Hirst and Thompson: Globalization in Question

Hirst, PQ, and G Thompson. Globalization in question. Polity Press.

Ch. 6: Can the Welfare State Survive Globalization?

"In no area is increased openness to international capital movements and trade seen in more apocalyptic terms than in the case of social welfare" (161).

Many talked about the race to the bottom as being the defining feature of an era of increased capital mobility, with welfare states stripping away rights and privileges that were previously afforded to the downtrodden in their own societies in order to reduce tax burdens and attract capital from foreign investors. This story is too blunt and misses much nuance. The welfare state has not gone asunder, and has arguably been strengthened in many parts of the world by the boon of income provided by increased international trade. The welfare state can act as a mitigating force against the booms and busts of a liberalized global economy. It can also act as a tool for macroeconomic stimulus when needed.

However, while globalization has not marked the end of the welfare state, it has changed the way that it works, and this has happened differently in distinct countries.

Sweden and Denmark are compared in the early 1990s. Sweden has been used as a case for the demise of the welfare state: Swedish welfarism was seen as being a driving force in the country's stagnation throughout the early 90s. However, Denmark represents an opposite case: its country has grown while government expenditures have remained monstrous.

The Netherlands are explored. It is argued that welfare states, once institutionalized, become very difficult to change and become an embedded feature of society.

Italy is explored.

The European Monetary Union is also explored as being a potential damper on the standard European welfare state structure.