states in the ownership of consumer goods. For example, it has more TVs per capita [31536], more personal computers per capita [31537], and more radios per capita [31538] than welfare states.

Socialists and Marxists criticize welfare state programs as concessions made by the capitalist class in order to divert the working class and middle class away from wanting to pursue a completely new socialist organization of the economy and society, as it had been historically used for in Germany by Bismarck along with his anti-socialist laws. Furthermore, socialists believe it is an attempt to "patch up" the ineffective capitalist market economy and proves that capitalism does not work effectively. By implementing state or public ownership of the means of production, socialists believe there will be no need for a welfare state.

Another criticism characterizes welfare as theft of property or forced labor (i.e. slavery). This criticism is based upon the classical liberal human right to obtain and own property, wherein every human being owns his body, and owns the product of his body's labor (i.e. goods, services, land, or money). It follows that the removal of money by any state or government mechanism from one person to another is argued to be theft of the former person's property or a requirement to perform forced labor for the benefit of others, and thus is a violation of his property rights or his liberty, even if the mechanism was legally established by a democratically elected assembly.

A third criticism is that the welfare state allegedly provides its dependents with a similar level of income to the minimum wage. Critics argue that fraud and economic inactivity are apparently quite common now in the United Kingdommarker and Francemarker. Some conservatives in the UK claim that the welfare state has produced a generation of dependents who, instead of working, rely solely upon the state for income and support; even though assistance is only legally available to those unable to work. The welfare state in the UK was created to provide certain people with a basic level of benefits in order to alleviate poverty, but that as a matter of opinion has been expanded to provide a larger number of people with more money than the country can ideally afford. Some feel that this argument is demonstrably false: the benefits system in the UK provides individuals with considerably less money than the national minimum wage, although people on welfare often find that they qualify for a variety of benefits, including benefits in-kind, such as accommodation costs which usually make the overall benefits much higher than basic figures show.

A fourth criticism of the welfare state is that it results in high taxes. This is usually true, as evidenced by places like Denmarkmarker (tax level at 48.9% of GDP in 2007) and Swedenmarker (tax level at 48.2% of GDP in 2007). Such high taxes do not necessarily mean less income for the nation overall, since the state taxes ideally go directly to the people it is taxed from. These high taxes are argued to result in a major redistribution of that income from the citizens who do not accept welfare to the citizens who do accept welfare.

A fifth criticism of the welfare state is the belief that welfare services provided by the state are more expensive and less efficient than the same services would be if provided by private businesses. In 2000, Professors Louis Kaplow and Steven Shafell published two papers, arguing that any social policy based on such concepts as justice or fairness would result in an economy which is Pareto inefficient. Anything which is supplied free at the point of consumption would be subject to artificially high demand, whereas resources would be more properly allocated if provision reflected the cost.

The most extreme criticisms of states and governments, are from anarchists and Libertarian Socialists, who believe that all states and governments are undesirable and/or unnecessary. Most anarchists believe that while social welfare gives a certain level of independency from the market and individual capitalists, it creates dependence to the state, which is the institution that, according to this view, supports and protects capitalism in the first place. Nonetheless, according to Noam Chomsky, "social democrats and anarchists always agreed, fairly generally, on so-called 'welfare state measures'" and "Anarchists propose other measures to deal with these problems, without recourse to state authority." Anarchists believe in stopping welfare programs only if it means abolishing government and capitalism as well.

The welfare state and social expenditure

Correlation between GDP (PPP) per capita and welfare expenditure as a percentage of GDP.
Correlation between HDI score and welfare expenditure as a percentage of GDP.

Welfare provision in the contemporary world tends to be more advanced in countries with stronger developed economies. Poor countries tend to have limited resources for social services. There is very little correlation between economic performance and welfare expenditure.

There are individual exceptions on both sides, but as the table below suggests, the higher levels of social expenditure in the European Union are not associated with lower growth, lower productivity or higher unemployment, nor with higher growth, higher productivity or lower unemployment. Likewise, the pursuit of free market policies leads neither to guaranteed prosperity or social collapse. The table shows that countries with more limited expenditure, like Australia, Canadamarker and Japanmarker do no better or worse economically than countries with high social expenditure, like Belgiummarker, Germanymarker and Denmarkmarker. The table does not show the effect of expenditure on income inequalities, and does not encompass some other forms of welfare provision (such as occupational welfare). Overall, there is a slight positive correlation between increased spending on social services and higher GDP per capita as well as higher HDI rating.

The table below shows, first, welfare expenditure as a percentage of GDP for some (selected) OECD member states, with and without public education, and second, GDP per capita (PPP US$) in 2001:

Nation Welfare expenditure
(% of GDP)
omitting education

Welfare expenditure
(% of GDP)
including education

GDP per capita (PPP US$)
Denmarkmarker 29.2 37.9 $29,000
Swedenmarker 28.9 38.2 $24,180
Francemarker 28.5 34.9 $23,990
Germanymarker 27.4 33.2 $25,350
Belgiummarker 27.2 32.7 $25,520
Switzerlandmarker 26.4 31.6 $28,100
Austriamarker 26.0 32.4 $26,730
Finlandmarker 24.8 32.3 $24,430
Netherlandsmarker 24.3 27.3 $27,190
Italymarker 24.4 28.6 $24,670
Greecemarker 24.3 28.4 $17,440
Norwaymarker 23.9 33.2 $29,620
Polandmarker 23.0 N/A $9,450
United Kingdommarker 21.8 25.9 $24,160
Portugalmarker 21.1 25.5 $18,150
Luxembourgmarker 20.8 N/A $53,780
Czech Republicmarker 20.1 N/A $14,720
Hungarymarker 20.1 N/A $12,340
Icelandmarker 19.8 23.2 $29,990
Spainmarker 19.6 25.3 $20,150
New Zealandmarker 18.5 25.8 $19,160
Australia 18.0 22.5 $25,370
Slovak Republicmarker 17.9 N/A $11,960
Canadamarker 17.8 23.1 $27,130
Japanmarker 16.9 18.6 $25,130
United Statesmarker 14.8 19.4 $34,320
Irelandmarker 13.8 18.5 $32,410
Mexicomarker 11.8 N/A $8,430
South Koreamarker 6.1 11.0 $15,090

Figures from the OECD and the UNDP.

Note: no data for China, India, Indonesia, Brazil, Russia, and Pakistan, which are not members of the OECD.

See also


Transfer of wealth:



  1. "Welfare state." Encyclopedia of Political Economy. Ed. Phillip Anthony O'Hara. Routledge, 1999. p. 1245
  2. F. A. Hayek, The Constitution of Liberty (London: Routledge, 1960), p. 502, n. 12.
  3. S. B. Fay, 'Bismarck's Welfare State', Current History, Vol. XVIII (January 1950), pp. 1-7.
  4. "welfare state." O'Hara, Phillip Anthony (editor). Encyclopedia of political economy. Routledge 1999. p. 1245
  5. Social Services (2) - Saudi Arabia Information
  6. Royal Embassy of Saudi Arabia London
  7. Pawel Zaleski Global Non-governmental Administrative System: Geosociology of the Third Sector, [in:] Gawin, Dariusz & Glinski, Piotr [ed.]: "Civil Society in the Making", IFiS Publishers, Warszawa 2006
  8. Bo Rothstein: Just Institutions Matter: The Moral and Political Logic of the Universal Welfare State (Theories of Institutional Design), Cambridge 1998
  9. Kenworthy, L. (1999). Do social-welfare policies reduce poverty? A cross-national assessment. Social Forces, 77(3), 1119-1139.
  10. Bradley, D., Huber, E., Moller, S., Nielson, F. & Stephens, J. D. (2003). Determinants of relative poverty in advanced capitalist democracies. American Sociological Review, 68(3), 22-51.
  12. The Welfare State We're in / James Bartholomew (2004) ISBN 1842750631
  13. Our Culture, What's Left of It: The Mandarins and the Masses / Theodore Dalrymple (2005) ISBN 1566636434
  15. Noam Chomsky on anarchist support for 'welfare state' policies
  16. J.5 What alternative social organisations do anarchists create?
  17. Barr, N. (2004). Economics of the welfare state. New York: Oxford University Press (USA).

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