The Universal Welfare State as a Social Dilemma

Abstract

From a mainstream neoclassical economist perspective, most of the things provided by modern welfare states are essentially private goods. Such goods—health care, social insurance and education, for example—can be privately consumed. This means that A, who owns the good, can exclude B from consuming the good in question. So in order for the welfare state to be understood as a bundle of publicly provided private goods, it would not be a suitable candidate for the social dilemma/collective action approach in political science (Ostrom 1998). The reason for this is that this approach, by definition, only relates to public goods, that is, goods where it is not possible for the individual to exclude others from using the good. The existence of the welfare state is understood by many mainstream economists as an anomaly, because what the welfare state provides should instead be left to market decisions where, as for other private goods like food, cosmetics, and clothes, individual demand would meet its supply (Baumol 1965). Moreover, if left to the market, standard economic theory states that the things the welfare state provides would be produced with much greater efficiency than if provided by the government and paid for by taxes. This occurs because competing producers of such private goods would have a strong incentive to rationalize production, while such incentives are of course lacking in a state-monopoly system.KeywordsPublic ChoiceWelfare StateProcedural JusticeSocial AssistancePrivate GoodThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.