What is the Regulatory Welfare State?
Over the last four decades we have witnessed a rapid growth of regulation within and outside welfare and social arenas, with the increasing privatization, marketization, and commodification processes of welfare state services. The expansion of regulation is not unique to welfare; it is a part of a larger regulatory expansion that affects—negatively as well as positively—the wider environment of our governing institutions. It affects all regulatory regimes, and it has distributive, redistributive, and constitutive processes and outcomes. Policy-makers and policy advocates increasingly turn to regulatory instruments for promoting welfare norms and outcomes in privatized and liberalized markets. Likewise, with the widespread outsourcing of social services, regulation is increasingly used for steering services and protecting users’ rights vis-à-vis nonstate service providers. Social regulation is also dominant at the supranational level, such as the EU (e.g., the EU’s work-life balance directive), and in nongovernmental initiatives (e.g., the ISO’s social responsibility standards). Thus, regulation, which was somewhat a “hidden side” of social policy, has become much more visible in these new forms of welfare state governance, redefining policies and state roles in society and in the economy.
Conceptual Framework
The concept of the regulatory welfare state (RWS) deals with the role of the state in society, politics and the economy and in the various ways in which the state may use both regulatory and fiscal tools to pursue social goals. It transcends the simple ideas of a trade-off between “welfare” and “regulation” to offer a more nuanced theoretical framework for understanding exactly how welfare is governed today. It rests on institutional and historical approaches for understanding what the welfare state is, what the regulatory state is, and what the interaction between them. As such, the concept of the regulatory welfare state expands the scope of scholarship for both regulation and the welfare state. It allows us to make sense of the various combinations of responsibility and delivery among state, civil society, markets, and individuals. However, at the same time, it also highlights how complex the analyst’s task is in times of constant moving, shifting, and blurring of the boundaries among these realms.
The normative dimension
The concept of the RWS assumes that both regulatory tools and fiscal tools can be used for expansion, stagnation, and retrenchment of social goals; policy makers can use them to commodify, de-commodify and re-commodify, and they may have progressive or regressive results at the same time. Moreover, both regulation and social expenditures can function as disciplinary and repressive measures to achieve the goals of social control.
Based on these assumptions, it is useful to distinguish between different types of regulatory welfare state in terms of their normative dimension.
The first is the neoliberal regulatory welfare state, a state that uses both regulation and social expenditures with the aim of commodification. The provision of welfare in this type of state is conditional on the participation in the labor market. Thus, social rights are offered via instruments such as tax expenditures, corporate pensions, corporate health insurance, and corporate programs for parental leave.
The second model is the liberal regulatory welfare state. This model uses regulation to de-commodify while keeping fiscal transfers for commodification purposes by encouraging, for example, home ownership. In this type of welfare state, fiscal transfers are mainly directed toward nurturing the labor and investment markets, while regulation can be used to moderate and balance the effects of commodification.
The third model is the social democratic regulatory welfare state. Under this model, both fiscal transfers and social regulation are used mainly to de-commodify labor and social relations. Here, for example, both regulation (e.g., rent control) and housing subsidies (e.g., for social housing) are used to promote de-commodified housing services.
And finally, the fourth model is the paternalistic regulatory welfare state, in which fiscal transfers are the main instrument for de-commodification, whereas social regulation is used for commodification. The inherent logic of this arrangement is to provide popular goods (subsidies) directly and visibly while using fewer visible tools such as regulation to commodify. Money is visible while regulations are not, thus subsidies will be used to shape social life and to create (or reflect) a clientelistic network. Thus, we can expect, for example, housing benefits and subsidies in the form of transfers but not, for example, as rent control.
The institutional dimension
The delivery function of the welfare state has undergone significant transformation due to privatization and New Public Management reforms. These transformations of social policy delivery—the use of both public and private actors and both regulatory and fiscal means—create an analytical structure for variations of how social policy is delivered under the RWS. This analytical framework, created from the intersections between these delivery methods, adds three additional delivery strategies to the traditional provider-state model of state funding and delivery.
The first strategy is quasi-markets, whereby the state funds the services delivered by the market through competitive contracting or vouchers. The funding of these arrangements remains basically public, but regulatory and market-mimicking approaches are adopted to steer these services. In such instances, the decoupling of public funding and state delivery creates a model of service delivery in which the state funds services that are delivered through voluntary and market actors.
The second strategy is regulated market provision, whereby regulatory rule-making is used to ensure the access of individuals and families to certain goods and services in the market with no direct public financing. These instances of provision of services through regulated markets demonstrate how nonfiscal tools can be used in the market for social welfare purposes, even though they usually aim at a low level of de-commodification, such as poverty relief.
The third strategy is public option, in which services are provided by a public entity without public financing. In this respect, the public provision of services is offered within the market alongside private options. This strategy allows the state to play an active role in addressing social problems and promoting social goals, but the services operate within a competitive market environment and need to survive financially without public funding. The state sets standards for price and quality, not through direct social regulation but by offering customers an option to choose a socially driven product or service (for example, by offering low-fee pensions to low-wage pension savers).
Under these additional strategies for welfare provision, the state does more steering than rowing. It relies on nonstate, voluntary, and commercial actors for the delivery of social welfare (a model also known as welfare pluralism). But it is important to note that the commercialization of social welfare involves not only a massive entry of nonstate providers into the social arena, but also an infusion of the logic of the market into the culture of social provision. It also involves opening up social sectors to competition and to pressure from the global market.
The individual dimension
How do the normative and institutional dimensions of the RWS bear on individuals’ rights and duties? Here, we rely on two basic assumptions: First, that the state can protect, promote, and secure social rights using a variety of means, and not only by providing services directly, but by financing and/or regulating services delivered by nonstate providers. Second, the choice of policy instruments or tools reflects the values of the policy-makers and the norms of their institutional environment.
The shift to regulation may affect the nature and meaning of social rights. Braithwaite, Makkai, and Braithwaite (2007), for instance, found that in aged care homes in the United States, the UK, and Australia, the elderly have the right to buy their own provision from a plurality of residential and nonresidential providers. Moreover, the rights of the aged to privacy, to participation in care planning, to a homelike environment, to freedom of movement, to political participation and to lodge formal complaints have also expanded in all three nations. However, these rights do not necessarily promote de-commodification; they actually look more like consumer rights than citizenship-based social rights. Similarly, in what they term as the “civilization” of social rights, Leisering and Mabbett (2011) found that in the context of privatized pensions, conventional social rights give way to civil rights set in a social context. Here again, the pension savers’ rights were more about regulating access to the market and about procedural fairness than being concerned with welfare outcomes and redistribution. Furthermore, when the regulatory state intersected with the agenda of activation and responsibilization, as many recent social reform programs do (Gilbert 2005; Mann 2005), the meaning of social rights may take the form of re-commodification, demanding that people “participate in markets, including ‘quasi-markets’ within the public sector” (Dean 2015, 13).
The RWS also comes with new regulatory ways of steering individuals’ behavior within it. In addition to influencing individuals’ behavior in the traditional way of using economic incentives, legal duties, and public information campaigns, there are also new methods of influence, such as nudging people to change their behavior or setting default options that individuals will need to change actively. These forms of intervention—sometimes labeled as “libertarian paternalism”—try to influence the individual’s choice without taking away his or her choice, but rather trying to “push” them in a direction that seems preferable to the policy-makers.
For more details see this article and the rest of the special issue on the RWS