Welfare State: How It Works

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O welfare state is a concept that encompasses the social, political and economic areas and that sees the State as the institution that has for obligation to organize a nation's economy and provide citizens with access to basic services such as health, education and safety. The welfare state aims to reduce social differences arising from capitalism to promote a way of life that takes a most humanitarian condition to the working classes and the poorest layers of the population.

Read too: Social-democracy: an economic model influenced by the welfare state

Creation of the welfare state

The concern of some people with the classes disadvantaged. In the 19th century, after the installation of industrial capitalism in Europe and industrialization took place to other continents, the population found itself in a chaotic scenario of misery, hunger, spread of disease, and exponential growth in violence and inequality Social.

The welfare state appeared at the end of the 19th century with policies aimed at reducing social inequality.
The welfare state appeared at the end of the 19th century with policies aimed at reducing social inequality.
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Factory workers in the 19th century faced long working hours that often exceeded 12 hours a day. They were not entitled to paid rest, such as vacations and weekly rest, in addition to lack of social security and a satisfactory remuneration that would allow them a decent life. The workers lived in the misery, were hungry, and the situation was even more serious among the unemployed.

Amidst the growing wave of demands for rights and union formation lived, in the transition from the 19th to the 20th century, theories emerged that defended that the State should provide a minimum well-being for the population in general. The first major theory to defend this practice was promoted by the German statesman Otto von Bismarck, in Germany, in 1880.

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Responsible for unifying the Germanic and Prussian kingdoms into the great German nation, Bismarck proposed an alternative policy who wouldn't even give in to economic liberalism nor to socialism. There was, in Bismarckian politics, a state control over the economy, and the management of resources received through taxes was responsible for distributing the resources in improvements to the population.

In the 20th century, an English economist, John Maynard Keynes, revolutionized world economic policy by proposing a new system that follows in the footsteps of promotion ofsocial welfare.

What is Keynesianism?

Macroeconomics (study of the economy of a State, a nation or a specific place as a whole organized) was governed, until the 1930s, by neoclassical economic theory, essentially liberalist.

Neoclassical theory understands that the free market it generates jobs and that jobs are enough to solve social problems. However, for employability, workers must accept more flexible wages (lows) and adverse working conditions (precarious).

John Maynard Keynes, English economist.
John Maynard Keynes, English economist.

For Keynes, the State must regulate the economy, regulating the wages and rights of workers, in addition to acting as an agency that demands taxes of everyone, including businessmen, and reverts these taxes into services for the population, creating a welfare state. The chaos left by the Second World War it caused the ideas disseminated by Keynes, in the 1930s, to be implanted in the great Western democratic powers.

However, from the 1960s onwards, the economies of the United States and England began to fall. With the economic downfall aggravated, in the 1970s, by the oil crisis, these two powers left Keynesianism aside and adopted ideas close to the neoliberalism, based on economists from the Austrian School, such as Ludwig von Mises, and, above all, from the Chicago School, such as Milton Friedman.

Welfare State and Public Policy 

Public policies are actions taken by governments with a view to guarantee of rights. In our country, rights are guaranteed in the Federal Constitution of 1988, and public policies are mechanisms of the Executive Power (sometimes in partnership with the private sector) to put into practice the rights guaranteed by law.

To think of a fully functioning welfare state, it is necessary to have effective public policies. In this sense, it is the government that must take the lead so that the population's rights are maintained. However, government policies are fleeting and tend to undo, in many cases, when there is a transition from one government to another.

The policies that remain and are not changed, as they are the result of a “general will” of the nation, are called State policies. They remain with the National State for a longer time. In the following topic, we will exemplify how government and state policies are linked to the welfare state, taking the Brazilian case as an example.

Social welfare state in Brazil currently

Brazil is not a strong reference when talking about public policies, based on the empirical experience of Brazilians. However, at the global level, we have valuable public policies that are very much in line with the idea of ​​a welfare state.

One of these policies, which became a State policy sanctioned by the Federal Constitution of 1988, is the creation of the Unified Health System, the SUS. Despite the lack of funds, the lack of professionals and the deficient structure, the SUS is one of the few health systems totally free and that proposes to serve any citizen in the world.

For the SUS, it does not matter nationality, socioeconomic status, housing (or lack thereof), finally, regardless of any factor, the person has the right to health care for this system. This is a Brazilian public policy that is in line with the idea of ​​a social welfare state, as it uses public resources to offer health care for all citizens that inhabit the Brazilian territory.

Another example of public policy that is based on the idea of ​​social well-being is the Brazilian education policy. Brazil offers, free of charge, basic and higher education to any Brazilian citizen and naturalized foreigner or with a visa.

Basic education (kindergarten, elementary school and high school) must be guaranteed to all children and adolescents, in addition to having public policies for young people and adults who intend to complete their phases. The State must ensure that all these people are inserted in the student board of public schools.

Social inequality in the liberal state is immense, imposing the need for state intervention in social life.
Social inequality in the liberal state is immense, imposing the need for state intervention in social life.

In the case of public higher education, there is no guarantee that there will be a place for everyone who wants to enter it, but there is an offer of totally free places. We can, therefore, see that there is an intimate relationship between Brazilian education and the idea of ​​a welfare state.

Another public policy that comes close to the idea of ​​a welfare state is the Bolsa Família Program. The mechanism created in 2003 and converted into law in 2004 (Federal Law n. 10,836/04), during the government of former president Luís Inácio Lula da Silva, I brought one cash transfer system the Federal Government for low-income families to have access to food and a more dignified life.

See too: Brazilian culture: from diversity to inequality

Has the welfare state failed?

There are numerous criticism to the idea of ​​the welfare state since the foundation of neoliberal ideals in the mid-twentieth century. Chicago School economists like Milton Friedman argue, with some reason, that Keynesianism would bankrupt the United States. However, other measures of social welfare can be sung in addition to what was proposed by John Maynard Keynes.

In Brazil, for example, with a large majority of the population unable to pay for services. education and health, it is impossible to think of any other reality than with education and health systems free. Furthermore, the highest human development indices (HDI) of the world focus on Nordic countries, which use welfare state measures. The government model used there was even known as the Nordic model.

by Francisco Porfirio
Sociology Professor

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