Economic crisis, climate change and the future of welfare states

This article discusses the future(s) of Western welfare states in the face of two systemic challenges: the economic crisis and the pressures of climate change. It uses a punctuated equilibrium framework of institutional change to argue for path dependency in welfare reform alongside crisis-driven switching points. The second part argues that the economic crisis of 2008 was endogenous to the preceding era of financialised capitalism, and that it will generate a long-term fiscal crisis, notably in Britain. The third part contends that climate change, and the necessary mitigation measures taken to deal with it, will impose severe demands on traditional social policies. It also threatens further growth in rich countries which undermines the resources available for welfare systems. Thus, economic crisis makes future growth uncertain; climate change makes it undesirable. The conclusion is a new political economy analysis must be developed to promote a radical second stage of de-commodification of economies and welfare systems.