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The Politics of the New Welfare State$
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Giuliano Bonoli and David Natali

Print publication date: 2012

Print ISBN-13: 9780199645244

Published to Oxford Scholarship Online: January 2013

DOI: 10.1093/acprof:oso/9780199645244.001.0001

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Stress-testing the New Welfare State

Stress-testing the New Welfare State

Chapter:
(p.68) 4 Stress-testing the New Welfare State
Source:
The Politics of the New Welfare State
Author(s):

Anton Hemerijck

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199645244.003.0004

Deep economic crises are moments of institutional truth, so the history of the 20th century teaches us. In the wake of both the Great Depression in the 1930s and the Great Inflation of the 1970s, the socioeconomic order of advanced economies, triggered by exceptional economic hardship, recast in fundamental ways. The aftermath of the global financial crisis of 2008 marks another ‘stress test’ for the welfare state. Can the welfare state wither the storm, once again, as it did in the 1980s and 1990s? This chapter deals with the initial responses adopted across Western Europe since the outbreak of the crisis in 2008. It reviews three distinctive sequences of crisis management that have been pursued, each triggered by different, but complementary, sets of economic and political challenges. The global financial crisis has affected different economies differently, as a result of their relative vulnerability to endogenous and external economic shocks and also because of the differing institutional capacities they were able to mobilise to address the economic duress. In particular it focuses on the developments that social investment policies have undergone after 2008. While there are differences across welfare regimes, policies with a social investment flavour (activation, childcare) have been somewhat more resilient in the face of fiscal austerity. While clearly suffering from an extremely unfavourable budgetary context, the reorientation towards a social investment welfare state seems still on the agenda, if anything because of a lack of alternatives.

Keywords:   global financial crisis, social investment, crisis aftershocks, welfare reform, welfare regimes, policy responses

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